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OpenMarket: John Berlau

  • Obama denigrates Delaware in debate

    October 8, 2008
    Poor little Delaware. In every presidential election since 1992, she has been in the "blue" column voting for the Democratic candidate. She has long had a Democratic governor. Although she is represented at large by moderate GOP Rep. Michael Castle in the U.S. House, her Senate representation has been 100 percent Democrat since Tom Carper defeated the late Sen. William Roth in 2000.

    And of course, her other U.S. Senator, Joe Biden, is now the Democratic Party's vice presidential candidate. Yet this didn't prevent this bluest of blue states from getting a thrashing in Tuesday night's debate from none other than the Democratic Party front-runner, Barack Obama.

    In a strange, little-noticed tangent that Obama got onto in responding to a health care question and attacking opponent John McCain for being a deregulator in every policy area (...
  • Lehman Bros hearing -- Rep. Maloney blames deregulation, ignores her own role as Fannie's enabler

    October 6, 2008
    At the hearing being held today by the House Oversight and Government Reform Committee, in which former Lehman Brothers CEO Dick Fuld is now testifying, an earlier panel attempted to look at the causes of Lehman's collapse and the broader credit cirisis. And this gave an opportunity to committee members to ride their various hobby horses.

    Rep. Carolyn Maloney's horse and "whipping boy" was deregulation. She blamed the entire crisis on deregulation, and specifically the repeal of the Depression-era Glass-Steagall law that separated commercial and investment banking. The repeal was done through the Gramm-Leach-Bliley Act, which Maloney neglected to say was passed on an overwhelmingly bipartisan vote and signed by President Bill Clinton in 1999. Clinton, in fact, recently defended the law, saying it didn't contribute much to the...
  • Market down on bailout -- Don't compound damage with overregulation of 'Main Street'

    October 3, 2008
    Today -- five days after a courageous independent vote against Treasury Secretary Hank Paulson's $700 billion bailout for Wall Street -- the U.S. House of Representatives disappointingly approved the same basic measure. Many of the bill's other "sweeteners", such as earmarks and a regressive increase in deposit insurance for upper income bank customers --will also cost taxpayer hundreds of billions of dollars.

    All this week I and my colleagues have pointed out ways this bailout could, in addition to being costly, be counterproductive for the economy. Wall Street may have been feeling this "buyers' remorse" today as the Dow Jones Industrial Average pared back ealier gains to end the day down by 150 points. As Yahoo Finance noted, "financial stocks, which had traded sharply higher on the promise the bill would be passed, fell after the House vote on profit-taking and as the market...
  • Another bad bailout idea -- raising deposit insurance cap is regressive and counterproductive

    October 1, 2008
    As the Wall Street crisis has expanded, politicians are falling all over themselves arguing on behalf of the "little guy" against "fat cats." But in reality, the main elements of "rescue" plans receiving a bipartisan push would represent a massive transfer of wealth from little guys and gals to fat cats' pockets.

    First, there was Treasury Secretary Hank Paulson's $700 billion bailout the House defeated on Monday, but to be revived in the Senate as early as Wednesday night. Then there is the upper-income wealth transfer that will now be added as the cherry on top of this bailout: raising deposit insurance to bank accounts of $250,000 or more.

    According to the Associated Press, both Barack Obama and John McCain on Tuesday backed lifting the deposit insurance cap to $250,000 from the current $100,000 maximum. And Federal Deposit...
  • Republican Study Commitee plan now best viable alternative

    September 29, 2008
    The stunning defeat of the Hank Paulson's socialism-for-Wall Street bailout on Monday has just made planks of a pro-free market alternative much more viable. As Open Market has noted before, The Republican Study Comittee, a caucus of pro-market members of the GOP Congress, has presented such a plan that would be much more effective at stopping the contagion than the Paulson bailout, and many of its provisions would not cost taxpayers a dime.

    The RSC plan is chock-full of measures to remove barriers to economic growth and market-distorting subsidies. It would suspend capital gains taxes to put trillions of dollars of capital in the economy, and set Fannie Mae and Freddie Mac, which as CEI has documented were at the...
  • Bailout fails -- Move on to Mark-to-Market Reform

    September 29, 2008


    Oh, Happy Day! And it certainly is for all those who value freedom, responsibility and the true free market in which individuals are free to profit from their risks on the condition that they don't stick the rest of us with their losses.

    It's not hyperbole to say the Republican and Democratic backbenchers who defied both parties' leadership to defeat this $700 billion package of Wall Street socialism literally saved America. Whatever their reasons, this defeat (or rather victory for freedom), means that...
  • $700 billion to worsen economy? -- Berlau in American Spectator

    September 29, 2008
    Here are excerpts from my story in today's American Spectator Online on how the $700 billion bailout could actually make things worse -- in terms of resulting inflation and even a further contraction in credit due to the government purchases' interaction with the mark-to-market accounting rules. To read the piece in its entirety, click here.

    ""The government has to do something to keep markets from falling and the economy from getting worse." How many times have you heard that mantra this past week from President Bush, Treasury Secretary Hank Paulson, Democrat leaders, the news media, and even some ostensibly conservative periodicals?

    But what if the bailout, as originally proposed and in its latest incarnation, would spend $700 billion of taxpayers' money and actually make the economy worse? Believe it or not, there...
  • Kudos to Republican Study Committee for bailout alternative

    September 25, 2008
    Those of us (and CEI is among the "us"!) who oppose Treasury Secretary Henry Paulson's $700 billion bailout of Wall Street have been challenged to come up with an alternative to stop the credit contagion. The Republican Study Comittee, a caucus of pro-market members of the GOP Congress, has just answered this challenge. They have presented such an alternative that would be much more effective at stopping the contagion than the Paulson bailout, and it would not cost taxpayers a dime.

    The RSC plan is chock-full of measures to remove barriers to economic growth and market-distorting subsidies. It would suspend capital gains taxes to put trillions of dollars of capital in the economy, and set Fannie Mae and Freddie Mac, which as CEI...
  • Paulson bailout would worsen contagion-spreading accounting rules

    September 22, 2008
    My colleague Hans Bader is correct that most of the aims of Treasury Secretary Henry Paulson's $700 billion bailout -- stopping the "contagion" of securitized loans that have become illiquid -- could be achieved if mark-to-market accounting rules were "immediately relaxed by federal agencies like the SEC that enforce them." As I wrote in my Wall Street Journal op-ed this weekend, because the mark-to-market rules require writedowns of performing loans based on the last sale of similar assets, good "banks holding mortgages that haven't been impaired often have to adjust their books based on another bank's sale -- even if they plan to hold their loans to maturity." (And commenter "Topcat" misses the point...
  • The 'Naked' Truth -- Short sellers are unsung financial heroes

    September 19, 2008
    At the peak of the real estate boom, there was one group of individuals who said the bubble was about to pop. They pointed to overvalued land and bad underwriting of loans. And they bet their own money on their beliefs. Who are these unsung prophets of the subprime bust: the much-maligned short-sellers, whom both Britain, as Iain Murray reported yesterday, and now the U.S. Securities and Exchange Commission temporarily want to ban in an effort to keep the share price of financials from going further down.

    On Thursday, John McCain foolishly called for the ouster of SEC Chairman Chris Cox because Cox hadn't cracked down on so-called "naked" short sellers and supposedly "kept in place trading rules that let speculators and...

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