Looking for a flashlight

We are in economic crisis in our nation. House Speaker Nancy Pelosi says it’s President Bush’s fault and that Congress should hold some hearings, which is usually a finger-pointer, not a problem-solver. Senate Majority Leader Harry Reid says the Treasury Secretary and the Federal Reserve Chairman don’t know what to do. That’s hardly reassuring or even true. Senator John McCain says “we” are going to reform the way Wall Street does business. He’s had 26 years to work on that. Senator Barack Obama wants to throw some more money at the problems. The simple fact is, the Wall Street and financial woes are far bigger than any single politician or group of politicians. This isn’t even a partisan problem. The real danger here is over-reaction, a patented Washington solution to public problems. We shouldn’t fear that Congress will not do anything, but that they will do too much. Like their proposal to absorb all the bad mortgages in their most recent proposal, that gets banks off the hook, but not us. The deal could cost trillions.

That Congress should act in the current economic mess is not a question. We firmly believe in the free market system, that the market must be allowed to work in ways that benefit investors, corporations, employees and consumers. But we also believe that in the current do-anything environment, such as has existed in financial and investment markets, man’s nature will lead him to get greedy. Lehman Brothers got greedy. AIG got greedy. Freddie Mac and Fannie Mae got greedy. There should be some way to keep CEO golden parachutes from being tied to inflated stock prices, so that unscrupulous CEOs and boards of directors won’t be able to steal from shareholders and then hide in bankruptcy. Lehman Brothers is a venerable old investment company that took a wrong turn. The board of directors now will be able to avoid many of their financial obligations in bankruptcy, get well financially, issue new stock and go about their business — leaving current investors who took the big risk with nothing. We pray that the reaction of Congress won’t give us more absurd regulatory nightmares like Sarbanes-Oxley, which didn’t solve any problems, but put a choke-hold on many small financial institutions.

Maybe Senator Reid is right. Maybe nobody understands exactly how to get out of this mess, but we really don’t believe that. We do know, however, that the unrestrained corporate and individual greed of the past two decades — under Democrat and Republican presidents — got us here. The person who wants to be the next president needs to be talking economics to some really smart people. The American people are taking this one on the chin. We should be listening carefully to McCain and Obama to see if either of them has a flashlight to lead us out of this dark place.—TCA