Issue Position: Financial and Banking

Issue Position

We should create an environment where risks can be taken without the fear of government second guessing.

The current administration is working to remove all "risk" from our economy. They believe that if the government has enough control of any industry, it will be managed better than can be done by private business leaders. There are several major problems with this theory:

1. This is completely anti-capitalist and unconstitutional.
2. It is impossible for one federal government to regulate all 50 states and every type of business.
3. It is difficult to find a business that is run less efficiently than the government.

Instead of "risk aversion" we should create an environment where risks can be taken without fear of governmental second guessing. This is especially true in lending. Banks, especially community banks, must be allowed to lend and encourage people to take risks to start and expand business. Our economy is based on risk. Businesses rise and fall based on their ability to take and manage risk. Business should be allowed to fail--even if they are big. When risk and potential failure are removed, business owners have no motivation to manage their businesses well.

The government does have a legitimate role in protecting the free market. But regulations should be rare and focused on protecting liberty rather than creating economic tyranny.

* The barrier of separation between lending and investing in banks should be re-established.
* Community banks should not be regulated the same way as large banks.
* Credit unions should continue to be protected to allow a not-for-profit option for lending and financial transactions.
* Financial regulations should be created by statute, not by unelected government regulators.

Congress should audit the Federal Reserve and privatize Fanny Mae and Freddie Mac. If "big banks" operate in a manner that puts their company at risk, they should be allowed to "fail" so they could reorganize in bankruptcy under new leadership. To create a clearer opportunity for information, the federal government should encourage additional private rating companies to enter the market to compete with Standard and Poor's, Moody and Fitch.

A government plan should not include the federal ownership of banks, mortgages or investment companies. A move to socialism will not help Wall Street or the US economy. As William Buckley said, "The problem with socialism is socialism; the problem with capitalism is capitalists."

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