Koch: Democrats using 'stealth' to re-engineer society with 'stimulus' package

From Ed Koch: Those in power under former president George W. Bush contributed to the economic rape of the country by declining to regulate Wall Street, allowing the economic debacle now unfolding which has devastated the country, bringing middle-class Americans to their knees economically with their jobs and savings vanishing with each passing day.

In the last days of the Bush tenure, his economic team tried to stem the economic tidal wave overwhelming the country with a team led by Treasury Secretary Henry Paulson who failed miserably. Bush’s team told us that the major problem was liquidity and that a bailout of the banks was absolutely necessary; otherwise the country would collapse into a great depression similar to that which ushered in the FDR administration. When the Congress which had rejected the first Paulson plan reversed itself out of sheer terror and voted for the $750 billion bailout, we found that six weeks later, Paulson was telling us buying the “toxic assets” of banks was no longer the way to go and instead we should give these banks more dollars to shore up their capital, which he did using half of the $750 billion that had been approved by the Congress for the bailout to secure liquidity. The man who we thought knew what to do gave those billions away without conditions and the banks chose to date not to lend, and instead buy other banks, pay dividends to shareholders and bonuses to their top executives and others who led them to failure.

The new team under President Obama has asked the Congress for an additional so-called stimulus bill, now at about $800 billion and still growing — with about $350 billion remaining and available to the Obama administration for use from the prior stimulus package. The administration has the power now or through laws that Congress could pass to make the banks lend and provide the needed liquidity. When I wrote to Federal Reserve Chairman Ben Bernanke on October 9, 2008 and asked why he didn’t impose a requirement that the banks do their job to lend for which they were licensed — and only to those applicants who were creditworthy and at the same rate as the prior year, his response was, “…requiring directly that banks extend specified amounts of credit to creditworthy borrowers would entail many complications. For example, bank regulators would need to create an objective definition for determining which borrowers were creditworthy. Moreover, because the volume of banks’ credit activities can fluctuate over time for a variety of reasons, including those over which they have no control (such as the rate of economic growth in their geographical regions), determining appropriate targets for individual banks’ lending activities would be complex and potentially arbitrary. In addition, because of the very large number of banking institutions in the country — more than 8,000 — administering such a program would be extremely resource intensive.”