The McCotter Plan

Posted by Willmoore on Sep 24th, 2008
2008
Sep 24

Rep. Thad McCotter of Michigan has unveiled a new plan that he’s pushing as an alternative to the Paulson bailout, it’s based on pushing firms through expedited recapitalization proceedings, relieving distressed homeowners, and limiting the size of financial firms to prevent “too big to fail.”

I attended a lecture by McCotter a couple of days ago, my account of that is here. He had thoughtful comments on the imbalances in our economy and financial system that lead to the crisis. He also expressed his approval of a plan from Chicago prof Luigi Zingales that has gotten some attention, and which seems to have influenced McCotter’s own proposal.

And what do I think? Well, the McCotter proposal is called the EARN Act for Expedited American Recapitalization-Now. I can’t stand cutesy acronyms–rename it! Otherwise, it’s lookin’ good. I’m trying to avoid exhibiting Male Answer Syndrome by opining too much about the financial crisis, about which my level of knowledge and insight is just about zero. But it seems clear enough that the Paulson plan rewards the wrong people and behavior, and I hope that McCotter’s plan generates the discussion it deserves.

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2 Responses

  1. Willmoore Says:
    September 24th, 2008 at 3:03 pm

    An accompanying statement from McCotter:

    I was not elected to abet American socialism.

    Thus, I am opposing the Bush administration’s taxpayer funded, trillion dollar Wall Street bailout; and, alternatively, proposing a pro-taxpayer, free market, private recapitalization plan for the banking system; ending financial chaos; and preventing the advent of Wall Street Socialism.

    Drawn from the free-market ideas of the public and our members, this proposal is premised upon the following principle: Our prosperity is from the private sector not the public sector.

    True, some will still assert the administration’s support of Wall Street’s leveraged bailout at taxpayers’ expense is the only answer to this crisis of confidence. They are dead wrong.

    First, we must never punish the innocent to profit the guilty.

    Secondly, a taxpayer bailout is never the first or only resort. If it is claimed to be so, the object of the bailout is already too far gone to be saved.

    Thirdly, this trillion dollar taxpayer bailout will not prevent a Great Depression. It will promote a Greater Depression.

    While there exist a host of other reasons, for the sake of brevity let me reiterate: The Paulson Plan is premised upon a public bailout. A better plan is premised upon private recapitalization. Thus, I oppose the Paulson Plan’s raid on the taxpayers; and I will continue fighting to ensure the Wall Street crowd who made this mess pay to clean it up.

  2. Bill Says:
    September 25th, 2008 at 5:48 pm

    This, too, is a loser of a plan!

    The key to riding out this storm is confidence and responsibility. If businesses make horrible decisions in investements, then they should suffer for it. If “homeowners” take out a loan they can’t afford to pay off, they should simply return to renting.

    I am opposed to both the Bush administration’s and Mr. Dodd’s proposed socialization of the financial markets. I fear that once the government steps in, we will never again benefit from the largest source of liberty in independence the world has ever known.

    I ask that my representatives vote against this legislation in any form. In this regard, a vote for this or any similar legislation that “bails out” private industry or requires my tax dollars to be used to reward citizen’s that knowingly got in over their heads with loans they could not afford will ensure that that representative, senator or presidential candidate will never receive my vote for office.

    Only by allowing businesses to fail and citizen’s to live with their actions will the market recover. Mr. Bush’s and Mr. Dodd’s plans reward greed and stupidity. I avoided over-extending myself and now you and many others advocate punishing me by further propping up a false economy and rewarding the problem causers.

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