Letter to Congressman Miller about the Bailout

Congressman Miller,

Please take a stand on this financial crisis.

An illustration: Let’s say that some beach-bum, surfed-out, pot-smoking loser asked me to borrow $1,000. He looks honest, as far as pot-smoking losers go, so I give it to him. Six months later, I go to his dirty apartment to ask for a payment. And, his response is “Whoa, man. Have we met before?”

Now, who is at fault here? Is the pot-smoking loser at fault for borrowing my $1,000, knowing that he wouldn’t be able to pay me back? Sure, he is. But, he’s also a pot-smoking loser. And, I knew that when I gave him the money. So, shame on me.

My point is this: bad loans are primarily the responsibility of the lender.

And, bad loans - after all the repackaging, CDOs, swaps, and security bundling – are at the heart of this crisis. Shame on the lenders!

Here’s a picture of the future: It’s 2020, 12 years after the mortgage loan bailout. The federal debt is still monstrous. Credit card debt, retail consumer debt, student loan debt, and new “innovative” lending (we now lend to pre-school kids as a school voucher program) have risen to astronomical levels since mortgage lending was curtailed by that nasty crisis of ‘08. A mild recession hits, triggered by a price increase in some anti-aging medication. Lending tightens, and, viola, we’re right back here. Only this time, China offers to buy out our whole banking system – with $4 trillion cash in hand– in exchange for us putting posters of Mao up in every church and having our school children chant “China is great” for five minutes a day.

The point is, responsible lending is a MUST. Moving forward, we can’t leave any gray area about responsible lending. And, as much as I’d like to think lenders would learn their lessons here, and move forward responsibly, THEY WON’T! I came home from work yesterday, listening to the news of the bailout, and guess what I found in my mailbox? Yea. Credit Card offers. Four of ‘em.

Look, if the government needs to inject cash to shore up confidence, do it. But, I say you should GIVE THE $1,000 TO THE POT-SMOKING LOSER! Sure, he’s a loser. He smokes pot. He’s probably an idiot. But, at least he’s not an irresponsible lender.

Besides, the $1,000 borrowed by that loser has been packaged and re-packaged, and converted to CDOs ,and swapped, and securitized, and sold to the long-term asset line on the balance sheet of every company in the Fortune 500. You have to wonder if anything other than killing the bad loan at the source is going to work.

Good luck, congressman.

Travis English