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Bailout Plan
Posted by
goferrarigo
,
26 September 2008
·
108 views
Ok guys, i had this assignment to write for one of my classes on Business Technical Writing, So i thought i would post it here, in case anyone wants to read/ ask any questions...
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Dear Mr. Paulson,
I am student learning economics at the .... I recently read in the newspapers that you have arranged a bailout plan for the financial system called Troubled Asset Relief Program in the tune of $ 700 billion. I think that this plan is flawed in a few ways which I plan to address in this letter.
This plan, I think, is a very short term solution to the greater problem facing the American economy. The American banking system, especially after the repealment of the Glass-Steagall Act in 1999 which made the same entity responsible for lending money and investing it. This leads to conflicts of interest in the entity and also allows the entity to take part in risky security transactions. In an effort to make the banking system regulation-free, a lot of liberties were given to the financial system, making it prone and ready for a disaster. The way out is not by buying the rubbish mortgage backed securities but by tightening the regulations around them and allowing institutions to fail.
This plan is rewarding incompetence and American companies will be reckless in risk-taking as they know if they have some problem in the future, the Government will bail them out of this by clearing all the losses off their balance sheet. So the companies can enjoy that extra risky profit and still have no repercussions when things go bad. This is also not a good precedent to set for the future.
As Senator Jim Bunning said, “This massive bailout is not a solution. It is financial socialism, and it’s un-American.” This plan goes against what America has been preaching to the world, that let markets operate by themselves with no government intervention and they will sort themselves out. America’s policy has always been to allow institutions to fail and new ones to come and replace them, why are they changing their policy now?
Another big opposition to this plan is the pricing of the mortgage backed securities. The pricing will always be argued on and at no price will everyone agree it was fair as either it will be shorting the Wall Street, for who this plan is intended for or the taxpayers will be bearing the hit. A correspondent had this to say, “I am hoping Congress can find the backbone to stand on their feet and not their knees before BIG BUSINESS.” A lot of elected representatives are receiving emails, calls most of which are opposed to this plan. Hence I think taxpayers should have a vote on this before it gets passed as once the plan is passed, it can not be reviewed by any court of law or administrative authority.
Thus, I would request you to rethink about the Troubled Asset Relief Program or at least delay it for a few days so a debate can occur in the senate where the plan can allay the concerns of the public and everyone can be contended with the decision which will have a lasting effect on the economy of America.
Sincerely,
AJ.
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Dear Mr. Paulson,
I am student learning economics at the .... I recently read in the newspapers that you have arranged a bailout plan for the financial system called Troubled Asset Relief Program in the tune of $ 700 billion. I think that this plan is flawed in a few ways which I plan to address in this letter.
This plan, I think, is a very short term solution to the greater problem facing the American economy. The American banking system, especially after the repealment of the Glass-Steagall Act in 1999 which made the same entity responsible for lending money and investing it. This leads to conflicts of interest in the entity and also allows the entity to take part in risky security transactions. In an effort to make the banking system regulation-free, a lot of liberties were given to the financial system, making it prone and ready for a disaster. The way out is not by buying the rubbish mortgage backed securities but by tightening the regulations around them and allowing institutions to fail.
This plan is rewarding incompetence and American companies will be reckless in risk-taking as they know if they have some problem in the future, the Government will bail them out of this by clearing all the losses off their balance sheet. So the companies can enjoy that extra risky profit and still have no repercussions when things go bad. This is also not a good precedent to set for the future.
As Senator Jim Bunning said, “This massive bailout is not a solution. It is financial socialism, and it’s un-American.” This plan goes against what America has been preaching to the world, that let markets operate by themselves with no government intervention and they will sort themselves out. America’s policy has always been to allow institutions to fail and new ones to come and replace them, why are they changing their policy now?
Another big opposition to this plan is the pricing of the mortgage backed securities. The pricing will always be argued on and at no price will everyone agree it was fair as either it will be shorting the Wall Street, for who this plan is intended for or the taxpayers will be bearing the hit. A correspondent had this to say, “I am hoping Congress can find the backbone to stand on their feet and not their knees before BIG BUSINESS.” A lot of elected representatives are receiving emails, calls most of which are opposed to this plan. Hence I think taxpayers should have a vote on this before it gets passed as once the plan is passed, it can not be reviewed by any court of law or administrative authority.
Thus, I would request you to rethink about the Troubled Asset Relief Program or at least delay it for a few days so a debate can occur in the senate where the plan can allay the concerns of the public and everyone can be contended with the decision which will have a lasting effect on the economy of America.
Sincerely,
AJ.
