May 16, 2012
President Obama and his Democrat allies in Congress cannot talk about their failed economic policies and historically slow recovery. Following reports last week of a $2 billion loss in financial markets by JPMorgan Chase, Democrats seized an opportunity to distract Americans from their failed economic policies.
- It’s not surprising President Obama and his allies want to deflect focus from their own failed economic policies, but it is surprising they are so fixated on this private sector loss. If only they demonstrated the same concern when taxpayer funds were on the line…
- Not long ago, the Democrats were concerned that firms on Wall Street were making too much money. Now they appear to be concerned that Wall Street firms are losing money.
- When pressed on whether he regretted the taxpayer-sponsored “investment” he made in Solyndra, President Obama responded, “No, I don’t…what we always understood is that not every single business is going to succeed.” He went on to say, “[H]indsight is always 20/20. It went through the regular review process and people felt like this was a good bet.”
- More than a half a billion in taxpayer dollars later, it’s clear Solyndra wasn’t a good bet for the American taxpayer.
- The losses at JPMorgan Chase do serve as reminder that the taxpayer should not stand behind Wall Street firms. Unfortunately, that’s exactly what the Dodd-Frank Act has them do—it enshrines bailouts by designating certain firms as “systemically important” and allowing the Federal Deposit Insurance Corporation (FDIC) to resolve a troubled firm and borrow from the Treasury Department to pay off the firm’s debts in doing so.
- It’s clear that JPMC did an incredibly poor job managing their risk. Democrats ultimately want the federal government to manage the risks and business decisions of federally-insured or guaranteed financial institutions. The real question: can the federal government do better with a record like this?…
- National Flood Insurance Program (NFIP): The NFIP owes the Treasury $18 billion.
- Pension Benefit Guaranty Corporation (PBGC): For FY2011, the PBGC had a debt of $26.04 billion, and its estimate of its exposure from underfunding by plan sponsors totaled approximately $227 billion.
- Fannie Mae and Freddie Mac: The Enterprises combined have now cost taxpayers nearly $200 billion.
- When we reflect upon JPMorgan’s loss we should remember this: bailouts beget bailouts through moral hazard. If we lose our ability to fail in America, then we may one day lose our drive to succeed. That is what this debate should really be about.
Americans want us to focus first and foremost on turning around the Obama economy. House Republicans have a Plan for America’s Job Creators—it’s time for the President and Senate Democrats to stop blocking our bipartisan jobs bills.
For additional information, contact:
The House Republican Conference Policy Office