Dear Senator John McCain: 
I’ve heard that you are all for this big bailout thing that Congress rejected yesterday. I’m sorry to hear you are arguing over the terminology of “rescue” vs “bailout.” I hate to mention lipstick and I shan’t tarnish the ignoble name of the tasty porker by comparison, but you know the saying.
This bailout was bad for America. You and I both know that it didn’t fail because Nancy Pelosi made a partisan speech or Barack the indecisive didn’t come out for or against it (what do you expect from a guy who missed a quarter of all votes taken since 05?). It failed because hundreds of thousands of Americans called and emailed their representatives and said “don’t you dare” (seems they didn’t like the giant sucking sound headed toward their wallet without even reason to believe it would succeed in averting a recession). And, for once, Congress listened.
Mr. McCain, in a time of crisis, doing something is no substitute for doing the right thing. Congress realized that. Despite their bad rap in the press, conservative members of Congress might just have saved you from yourself. As it turns out, the only Republicans I found who voted for this ‘bi-partisan compromise’ were (A) in leadership, (B) retiring, or (C) in very safe districts. The members who needed to listen to their constituents said ‘no-deal.’ And a full third of Democrats – quite a few of them conservative – joined Republicans in sending this Washington Insider feit accompli to an ignoble grave.
Please back away from the “something must be done” hysteria and work on formulating a market based solution to our troubles. I know the situation is serious. I know Wall Street affects Main Street.
Just like everyone else, I’m sweating. My tiny investment portfolio doesn’t look as good on paper as it did last month. But I was given two pieces of advice by folks a great deal more savvy than myself. The first was ‘don’t invest anything you can’t afford to loose’ and the second was ‘invest for the long-term and don’t sweat the ups and downs.’
Mr. McCain, there is something worse than a plunge in the numbers my financial adviser sends me every month. This bailout was slated to cost up to $700 BILLION. And it comes on top of bailing out Freddie and Fannie and the auto industry. Now I know you’ve been in Washington awhile, so it must be tempting to lose track of the zeros. But it’s more than the cost of the entire Iraq war and it’s a heck of a lot more than a career full of earmarks.
Over the past two weeks, you have joined the Republican and Democrat leadership, the Administration and the Wall Street financiers who bungled this whole thing in advocating a solution that we little wage-earners simply could not stomach. As the crisis gets worse, here’s one Republican activist who is hoping you will reclaim your Maverick image and get to work on behalf of a solution the American people can embrace – if not with enthusiasm, then at least without rancor.
Mr. McCain, I was supporting you before this bailout business and I’m still supporting you today. I have your bumper sticker on my car and your sign in my yard, I’m hosting a debate watch party this week for your VP pick and that’ll be me passing out the sample ballot with your name on it come Election Day. But, sir, your response to this crisis has not bolstered my confidence. It’s not too late though.
The way I see it, the people who made this mess should go down. The kinds of firms that saw this coming and managed their assets better will rise to the top. It won’t be painless but it will happen. With a little help from the FDIC, we just saw Bear Stearns, AIG and WaMu fall gently. I don’t think a little more thoughtful deliberation in the people’s house will kill the country.
Now that Monday’s bill has failed, there is already another plan up for discussion. It might just represent the basis for a new consensus – one that could stabilize our economy without leaving the taxpayers on the hood for the biggest bailout, well, ever. It would leverage voluntary private capital rather than involuntary taxpayer dollars to shore up our economy. It would fix the market-to-market accounting rules so that book value reflects real asset value. It would address underlying problems with the Federal Reserve. And, it would force corporate accountability. I hope you’ll think about it.
Here are a few articles you might want to read. Some of the really smart people are saying it better than I can: Wallison / Calomiris, NR – Robinson, Boston Herald – Graham, & Miron – CNN.
Thanks for putting your country first. I know that doesn’t always mean you’ll make perfect choices (I certainly don’t) but this one is too important for a leader of your stature to rush to judgment. Keep fighting for us, Senator. The American people need the confidence that you’ll be working for them come January – not Paulson and his buddies on Wall Street. Next time I write to you, I want to call you Mr. President. If you do the right thing, I think you can make that possible. And, once you get there, can we talk about this whole “affordable housing” loan mandate in the Community Reinvestment Act that helped get us in this mess in the first place?
Yours sincerely,
DCH
