Letter to Send to Feds Courtesy of Urbansurvival

Hi everyone,

George Ure over at Urbansurvival.com has posted a letter on his site that he is authorizing for general distribution so that we can all copy it and send it out to our Federal Representatives. I think we need to take action as the Wall Street Banksters want to finish fleecing the sheep (us).

SOURCE

Dear (elected official):



I am writing to demand that any bailout of investment bank include a mandatory requirement for private co-investment.

As you know, the current plan proposed by the Treasury - and now being rushed through approval is designed as follows:

Financial Institution with 'bad paper' will be able to sell their paper to the government.

The government will then sell this paper to other investors at whatever discount they need to in order to 'keep the system alive'.

The buyers of this paper from the government have no incentive to bid up prices because the farther the asset valuation falls, the more money the bankers will make.

Ultimately, the public will fund the difference between the current valuation of the instruments and however low these same investment bankers can drop their bids.

Obviously, this is an absurdity because under Game Theory, the lower the bids are when the government sells, the higher the yields on these debt instruments.

What's worse, an instrument sold my one firm, such as hypothetically Goldman Sachs (or more likely the Goldman Sachs Asset Management group) could ultimately be purchased from the government bailout agency purchased by Morgan Stanley. At the same time, a hypothetical Morgan Stanley\asset sold to the government could ultimately be picked up - dirt cheap - by the same Goldman group selling their hypothetical paper.

To my way of thinking, this "bailout" is a flim-flam deal. The investment "banksters" could 'wash the paper and take the spread' as things are presently proposed. As a Taxpayer, I am appalled and demand a better solution.

Is there an alternative? Of course!

Write and enforce a new provision requiring that any sales of government purchased instruments to private firms retain a minimum 90% public participation. Thus, when the [toxic waste] bonds are resold by the government, the tax paying public which is footing the bill would be compensated for its risk. Give the paper vultures compensation with a small 1-3 basis point spiff for managing the public's side of the deal.

The new deal structure would look like this:

Financial Institution with 'bad paper' will still be able to sell their paper to the government.

But because the government will sell only a maximum 10% private share (the rest being the public's skin in the game) the markdowns would likely be less.

The public would retain a 90% ownership position. Thus any profits made by the paper vultures would be diluted 10:1 and the public compensated for its risk.

In this way, the public would make back much of its initial cost and the debt load on the American financial system would be lessened dramatically - reducing the ultimate cost of the bailout dramatically.

As you can readily see, this approach - let's call it Private Sector Coinvestment - will work very well, although now that the investment bankers have "seen the green" in the form of the rudimentary "bailout plan" which is nothing short of a banker's coup d'état, will scream bloody murder when a rational and money saving plan is proposed.

It all comes down to whether you represent the interest of the People, or the interests of the Bankers who began their theft of the American economy in 1913.

As a voter in your district, I beseech you to look out for the interests of the American Taxpayer and honor the intent of the Framers to defend and protect this Great Nation.

Sincerely,





(share this freely)

I made a couple a very small edits, sorry George.