Dear Colleague:
Many years ago, I was the Chief Executive Officer of a retail California bank, with assets approaching a billion dollars. I feel compelled to comment on the part of our financial system upon which ninety percent of our business and individual constituents rely.
The independent community of savings banks and credit unions are safe, sound, and liquid.
Yes, they may be suffering from higher delinquencies due to local economic problems - unemployment, lower home prices, natural disasters, etc. - but that, for the majority, results in lower profits, slower growth, and higher credit standards for potential borrowers.
For those of us who believe in a market economy, those results should come as no surprise. It should also come without question that the proposed bailout will only help reckless speculators who have been caught on the wrong side of the come line.
Yesterday, a colleague said that he was worried that banks had to pay close to six percent for "Fed funds" (day loans between banks, usually available at one to two percent, to adjust cash requirements.) Well, dear colleague, Duh! Whilst one bank paid six percent, another bank earned six percent.
Another colleague attributed to Secretary Paulson a comment to the effect that absent his bailout, folks wouldn't be able to get cash at ATMs. That is irresponsible rumor mongering hogwash.
Please, friends, whatever you decide about the "bailout," (and I intend to ignore/oppose it in any of the forms suggested thus far) I ask you not to create fear and incite the public to unwarranted hysteria, which actually could hurt the economy.
Sincerely,
Pete Stark
Member of Congress
