United Liberty

The Treasury Department has allocated $250 billion to buy senior preferred shares of dozens of the nation’s largest banks as part of the “Troubled Asset Relief Program,” (TARP). Our government however, has haphazardly invested these relief funds in banks that have shown a propensity for making irresponsible and imprudent business decisions. On top of a lack of disclosure of the criteria for approved banks the government has displayed no consideration for the American public. By printing new money and diluting existing shareholder positions our leaders have proven they care more about saving poorly run businesses than their constituents.

All Americans, not just existing shareholders of the banks involved, are impacted by the governmental intervention created by this bailout. Section 122 of the TARP raises the pubic debt ceiling from $10 trillion to $11.3 trillion; the government will do this by buying treasuries from itself. Raising our money supply by 10% inflates every dollar you own or earn by 10%. This careless increase in money supply reduces hard working Americans savings accounts true value across the board by 10%.

The second group of people hurt by the bail out are the existing shareholders of the banks involved. The government will receive warrants to buy additional shares worth up to 15% of the preferred shares it purchases. When the warrants are exercised by the government the number of shares outstanding grows which creates dilution. Dilution creates lower earnings per share, which hurts shareholder value. This disregard for existing shareholders shows the quick fix mentality and lack of thought put into the creation of this bail out.

Finally, by re-setting a precedent of the government bailing out financial institutions after imprudent business practices (see the S&L crisis that cost the American Public $124.6B) the government is continuing to show people that they do not have to take personal responsibility for their actions. Until the government finds the courage to hold individuals and businesses responsible for their actions we as a Nation will continue to act irresponsible and drive ourselves deeper and deeper into debt.

I urge those that have commendably taken the time to learn how our government is using the debt taken out in your name to inform others and seek out candidates that would not try to solve a problem by quickly and carelessly throwing enormous amounts of cash at the problem while holding no one responsible for the catastrophe.

Click here for a list of the financial firms approved to take part in the TARP.