Liberty Maven

As the bailouts continue, I urge the Reader to remember the republicans who gave warning decades ago. One is Dr. Paul, another is the “First Ron Paul Republican” Vern McKinley.

by Jake, the Champion of the Constitution
Originally published September 29, 2008 at http://www.nolanchart.com/article5048.html

I recently came across a summary article (full version with sources here) from Vern McKinley on Freddie Mac and Fannie Mae published for the Cato Institute where he warned of its threat to the taxpayer in 1997.

“Although Freddie and Fannie are privately owned, they are what is known as government-sponsored enterprises (GSEs). GSEs don’t have to follow all the rules that true privately owned companies do: they don’t have to register their securities with the government, their securities receive special treatment for investment purposes, they don’t have to pay state and local income taxes and–most important–their government sponsorship gives them the aura of a fully guaranteed government entity. That final benefit means they save billions in borrowing costs, just as lenders are willing to offer low-interest student loans that are guaranteed by the government. That savings alone allows the GSEs to pocket about $2 billion per year, according to estimates by the Congressional Budget Office and the Treasury Department.”

“Allowing Congress to grant such special privileges is a bad idea. Those privileges, which are granted solely to Freddie and Fannie, crowd out other potential competitors in their market. Privately owned companies should not receive such preferred borrowing status, because it redirects investor funds into the middle- and upper-income housing market at the expense of other potential investments. Finally, the failure of either Freddie or Fannie could saddle taxpayers with a huge liability.”

“Congress should immediately revoke all the benefits of government sponsorship: clearly, Freddie and Fannie can be profitable without them. Eliminating special privileges will force mortgage markets to be truly competitive and will eliminate the possibility that the current system of government sponsorship will someday lead to yet another taxpayer-funded bailout.”

Vern also warned that these millions of dollar of savings were recycled into a “high-powered public relations and lobbying machine.” The GSEs also evenly supporting both Democrats and Republicans with $750 million in the latest contemporary election cycle at the time of his article. The article was published in 1998 in USA Today with the title “Privatize Fannie Mae and Freddie Mac.”

Vern McKinley was billed as the First Ron Paul Republican since he decided to run for office before Ron Paul announced his presidential candidacy. Vern ran for a seat in the House of Representatives for the 10^th congressional district of Virginia but lost in the Republican primary against Frank Wolf in June, a fiscally not conservative career politician who has kept a seat warm in Congress for about 28 years. Wolf refused to debate Vern and won with about 91% of the primary votes compared to 9% for McKinley.

Vern has worked with the Board of Governors of the Federal Reserve, the FDIC, the Resolution Trust Corporation, and the Department of Treasury’s Office of Thrift Supervision. He has also traveled extensively internationally, spreading free market ideas to China, Kenya, Afghanistan, and Indonesia among others. You can check out his views here.

As a disclaimer of sorts, I financially supported Vern and wrote a recommendation (see below) in May.  At the time, I only cared that he would not support the War on Terror.  How cute and naive I was back then!  If you have the time, I suggest writing a note to him at vern@mckinleyforcongress.com and encourage him to run again.

In Liberty!

Jake, the Champion of the Constitution

www.CampaignForLiberty.com

[Reach the Author Here!]

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

As always, unlike the NFL, the author grants full permission to allow any accounts of, rebroadcasts, retransmissions, repostings in part or full of this article to your blog or anywhere else in order to promote the Restoration of our Republic.

Veritas numquam perit. Veritas odit moras. Veritas vincit. Truth never perishes. Truth hates delay. Truth conquers.

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