Financial Market Crisis Solution

Dear Congressmen and Senators;

I would like Congress to pass a Confidence Insurance Bill to insure accounts for up to $500,000. The Federal Insurance Deposit Corporation (FDIC) should increase its insurance on all bank accounts to $500,000 and provide Umbrella Insurance for Securities Investor Protection Corporation (SIPC), the National Credit Union Administration (NCUA), and the Savings Association Insurance Fund (SAIF) for up to $500,000.

The problem in the financial markets is not the amount of money available. The Fed can always pump money into the system. The problem is the confidence to accept new loans because people are afraid to keep deposits in financial institutions. Increasing insurance will increase confidence in the system. That will loosen the short term commercial paper problem in the money market.

Long Term Problem

The long term problem that I think congress should fix is one of home finance education. People my age have the advantage of experience and some type of education in the area of contracts and loans. I am sorry to say that many people get their education from commercials today. This is why our federal and state governments have to play a role in educating people in home finance.

When I was in public school, they taught us how to write a check, take out a loan, figure out how to make a home budget, and etc. I assume that they did this in schools when my children were in public school. It took a predatory loan situation involving using my daughter’s car as collateral to get me to inquire into this education in our public schools. They don’t teach home finance to all students in public schools anymore. In fact, the loan companies get graduation list and mail loan applications to students. This is why people at age 21 already have $10,000 to $50,000 in credit card debt. They are not taught anything about savings and investment. Most colleges do not require such training.

As a result, we now have generations of people who believe that a credit card is an extension of their paycheck. Savings is something that "lovers of money" do. This created a nation of people who are ripe for picking by loan sharks posing as legitimate business people. This leads to a lack of confidence in the nation’s financial system. Without confidence, the system cannot work.
A government is supposed to protect its people from such sharks. That is why President Roosevelt put in place regulations to shield people from this type of business. The Depression of the 1930 was caused by the 1920s home loans which led to the stock market crash of 1929.

From President Reagan to President Bush, the loan, investment banking, and commercial banking laws were deregulated. This President Bush believes in "Free Markets" and people can do what they want. Then last week, Bush decided that Socialism for the people at the top was the best policy to follow by giving them a $700 Billion Bailout. This will not fix the problem. This will just bail out the corporations that employed the loan sharks.

The System Works on Confidence

We now have a generation of Americans who thinks that the solution to everything is to borrow more money. How can you fix a problem of confidence when all you know how to do is borrow? The reason why "In God We Trust" is on our money is because the banking system works on faith. If you have no faith in the system, the system will not work. Deregulation allowed business people to take advantage of the public. These same people sold these bad loans to Wall Street who looked the other way. Wall Street sold them back to the banks, insurance companies, mutual funds, colleges, endowments, and other financial institutions. People did not get paid from these bad loans.

Europe and Asian business people started laughing at us. We had a reputation of being the best in finance until two weeks ago. Now European banks are failing and Asia is dumping western companies. Everyone lost faith in the system. They stopped investing. This brought the money markets to a halt. Now people may not get their pay checks. We may have another Great Depression soon.

To fix the problem, increase our insurance on our accounts, so that small business people as well as small public corporations can have confidence in the system which will lead to the loosening of the credit markets.

Sincerely,

Darnell L. Williams

Why I keep track of City Issues:

The Mayor wanted to upgrade the Harrisburg Incinerator instead of shutting it down. He said that it cost too much to shut down. That is why he wanted to upgrade it. Besides, the City can make so much money out of it that we could reduce taxes and upgrade parts of the City government according to Mayor Reed. I believed it and I believed in what the Mayor was doing.

I did not know that the Mayor ran a public propaganda machine that rivaled Joseph Gerbils,Hitler’s Propaganda Ministry Chief for the Third Reich. He kept things from the public by not reporting things to the press. Since City Council did not have a public relations office, they did not report any information to the press. That gave the Mayor the opportunity to change City Council members every two years by giving them all bad press. That bad press influences the voters to vote for the people that the mayor wanted in office. As soon as the City council members achieved experience in City Government, they were voted out. This gave the Mayor supreme power over everything in the City.

In the Incinerator affair, he hired his friends who never worked on a project this complex. He falsified City documents stating the progress of the Incinerator. He would not allow City workers to test the equipment once in place. When it became known that the Incinerator project was a complete disaster, he told the people through the press that it was all City Council’s fault. They ran this project and it did not work. In fact, the Mayor lied to cover up his failures and to turn over City Council members again in the next City election. His friends walked away from this project making millions of dollars and the public was stuck with higher utility rates.