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February 24, 2009 08:35 PM UTC

Sen. Bennet doesn't sound so bright questioning Bernanke

  • 13 Comments
  • by: Another skeptic

Sen. Bennet is questioning Fed Chair Ben Bernanke and is making a poor impression.

He initially seemed to be reading his question, which is a bad sign.  When he was appointed by Ritter, he was billed as very bright and a quick study. I don’t see that today. (Pun intended.)

What he’s asking is that the Fed and/or the Treasury bailout municipalities and other tax-exempt organizations that played the risky auctin-rate bond market and effectively got caught short.

That market is frozen, making it impossible for tax-exempt and even some for-profit organizations to lower their interest costs by borrowing for 30 to 60 days and rolling over those deals frequently rather than just issuing long-term bonds, which carry higher interest rates.

Tax-exempt organizations get big interest rate advantages by issuing bonds that pay tax-free interest to lenders. There is no reason the Feds should further subsidize them.

By promoting more subsidies for municipalities, school districts, etc., Bennet is promoting higher taxes that must be collected to make up the revenue shortfalls and subsidies granted to tax-exempt organizations. Historically, this has been public policy for a long time, but further subsidies aren’t justified. Tax-exempt organizations need to curtail their capital expenditures until the economy recovers five to 10 years from now.

Supporting frugality, of course, wouldn’t get Bennet elected in 2010. He’s looking out for himself rather than for taxpayers who are forced to subsidize tax-exempts.

Yes, lower interest costs for tax-exempt municipalities saves money for local taxpayers if the municipalities have to borrow. But they don’t have to borrow as much as they do and they should issue long-term bonds instead of playing the risky auction rate markets.

Wikepedia explains auction rate securities here:

http://en.wikipedia.org/wiki/A…

Comments

13 thoughts on “Sen. Bennet doesn’t sound so bright questioning Bernanke

  1. Bennet showed up to ask his question and then disappeared. Instead of hanging around to learn about banking, he’s off calling people who might help fund his campaign, I suspect.

        1. In order to feel superior, AS has to put his opponents down. This also gives him an excuse not to engage in debate, where his arguments were torn to shreds by posters who understand the topic.

          This is a new twist: Inserting a “pun intended” note where one was not written. (Confidential to AS: When Bennet was billed as “bright,” they weren’t talking about sunshine.)

          1. that is so wickedly clever none of us can grasp it. It’s a pun of Joycean proportions. When his mastery becomes evident, we will smack our foreheads so hard we’ll get concussions.

  2. I have to hand it to Mike May, Romanoff outshines him. This is just another example of the junior chamber chairman being hired to run the real chamber.

    It obviously shows here. May’s recommendation that the Guv appoint Romanoff was a legitimate, heartfelt and thoughtful recommendation.

  3. who expressed his wariness a couple of times about the possibility of “creeping nationalism” taking place in our banking system at the hands of our government.

    1. has rather sailed already, hasn’t it?

      If only we’d let the S&Ls work things out on their own — moral hazard, President’s son, oversupply of residential units and all. When will we learn?

      1. Repeat after me, free marketers – we need regulation enforcement. We need regulation enforcement. We need regulation enforcement.

        Why?

        Because business is amoral. (Not immoral, mind you, but amoral.)

        Left on its own, this is what the free market does, because everyone is looking out for number one. Businessmen and women do not turn down any opportunity for profit, and do not ask any hard questions about where this path to profit may take us.

        Only government regulation, drafted with an aim to preserving competition and protecting consumers, and enforced by people who know that it’s a necessarily adversarial job, keeps stuff like what we’re going through from happening.

        Not the free market. It won’t look out for the free market, it just looks out for number one.

      2. But “creeping nationalism” is another matter entirely. “Creeping nationalism” sounds like Corker’s political outlook, rather than our governmental policy.

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