Durston for Congress

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Bailout of Financial Institutions

Solving the Financial Crisis – First Do No Harm

Written By Bill Durston, M.D. on Sept. 24, 2008, published in the Elk Grove Citizen September 30, 2008

The current rush to provide a massive bailout for large financial institutions that engaged in unsound business practices during the sub-prime mortgage frenzy is reminiscent of the rush into the abyss which followed the September 11 terrorist attacks. It is time for Congress to show some common sense and political courage. Congress should not approve any plan that increases the national debt, that rewards corporate greed, or that puts the interests of Wall Street above the interests of Main Street.

As a Marine combat veteran of Vietnam and an Emergency Physician, I am well aware that there are times when it is appropriate to rush into dramatic action. There are also times, though, when it is more appropriate to move cautiously, taking simple measures while gathering more information. I believe that the current financial crisis falls into the latter category.

One of the basic principles in the practice of medicine, which I believe should also apply to the practice of government, is to, “First, do no harm.” The proposed $700 billion bailout for the financial industry violates this rule. The U.S. national debt is already close to 10 trillion dollars. Increasing the national debt by another $700 billion will further reduce the value of the dollar, worsen inflation, and put the federal government itself at greater risk of bankruptcy.

Another principle in the practice of medicine which is equally applicable to the practice of government is that of informed consent. Before undergoing a major operation, a patient has the right to an objective discussion of the risks, benefits, and alternatives of the proposed surgery. In the case of the bailout for the financial industry, we’ve heard very little from “economic experts” about the risks, a very vague discussion of the benefits, and virtually nothing about reasonable alternatives. Everyone seems to be assuming that drastic surgery is needed, when in fact, a minor procedure, such as reinstituting the banking regulations that were removed over the past decade, may be all that is necessary.

The sky will not necessarily fall if we leave those financial institutions that engaged in unsound business practices during the sub-prime mortgage frenzy to fend for themselves, just as most of us private citizens would have to do in analogous circumstances. People who have money invested in mutual funds and stocks will see a temporary drop in the value of their portfolios, but these values will go back up as the economy stabilizes. And as an alternative to a $700 billion bailout for the financial industry, we might consider redirecting the vast human and financial resources that we are wasting on war and preparation for war toward more constructive uses, including rebuilding our economy.

One final principle is that the fox should not be put in charge of guarding the chicken coop. Congress is being told by Treasury Secretary Henry Paulson, former CEO of the investment banking giant, Goldman Sachs, that it should give him almost complete control of how the bailout money is used. Paulson’s net worth is estimated at $700 million. Considering that Paulson did nothing to prevent the current crisis from developing and that he may have personally profited from the deregulation of the financial industry that contributed to it, it would seem more appropriate to call for his resignation than to give him sweeping new powers.

As Congress listens to the Wall Street “experts” on how to deal with the current crisis in the financial industry, it should also listen to the millions of other financial “experts” across the country who somehow manage to live within their means year after year, doing an honest day’s work for an honest day’s pay, putting aside some savings not only for themselves, but for future generations. These hardworking Americans, not the Wall Street investment bankers, are the real backbone of our economy. Congress should learn from their example.

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