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Tuesday, July 15, 2008

“Free” Speech

Taking note of recent communication by United States Senator Charles Schumer, I feel I must specifically ask our representatives, and offer a blanket invitation for anyone else to also answer, how free is our free speech? At what point is free speech not free, and at what point do you have a responsibility to learn to keep your mouth shut?

Instances where speech is not free can, of course, be found all over the place. Protesting at a soldier’s funeral can cause you to be incarcerated. Howard Stern can discuss exactly how much an indecent conversation can cost you, having been responsible for $500,000 in fines from the FCC.

Then we get to good old Chucky. Senator Charles Schumer, on June 26th, sent an open letter to the FDIC and the Office of Thrift Supervision stating concerns he had about the resources the bank controlled; the solvency of the bank. Never mind that this blow-hard is on the Finance Committee (specifically on the subcommittees for “International Trade and Global competitiveness,” “Social Security, Pension, and Family policy,” and “Taxation, IRS Oversight, and Long-Term Growth”) as well as the COMMITTEE ON BANKING, HOUSEING, AND URBAN AFFAIRS (specifically the subcommittees for “Financial Institutions,” “Housing, Transportation and Community Development (Chairman),” and “Securities, Insurance, and Investment”).

Stating a belief that the bank was in serious trouble; his quoted intentions were to “toughen up” the Office of Thrift Supervision who, in his opinion, were “weak regulator[s]”. His statements, according to bank regulators, caused 1.3 Billion dollars to be withdrawn over the next eleven days at the IndyMac Bank. This is what would best be described as a modern day run. Regulators estimate that the total cost to restore what federal law covers will end up costing between 4 and 8 Billion dollars, or roughly $26.52 for every single person currently alive in the United States. While your initial reaction may be “oh, it’s not that bad on a per person basis,” let me remind you that amount includes every single person who is on their way in and everyone on their way out. When you count only those who are between the ages of 18 and 65 (best classified as the working class age - but again, counting every single person between those ages, whether they work, go to school, or sit on a beach retired), that dollar amount jumps to over $42 a person.

While it can be understood that, as a Senator, Schumer retains a responsibility to guide the government and its agencies to the best of his ability, the biggest issue with Schumer’s “Toughen Up” stance should be the way he brought his condemnation. As a member of the Subcommittee for Financial Institutions, Schumer has the ability and the responsibility to control the purse strings of the financial regulatory institutions. Simply reminding this agency that, by not doing what is necessary, funds and resources could and would be allotted to other agencies that would be willing to take the responsible steps should have been enough of a “Toughen Up” pep talk (unless the collapse of a large financial institution was his ultimate goal). Instead this Senator publicly trashed a bank (albeit one that was struggling financially), and initiated a run.

To sum of the total cost of Senator Schumer’s comments, we’ll start with the 8 Billion estimated for cost to insure. Add to insurance cost the $81 Million lost in stockholder's stock value since the statement was made, and we’re left with a total cost of $8,081,000,000. That’s how much Senator Schumer’s Free Speech cost the United States government and its people. While this may be a little over-reaching, as there are some that have been quoted as believing IndyMac’s collapse was only a matter of time, we will never know for sure whether this bank would have been able to survive this tumultuous time in its history or whether another couple of weeks would have allowed it enough time to sell itself. Maybe next time a little self-censorship by the Senator would be a wise decision. Maybe next time the bank will be given the chance to sort its own problems out without the government having to rescue it, saving taxpayers large sums of money in the process. Maybe next time this arrogant, narcissistic Senator will be able to walk by a wound without rubbing salt in it.


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