The Bailout
The more I read about this bailout, the more is stinks. A request for nearly $1 trillion dollars to bail out bankers from their bad gambles. No strings attached, no oversight, and no judicial review. Just trust us, the administration is saying. And this is brought to you by the same crowd that brought you the Patriot Act, the Iraq War, and Katrina. To add insult to injury, the administration, backed by Wall Street lobbyists, is dead set against linking the bailout to new regulatory initiatives or to any sort of assistance to struggling homeowners.
I agree with Glenn Greenwald that this bailout may be the most significant event of the last eight years in terms of defining where we are as a polity. And that says a lot. To watch the Democratic leadership get cowed by the Bush administration’s economic team was nauseating. It was as if the last eight years had never happened.
The progressive Catholic justification for the permissibility of voting Democratic, notwithstanding the party’s support of abortion rights, has always been that the party is better that the Republicans on other issues of great importance to Catholic social thought, issues like economic justice, war and peace, and the death penalty, among other things. In recent years, however, the Democratic party, at least at the national level, has sometimes seemed virtually indistinguishable from the Republicans on the economic front, opening the door to industry lobbyists, turning its back on universal health care, enacting a badly flawed welfare reform, rolling over for deregulation of the financial industry, failing to hold the line against tax cuts for the rich, and refusing to block bankruptcy “reform.”
As today’s Washington Post notes, Obama has chosen to surround himself with the same sorts of Wall Street-friendly economic advisors that populate the McCain campaign. So, while I’m hoping that the Democratic party will grow a pair and stand up against this economic version of the Patriot Act, I’m not really all that optimistic. If this bailout goes down as currently planned, it will be the greatest heist of taxpayers in the history of our Republic… a massive redistribution funded by you and me, and directed towards those who brought us to this pass. If it happens with the cooperation of Democratic leadership or the endorsement of the Obama campaign, my vote will be going elsewhere this November.
UPDATE: The Times reports that Obama had some skeptical words about the Bailout at a rally in Charlotte. According to the report, he suggested linking the bailout with greater regulation of the financial industry. That’s a good start. This story from Politico also suggests that congressional Democrats have learned their lesson. We’ll see. The more I read about this bailout, the more I think that any bailout must include an equity stake in participating companies. In addition, I think any progressive version of this bailout must be linked to assistance for struggling homeowners. Apparently, on the talk shows this morning, Paulson rejected that idea, noting that homeowners who took on more mortgage debt than they could afford should not be bailed out. I guess when you make partner at Goldman Sachs, they remove the part of the brain responsible for grasping the concept of irony.
Eduardo, thanks for sticking with this story.
We should note that $813 billion have already been given out in bailout loans and other assistance (see ABC News). So the latest request for $700 billion would put us at something like $1.5 trillion, if passed.
What amounts to a forced investment by American taxpayers is getting close to $5,000 per person. (Calling William Collier to check my math.)
In my view, of even more concern is talk about establishing some kind of bailout fund that would prevent mismanaged companies from tanking. In taking the risk away from private enterprise, you end up with a no-risk–and no accountability–system.
I don’t understand why those who mismanaged these companies–let’s say, for the purposes of starting an argument, those executives who were in the top 10 percent of the company’s pay bracket and thus enjoyed the highest return for the debacle–aren’t being forced to pony up first.
BTW, anybody notice an uncanny resemblance between Paulsen and the title character in Murnau’s “Nosferatu”? Talk about blood suckers …
If this legislation is the economic equivalent of the Patriot Act, does that mean that it will be widely misunderstood and used as a dumping ground for all sorts of unrelated complaints? See Orin Kerr’s testimony here, for example: http://www.globalsecurity.org/intell/library/congress/2005_hr/050419-kerr.pdf
What is your opinion about the possibility of widespread economic collapse?
FWIW, Newt Gingrich is also an opponent:
It’s clear to me (especially as someone with significant retirement savings) that something major must be done, and quickly. And I can see the need not to have every decision second-guessed and reviewed and subject to potential lawsuits. But the money and the power this gives to one individual is extraordinary, with almost no accountability or oversight. They’ve got to find a more democratic way of doing this.
I have no retirement savings whatever–we used it up when my husband lost his job and my son needed meds.
So I don’t really have a lot of sympathy when the government comes to me and wants me to shore up the economy and make sure other folks with nice retirement plans don’t lose their investments.
I say again, go after those who made the big bucks from the mess. I’m pedalling as fast as I can to stay in one place.
Stuart, in response to your first question, the comparison is not at all substantive, but instead procedural in the sense that the Patriot Act was enacted in a rushed manner with virtually no congressional deliberation. Whatever its specific faults, that flawed process is a cause for serious concern. And while I can understand why it was done in the days after 9/11, given the level of panic and the relative trust of this administration, I don’t understand why Democrats would make the same mistake with so much water under the bridge.
In response to your second question, I think some sort of governmental action is necessary here, but several economists have suggested ways of doing this that don’t involve a huge infusion of taxpayer money with little or no oversight. I think the risk of a financial collapse is real, but I don’t buy the false choice of the Paulson plan or nothing. At a minimum, if we are to accept the Paulson plan, there should be some plausible quid pro quo for taxpayers, such as major equity stakes in banks that participate in the buyout or the promise of substantial regulatory reform to prevent this from happening again. Moreover, I think Democrats should couple their support for this with promises by the President not to veto other “social contract” type legislation, such as help for foreclosed homeowners.
OK, I see your point — in fact, I agree that the same dangers are present here. I recently read “Bush’s Law,” by the NY Times reporter who broke the NSA spying story. While the author might not have intended to convey this message, I thought the book made it fairly clear that a good deal of the overreaction arose because everyone was pointing fingers and saying, “you should have picked up this 9/11 hijacker on an immigration violation,” or “you should have known to arrest that hijacker for taking flying lessons.” As a result, many in the Bush administration became determined to err on the side of caution . . . which inevitably resulted in the harassment of many innocent people. (It’s obviously impossible to arrest for immigration violations only the very small set of people who were secretly planning to commit terrorism.)
So I could see the same thing happening here: “Something bad happened; something must be done; this is something; therefore we’ll vote for it.”
I’m not sure about helping foreclosed homeowners, or at least not all of them. Not to sound harsh, but do we have any idea how many foreclosed homeowners are innocents, vs. how many were speculators looking to flip properties (I remember seeing incessant informercials back when I had TV a few years ago, purporting to tell people how they could get rich by buying and flipping properties), rental owners, or people who signed up for loans that they knew they couldn’t afford?
On the other hand, I saw someone arguing (I think it was Arnold Kling) that for the price tag here, maybe we could just provide X% of equity towards all home loans, which would reduce foreclosures, which should in turn improve the value of mortgage-backed securities, etc.
Eduardo: I think you were too nice in your final dig at Paulson. His comment about homeowners taking responsibility for their bad financial decisions is beyond appalling.
Which brings me to my central question on this entire matter, a question that I simply do not quite know where to go to get an answer; so I will start with you (congrats on the little one by the way – as a father of three, I can only say, it sure gets exciting!). Here is my question:
Why isn’t anyone talking about criminal fraud with respect to the use of many of these investment vehicles, especially the “collateralized securities” bought with borrowed money. Surely, there is some kind of basic formula for determining the risk associated with bundled securities, and surely someone bundled securities without sticking to that formula. This cannot simply be a case of not understanding what one was using. I really think lots of people did not play by the rules here (not that there were many rules to begin with), and they have upset the apple cart mightily and need to pay for their actions.
But, no one is talking about this.
Further (I’m really made about this, can you tell?), Joe and Jane homeowner who have had their houses foreclosed now not only have no house, but they have REALLY lousy credit as well. This bad credit will stick with the poor people, but the bad investments of the mega banks will stick to no one.
You are warned. Total rant ahead.
We may not know how many homeowners were innocent but we can guess the number of innocent Wall Street traders as being close to zero. After all, they are the ones who have or hire math PhDs to track this stuff.
Also, foreclosure assistance will almost certainly be limited as it has in the past to homeowners who are actually residing in the dwelling with the mortgage. That’s not a perfect correlation with innocence but it certainly rules out most of the worst offenders.
Yes, it’s WMDs in a financial context all over again. I wrote to Schumer and I wrote to my senator even though he’s not on any banking committee. I am going to go after my rep tomorrow and all of the other Democratic members of my state’s delegation. (Rs apparently are hiding in their closets, too afraid to vote nay or yea — just the kind of mettle you want a leader to show in times of crisis.)
I also had a thought that on the one hand comforted and on the other hand terrified me, and that was, they want maximum flexibility in the form of a blank check not because they are total power mongers, but because they have no f*ing clue what they are doing and just in case prescribed measures don’t work, they want to experiment at the American taxpayer’s expense ad infinitum.
I also think I am going to offer a suggestion to Harry Reid and Nancy Pelosi, and that is, any rep or senator who chairs a committee must be willing to take comments by e-mail from anyone in the nation and not just his or her so-called constituents. Yes, I am looking squarely at you Chris Dodd, and I am about to make my first actual phone call to a congressional office just to punish you for your refusal to accept comments from me. I hope your phones ring so much tomorrow no one on your staff goes home without a migraine headache.
And for those of you having trouble keeping up, here’s the latest gem from the NYT via Josh Marshall:
“The Big Question: 2+2=4?
“The New York Times reports this evening that “foreign banks, which were initially excluded from the [Wall Street bailout] plan, lobbied successfully over the weekend to be able to sell the toxic American mortgage debt owned by their American units to the Treasury, getting the same treatment as United States banks.”
“The Times further reports that two of the biggest foreign banks in need of such relief are Barclays and UBS. In fact, my understanding is that UBS is more on the line here than any other foreign bank.
“Let’s add this up.
“John McCain’s top economics advisor, who is widely believed to be his choice for Treasury Secretary, should he win in November, is former Sen. Phil Gramm. (Indeed, just last night his spokesman refused to say Gramm wouldn’t be McCain’s choice for Treasury Secretary.)
“Gramm is both vice chairman of UBS’s US division and a lobbyist for UBS.
“If UBS successfully lobbied over the weekend to get in on the bailout, what was Gramm’s role in the lobbying?”
Why the f* aren’t foreign countries responsible for worrying about their domiciliary banks? And this is the guy who might become Secretary of Treasury? I wouldn’t give this guy a dollar to buy me a candy bar, much less a blank check to help out all of his erstwhile masters. At the very least, I want Obama (or surrogates) to make Gramm so toxic McCain wouldn’t dare hire him as Sec Treas or the Senate wouldn’t confirm solely based on his conflicts of interest.
Joe Pettit, regarding fraud. I know this sounds hard to believe, but there is very little actual, provable fraud. This is very different from the Enron debacle which was shot through with fraudulent accounting practices. There is some fraud, no doubt, but that’s not at the heart of the debacle. The heart of the debacle is that risk makers were able to profit from making mortgages while offloading the risk of loss to others, rinse, lather, repeat, a million times. There are other big problems too, one of which was that people were allowed to buy CDS instruments on companies that didn’t owe them anything, which means that there are CDS instruments out there in an amount that vastly exceeds the amount of debt. It would be like 10 people you don’t know buying a $1 million life insurance policy on you. Your insurer would have to pay $10 million if you died. I think this was AIG’s main problem — it was the entity that issued (or ended up owning) a lot of such CDS, and when a company goes belly up, they had to make good on them. This is how a lot of hedge funds are planning to profit from this mess. Personally, I think this practice should be illegal just as the aforementioned life insurance example is illegal (of course, in that case, we have the added concern that people might have an incentive to commit homicide.)
Anyway, nothing regarding CDS instruments is illegal thanks once again mostly to Phil Gramm.
OK. So I was so mad about this that I said above that I was made about it. GRRR. Two more thoughts.
1) I still think there must be serious issues of criminal fraud here, but let’s just stick with professional norms for the moment. If I was a biochemist and accidentally created virus that produced flesh eating zombies, I would at least lose my job. Has anyone lost a job over this because THEY made really bad investment choices, not because someone above or below in the chain of command made bad choices?
2) While we are on the question of bailouts, how about bailing out those with unpaid utility bills? Let’s come up with some arrangement to give utilities a percentage of their outstanding payments, at least those that are outstanding for people who no longer even receive the utility in question (say, gas for heat), and then wipe the slates clean. Let those who could not sign up for the utility now because they have back debt get a chance to sign up because that back debt no longer counts agains them. Winter is coming up, and when I was living in Chicago, fires in homes from space heaters (read: gas has been cut off) were weekly events in the winter.
Paying off every heating debt would be much, much cheaper than what we are dealing with now.
One final question: how much will all of this impact the ability of the next president to spend money on things like universal health care, poverty reduction, etc? This money all seems kind of magical, showing up in the nick of time. We sure as heck don’t seem to have it around when we want to do things like educate prisoners, pay for childcare, or subsidize housing. How many leprechauns did they have to mug for 1.5 trillion?
From Joe Pettit: “While we are on the question of bailouts, how about bailing out those with unpaid utility bills? Let’s come up with some arrangement to give utilities a percentage of their outstanding payments, at least those that are outstanding for people who no longer even receive the utility in question (say, gas for heat), and then wipe the slates clean. Let those who could not sign up for the utility now because they have back debt get a chance to sign up because that back debt no longer counts agains them. Winter is coming up, and when I was living in Chicago, fires in homes from space heaters (read: gas has been cut off) were weekly events in the winter.
Paying off every heating debt would be much, much cheaper than what we are dealing with now.”
If this happens, can my church get some help, too? I am seeing heavy traffic already and it’s not even getting cool yet? (Not that I am an absolute sucker, but the sheer levels of inquiries is staggering.)
After “yet”, put an ! rather than a ? and change “is staggering” to “are staggering”.
“2) While we are on the question of bailouts, how about bailing out those with unpaid utility bills? Let’s come up with some arrangement to give utilities a percentage of their outstanding payments, at least those that are outstanding for people who no longer even receive the utility in question (say, gas for heat), and then wipe the slates clean. Let those who could not sign up for the utility now because they have back debt get a chance to sign up because that back debt no longer counts agains them. Winter is coming up, and when I was living in Chicago, fires in homes from space heaters (read: gas has been cut off) were weekly events in the winter.”
Speaking as one who spent a good chunk of his weekend trying (in vain) to get the local electric company monopoly, ComEd, to not cut off service but give a break to an unemployed mother of three who could only pony up 60% of what she owes , I say – amen!
“In recent years, however, the Democratic party, at least at the national level, has sometimes seemed virtually indistinguishable from the Republicans on the economic front, opening the door to industry lobbyists, turning its back on universal health care, enacting a badly flawed welfare reform, rolling over for deregulation of the financial industry, failing to hold the line against tax cuts for the rich, and refusing to block bankruptcy “reform.””
And of course they voted in favor of the war in Iraq.
In regard to the portion of your post I quoted above, Eduardo, this section from a weekend NY Times article may be of interest:
“Within hours, Mr. Paulson and Mr. Bernanke were in the office of House Speaker Nancy Pelosi, briefing Congressional leaders on how bleak the situation was. Lawmakers were shaken but offered tentative support. Torn by conflicting imperatives to take action and to go home to campaign, they seemed alternately grateful and resentful of the new power couple in Washington. Some referred to “President Paulson” and others groused about an unelected central bank chairman doling out hundreds of billions of dollars.
“Mr. Paulson and Mr. Bernanke came under fire for being too aggressive and for not being aggressive enough. Senator Jim Bunning, Republican of Kentucky, said they were killing the free market. R. Glenn Hubbard, former chairman of Mr. Bush’s Council of Economic Advisers, said they should have acted sooner.
” “The opportunity to have taken bold action would obviously have been better had they done it months ago,” he said. “But better late than never.”
“In the end, what left so many lawmakers and economists frustrated was the sense that no one had a better idea. So they waited for Mr. Paulson and Mr. Bernanke to give them more details about what they wanted to do.”
http://www.nytimes.com/2008/09/21/business/21paulson.html?em
“In recent years, however, the Democratic party, at least at the national level, has sometimes seemed virtually indistinguishable from the Republicans on the economic front, opening the door to industry lobbyists, turning its back on universal health care, enacting a badly flawed welfare reform, rolling over for deregulation of the financial industry, failing to hold the line against tax cuts for the rich, and refusing to block bankruptcy ‘reform.’”
And they still whine about how all those Nader voters in ’00 cost them the election. Look in the mirror, D’s.
When it comes to economics, there has not been a Republican Party in Washington for ten years. This crisis is not the result of GOP policies, it is the result of Big Washington policies that both parties have been supporting for years.
That people like Schumer and Barney Frank are coming out as populists on this now is laughable. They have been taking mony hand over fist from the financial industry for years. When a few senators – from both parties (including McCain) – proposed legislation to stop Freddie and Fannie from playing Lotto in the mortgage market in 2005, who stood in the way? Chuck Schumer, Hillary Clinton, and Chris Dodd – oh, and a brand new Sen Obama. Barney Frank said McCain and the others were exagerating the problem – the the FM’s were just fine. Why? Maybe because they were the top contributers to their campaigns? That there top executives were all top Dem Party members.
Now we are going to let them and Paulson “Knows how to get rich on other people’s money but not much else” solve the problem?
Sean said: “When it comes to economics, there has not been a Republican Party in Washington for ten years. This crisis is not the result of GOP policies, it is the result of Big Washington policies that both parties have been supporting for years.”
Wow. Maybe we need some sort of Maverick to ride in and clean up the town…
I don’t think you can shunt aside a decade of actions and claim that they didn’t really come from Republican policies. Maybe there is a fantasy world of what you would like Republican policy to actually be. But you have voted for and pushed all of these people at every available opportunity and now that the depth of their betrayal of what we can now laughingly call (admittedly through our tears) their “principles”, you can’t now claim that some strange group of people snuck up on you through five elections cycles.
And by the way, McCain proposed regulations for Freddie and Fannie that would simply have had them lower their debt to equity ratio to what the commerical companies had; commerical companies that ultimately failed too. He did this because they didn’t like the fact the Freddie and Fannie could with higher leverage down more swill at the trough without having to raise as much capital as the other pigs. This wasn’t McCain trying to fix the system. This was McCain working on behalf of some of the smaller pigs to make some of the bigger pigs take smaller bites. He wasn’t thinking about the overall size of the trough at all.
Regarding Freddie and Fannie, it would be good to remember that it is subprime mortgages that are at the heart of this mess, and the definition of subprime is a mortgage that doesn’t qualify for purchase by Fannie or Freddie on the secondary mortgage market.
“Fannie and Freddie… were nowhere near the biggest culprits in the recent credit bubble. They may finance most of the home loans in America, but most of the home loans in America aren’t the problem; the problem is that very substantial slice of home loans that went outside the Fannie and Freddie box…. [T]he immovable objects of the conforming loan limits and the charter limitation of taking only loans with a maximum LTV of 80% unless a well-capitalized mortgage insurer took the first loss position, plus all their other regulatory strictures, managed fairly well against the irresistible force of “innovation.” If there has ever been an argument for serious regulation of the mortgage markets, the GSEs are it.”
Barbara said: “Regarding Freddie and Fannie, it would be good to remember that it is subprime mortgages that are at the heart of this mess, and the definition of subprime is a mortgage that doesn’t qualify for purchase by Fannie or Freddie on the secondary mortgage market.”
Fannie and Freddie held a combined approx. $200 billion in non-conforming debt, including obviously private-label Alt-A and subprime, at 12/31/07 per their 10q’s:
http://www.sec.gov/Archives/edgar/data/1026214/000102621408000026/f58905e10vq.htm
http://www.sec.gov/Archives/edgar/data/310522/000095013308002717/w58421e10vq.htm
Help for Main Street – stop the foreclosure hemoraging!
There are many simpler ways to staunch the bleeding in our real estate industry and economy in general The first priority and action should be to materially reduce the number of foreclosures that are happening. Some simple strategies that would work if only tried:
1. Loan modifications for troubled borrowers:
· Offer to extend the repayment period out to 40 years, thereby reducing the monthly payment burden.
· Offer to add current arrears to the end of the loan by extending the term for a few more months. Invite the property owner to resume payments at existing level.
· Offer to reduce loan terms for a period of time to interest only, for say, 1 to 3 years to allow time for the property owner to recover their ability to pay. Establish a ‘hardship policy’ that accounts for sudden job loss or medical costs.
· Reduce recent reset interest rates to the current FNMA level.
· Offer a fixed rate replacement loan to replace a current variable to produce more certainty for the borrower.
· Initiate direct personal contact with the borrower at first sign of missing payments and find out more about borrower’s situation. Be of friendly help.
· Offer to waive pre-payment penalties if borrower is capable of a refinance.
2. Repossession management by lenders:
· Immediately list the repossessed property for sale with a local realtor.
· Give the realtor the authority and a budget to keep the property maintained.
· Keep the utilities connected so that the property can be shown and maintained.
· Price the property realistically but not at a fire sale level. Support the price asked with an independent appraisal.
· Give the realtor time to locate a qualified buyer, at least 90 days. Create a marketing plan and budget.
· Offer stable rate, competitive financing to any prospective buyer who meets income and creditworthiness standards.
· Make cosmetic repairs quickly to preserve value and appearance. Do a property inspection to determine the need for major work. Do not disclaim responsibility for structural defects by selling ‘as-is.’
· Prior to auction sale by a trustee, work with the borrower to maintain the property, and attempt to secure a deed in lieu of foreclosure if no workout seems possible. The incentive to the borrower might be some preservation of their credit rating. Also consider renting back the property to keep it occupied and maintained and employ a rental management company for oversight.
3. Regulatory activity:
· Allow banks and mortgage holders to hold properties during the default period without demanding an increase in equity set-asides for non-performing assets.
· When a property becomes real estate owned, revalue the asset at 80% of the loan amount and thereby reduce capital offsets required of lenders.
· Give lenders a 90 day grace period in which to market property under a responsible listing agreement before any further capital offsets are required.
· Require loan servicers to notify borrowers when their loan is resold to another lender or investor including contact information.
· Institute a moratorium on pre-payment penalties and prohibit their use on new mortgage lending.
· Use FHA standards for credit, appraisal and property condition as the benchmark for every mortgage loan made by any lender. Require each transaction to be accompanied by a summary report indicating how the property and borrower measure up to those standards. Require disclosure of the summary report to all subsequent loan repurchasers and to the borrower.
· Prohibit ‘desk appraisals’ by lenders who attempt to use automated valuation models (like Zillow) to determine a property’s loan to value ratio.
· Prohibit home equity loans or lines of credit that when combined with existing debt, would exceed 90% of the value of the property, as determined by a licensed independent appraiser.
· Require FHA or private mortgage insurance for any loan exceeding 80% of value.
· Prohibit ‘collateralizing’ mortgages into derivative investments. Only the mortgage itself should be allowed to be sold.
· Set a standard rate spread for resale of mortgages from the originating lender to FNMA or FHLMC (e.g. currently 1/8th of a point) and prohibit origination fees (points) charged to the borrower from exceeding 1% of the loan amount.
· Prohibit ‘buy-downs’ of interest rates by sellers or builders which will later rise to imperil borrowers’ ability to make the required payments. Such discounts should be a part of the actual purchase price negotiation and not a gimmick to increase salability.
· Require that lenders reselling mortgages to any government agency fulfill standard audit, credit review and appraisal review criteria. Lenders who fail to comply would not be able to resell their loans.
4. Stabilizing the economy in general:
· Deny the Federal Reserve the ability to secretly and arbitrarily adjust interest rates. The extremely low recent rates only encourage investors to seek riskier avenues to maximize returns. Their surprise actions only exacerbate uncertainty and market fluctuations.
· Establish a targeted and narrow interest rate range within which banks, credit card companies, auto finance companies and personal loan makers can operate. Revise that range only by congressional advise and consent. Eliminate sudden rate resets triggered unilaterally by credit holders.
· Create a separately required truth in lending financial disclosure for any ‘teaser rate’ loans. Protect borrowers from being misled into a bad loan or speculators from trying to leverage their way into a property-flipping investment.
· Establish limits on the amounts of short term deposits that can be used to make long-term loans.
· Stop tinkering with the economy through monetary policy that relies on outdated and often inadequate statistical data.
· Suspend stock trading when shares fall dramatically in a single session and in cumulative sessions. Allow time for further analysis to take place before a stock or financial sector is allowed to gyrate wildly. Protect stockholders’ interests by reducing the risk of them being wiped out in a single day or week’s trading.
· Require stock and financial instrument rating companies to submit their analysis to the SEC prior to publishing online or in trade journals.
· Limit the fall or rise of shares to a 5% fluctuation on any trading day. Require programmed trading to be reviewed according to its effect on the market as a whole.
This is a long-time issue that seems like no ending. Government leaders are trying to limit our financial right despite the fact that we need it, especially this time. Although Ohio Governor Ted Strickland opposes the payday loan and cash advance industries, he is now fighting in favor of a new special interest group: Ohio’s community of gamblers. A bill that took effect in August 1, 2008 that would add Keno to the state’s lottery games is being contested on the November 4 state ballot. Strickland claims this bill is a valiant effort to raise money for Ohio’s public schools. Governor Strickland, also an ordained Methodist minister, has been taking the heat from people from all walks of life, including his congregation. In defense, Strickland maintains that although he opposes the expansion of gaming, this bill is best for the common good of the children. Part of the bill would amend the Ohio state constitution, and in turn authorize the construction of a $600 million casino near Dayton. Desperate times call for desperate measures, and it should be obvious that Ohio’s economy is desperate for funding. Essentially, Strickland is encouraging the citizens of Ohio to go out and gamble away their rent or mortgage payments for the sake of their children’s futures. However, if the citizens find themselves short on the funds they saved to buy their children clothes and supplies, Strickland disapproves of receiving short-term help from a payday lender. Strickland is a walking, talking contradiction.
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