Oversight can become messy

Re “Expanded Fed power proposed,” March 29

The Treasury’s decision to give the Federal Reserve and the federal government more power brings us that much closer to the nationalization of our banking, mortgage and insurance industries. Why don’t people realize that what we need is less regulation, not more?

The Fed’s spastic policies create a clear moral hazard, a situation in which a party is protected from risk and thus behaves differently.

The Fed was created to promote price stability, prevent financial panics and smooth out the amplitude of the business cycle. Ironically, and unbeknown to most Americans, Fed policy is enormously responsible for the boom-and-bust economic metric. Interest rate reductions, money supply manipulation, currency intervention and interference in the private sector are not the marks of a free-market economy.

The Fed needs to get out of the way and let banks, hedge funds and mortgage firms fail. It also needs to let consumers who made stupid decisions pay for their mistakes. That’s free-market capitalism, and it’s the only fair economic policy.

Drew Klein

Sherman Oaks

The writer is president of Greenrush Capital Management.

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Regarding the frantic efforts in Congress to come up with a bailout, we first have to distinguish between speculators and first-time home buyers; people who are in trouble because they bought a second home for flipping should be excluded from any bailout.

I also have nothing but contempt for Countrywide and other predatory lenders that took advantage of latecomers to the “real estate prices can only go up” pyramid scheme. Lenders should ultimately have to reimburse the government for any assistance.

Finally, the tricky part is determining how much responsibility the actual homeowner should take for his own fate. How does one determine if the homeowner’s motive was greed versus just trying to provide for his family? Unfortunately, there’s no easy answer.

David Gillerman

Tarzana