Thursday, October 30, 2008

Lancaster Post suspension "a little sad"

Very surprised to read your piece announcing the suspension of publishing for the Lancaster Post. As one who enjoys reading a newspaper on actual paper, it made me a
little sad. The Post was not a great paper. But then again, great papers are not built in 6 short months. It had its very interesting pieces,especially the Side by Side feature which offered both sides on a current, relevant issue of the day.

Unfortunately, The Post included more than its share of filler. Is Lancaster just burning to know how people meet and marry?

Is there really a dearth of recipes in the kitchens of our fair town? Do we need a puzzle page in an already brief number of pages?

More unfortunate was the amount of time and space devoted to the dramas involving the publishers themselves. Interesting? Sure, on a salacious level. But self-
serving stories are not enough to build a regular reader base willing to trek off to a little red box every week.

And if the focus of the publishers does not shift toward real news with broader appeal to its readers, the online version will be no more successful.

"A great observation"

As I have said over and over to those who have ask why don’t we just give the Convention Center "a shot", my answer is always the same...the CC will take the City three steps back, not two steps forward. The CC's never ending need for resources and subsidy will all but kill other revitalization efforts.

You make a great observation when you say that for the first time funds committed to the CC are hurting a key public resource in Lancaster City. [The library renovation and expansion] is just the first of a long line of worthy projects and initiatives that will not be taken on because we have mortgaged our future on a project with none.

Wednesday, October 29, 2008

Board failed to take advantage of the funds

Re the letter: "Have the board members used the restrooms?"

WOW, what a powerful message from someone who states the obvious! The Lancaster Library offers so much to the citizens of Lancaster and there was an opportunity to bring the facility up to the standards of many modern libraries. I feel strongly that once our community realizes that the Board failed to take advantage of the funds and leadership offered, many will be outraged.

I suggest it's time to consider some changes with some of the board members who are not as dedicated and knowledgeable about accomplishing what is easily achieved by experienced and accomplished individuals of our community.

Shame on the six that just didn't get it.

Have board members used the restrooms?

As a regular user of the Duke Street library, I am very disappointed that the board of directors failed to take advantage of the best opportunity in years to begin the process of bringing this building into the 21st century.

Have the six naysayer board members ever actually patronized the library, other than showing up for a board meeting? Do they check out books, do research, use the microfiche machines, use the restrooms - ever?

Yes, this is a tough environment in which to do fund raising. Yes, it may have been necessary to arrange a temporary loan from the endowment fund. Yes, it may have been more difficult to raise the balance of the funds post construction. But...don't these board members believe enough in their organization to make a commitment to do whatever it takes? If not, maybe they should give up their seats to community members who do.

I too feel sorry for Mrs. Field. I feel even worse for the families and kids who won't benefit from a modern facility.

Lancaster could lose its newspapers

I don't know if you noticed that the Christian Science Monitor has now stopped all their print editions. From this point forward they will only be online. Neighborhood papers that have a local following will survive longer in a print edition because they have a local economic anchor -- department store ads.

Print editions are all going the way of the dinosaur sooner or later. It could happen as soon as something like OLED thin-film flexible displays come on the market, probably some time in the next five years. At that point, displays could be routinely put on any surface, or carried like a folded sheet of paper in your pocket. Internet web browsers will be literally everywhere. Paper will be superfluous, even a nuisance.

At that point, the media, how people read, and how we keep track of it all could change dramatically and very quickly.

Bad timing?

[Not renovating the library] is bizarre. The Dow closed up over 10% yesterday, so maybe it's not the end of the world after all!

I guess if it doesn't involve High and huge public grants it just doesn't get done. Or maybe the timing of a key go/no go decision was bad.

I feel sorry for Karen Field.

Home Rule initiative a sham

The proposed "home rule" charter's limited provision for "citizen initiative and referendum" is nothing more than a false promise. This particular proposed "home rule" charter includes far too many exclusions and limitations to make this concept effective.

For example, consider this passage from the proposed "home rule" charter:

*Section 6.02 Subjects of Initiative.

a. Each proposed ordinance shall be germane to County government and limited to one subject which shall be clearly expressed in its title.

b. The power of initiative shall not extend to the current budget or capital program, to the appropriation of capital program, or to the salaries of those employees of the County in collective bargaining agreements.

c. An initiative seeking to limit tax increases shall be permitted only when an increase in the rate of any tax proposed by the County for the upcoming year equals or exceeds seven (7) percent of that imposed during the previous year.

Tuesday, October 28, 2008

Favors Home Rule

I'm voting for Home Rule. Five commissioners are better than three.

The provision for referendums is very important - no more convention centers, Conestoga View real estate giveaways, or ill-conceived YICs. Also - more efficient, less political management of county government.

Power to the people!

Monday, October 27, 2008

Lehigh Valley Convention Center shuttered

I was in Easton over the weekend. I spoke to a colleague who is a principle player in the Lehigh Valley Revitalization group. She mentioned that the new Lehigh Valley convention Center has been shuttered, and the Sands has halted plans for the hotel to adjoin the new casino on the Bethlehem Steel site.

FYI, the largest venue in the Lehigh Valley now is the Holiday Inn, so in Lancaster we already have several more venues to accommodate large groups than the megopolis of Allentown Bethlehem Easton.

The reason for the demise of the Convention Center (off I - 78) is lack of business.

Keeping the merry go round going

It has been so long since I have heard the word "revitalization." What happened with that direction? As I drive through Lancaster City I am seeing all the corners redone to accommodate disabilities. The few restaurants and shops are struggling more than those outside of the City due to the economy.

Real estate sales that were brisk months back are absolutely stale. Looming in the background is the over anxious investors that want this 'child' to be born; the pregnancy is well overdue. Unfortunately the marketing team of the hotel and convention center are coming up with events and bookings that will not generate big spenders.

Out in the county the old Holiday Inn is in trouble; tourism and meetings are way down.

As the economy tightens, crime rises, seniors and event goers to the Fulton question night trips to the City.

All the money being poured into the Home Rule situation is due to the desperate special interest groups that need to keep the merry go round going. Unfortunately the money from Harrisburg is drying up; yet the Chamber as well as some of the Lancaster Alliance members need to keep the ball rolling. The tax payer is
going to get the shaft royally one way or the other.

Where has all the conservative Lancaster County people gone? Is this recession/depression going to wake them up?

Sunday, October 26, 2008

Railyard / suburban housing not good mix

Homeowners who live in the Northwest Revitalization District, such as myself, have been told that our property values will increase with the relocation of the Norfolk-Southern Rail yard from F&M's North Campus into a suburban residential area called Barrcrest.

When the news first broke about these plans, I drove into the Barrcrest neighborhood to see first-hand why the rail yard relocation was opposed by many homeowners. When I saw the well-kept homes in the $500,000 market range, I could not believe that an institution like F&M that purports to be "a good neighbor" and a benefit to the community, would even consider putting a rail yard, one that may have as many as 16 tracks, into this nice residential area.

A similar idea from a Talkback correspondent, who said that he would not personally be affected by the Rail yard Relocation, recently posted the following comment on Lancaster Online: "Because of our location, it is six of one and half dozen of the other as to distance from us. But a rail yard the size of this one does not belong at this location. Norfolk Southern had no plans whatsoever for a rail yard here. This was an F&M proposal to free up their own backyard. LGH is going along for the ride with their partner on the Armstrong land deal, and Norfolk -Southern said, "What do we get out of it?" when John Fry wanted the tracks removed from behind College Row. That is evidenced by how little Norfolk-Southern is contributing to the project."

After reading this, I checked to see just how little Norfolk-Southern is paying. Out of the total $42 million dollar cost, Norfolk-Southern is paying only $2 million. F&M, who will gain the most land from the deal, is paying $6 million. LGH is matching F&M with $6 million of its own money. Taxpayers will foot the remainder of the bill, a cool sum amounting to $28 million. They will pay this even though they have had absolutely no say in the project.

But the principal reason to oppose relocating the rail yard to Barrcrest is the location. A rail yard and an upscale residential neighborhood are not a good mix.

Saturday, October 25, 2008

Do F & M Trustees have any clue..?

I am not usually in the habit of bursting out laughing when reading articles at the NewsLanc website.

That changed tonight as I read your article titled "F&M's John Fry continues to hide from interviews. By the time I got to the end of the piece, I was checking the calendar -- no, it isn't April Fool's Day -- then checking which website I was on -- no, not Lancaster Post.

Did you REALLY thank them for not having the F&M security guards mug you as they did Ron Harper?

Did you really tell them you would refer to Fry as "Johnny" if they all continue to refer to you as "Bob"?

Well done. My hat is off to you.

Mr. Fry and his staff certainly did not do their PR training with Dale Carnegie, did they? It does make you wonder if the Board of Trustees have any clue the kind of face Mr. Fry and his crew are putting on the F&M brand.

Just a thought from another "suspicious" letter writer ...

New Era opposing Home Rule

When the New Era agrees with you - that should give you pause!

Thursday, October 23, 2008

"Always yield to pedestrians"

When I took my drivers test the examiner asked me: when do you have to yield to pedestrians?…. Stupid me said at crosswalks. He corrected me and said you always yield to pedestrians.

The thing that ticks me off is when I'm driving down King Street and thugs walk out in front of me thinking their [sic] bigger than my half-ton truck.

Teach "Good Samaritan" policy to our children's most recent editorial, "Three Part Tragedy", bowled me over. I had no idea that there exists a "Good Samaritan" policy related to reporting drug overdoses.

Please continue to work to ensure that this policy is taught to our children. And thank you for being a powerful voice of reason in this "War on Drugs" environment.

Editor's note: That has been our understanding but we can give no assurance. Part of the tragedy of treating illegal drugs as a criminal justice rather than a public health matter is that medical authorities are inhibited about speaking out. The result is unnecessary but all too common deaths from over doses.

Home Rule best serves Lancaster County

The Chamber of Commerce as well as many Republicans and Democrats throughout the County have endorsed the proposed Charter based on our collective belief that Lancaster County residents are best served by a county government created by Lancaster County residents, and not subject to the one-size-fits-all, state-mandated form we operate under today. The Charter ties directly to The Chamber's mission to "build Lancaster County into a model of prosperity for 21st Century America" and I believe a 21st century government structure is an important step toward that goal.

To learn more about the proposed Charter and how it will impact County government, please visit our website at or visit the website the official Government Study Commission’s website at

Tuesday, October 21, 2008

Fiscal conservative only for others?

Some time when your journalists/researchers have a little time they should try to figure out how much money Joe Pitts will get from fixed benefit pensions and the like. There is no question that when he retires he will get multiples of what he ever earned working. Dining/gorging at the government trough while holding himself out as some fiscal conservative. Here is the guy that has "a philosophy" about the private market that prevented him from supporting any of the financial rescue initiatives. Meanwhile his constituents 401K and other non-fixed benefit pensions and savings of folks collapse.

Among his fixed benefit pension would definitely be US House pension, PA legislature pension, school teacher pension, and possibly a military payment as well as, of course, Social Security for periods when he worked under FICA. This guy has to be exposed for what he is.

Will newspapers slant TRRAAC response?

An out-of-state reader of NewsLanc sent an email to a resident of Lancaster County following the publication of NewsLanc's commentary headed "TRRAAC attorney fires back at F&M; Charges false allegations". The email reads:

Now that the lawyers are involved in the matter, the newspapers will be obligated to publish the news to the citizens.

Will Lancaster Newspapers publish the facts and questions presented by Mr. Cluck? Or will this information be obscured in a story that purports to be objective but is actually slanted toward F&M, as has happened in the past with news stories involving F&M?

Home Rule counties experience higher taxes

I would urge you to consider the whole picture - the other side - VOTE NO to more government and higher taxes and less control of our local government. Only 6 counties in PA have voted to have Home Rule (It is 6 or 7 - very few) and all of them have experienced higher taxes. Most wish they did NOT have home rule.

Do we want to look back and wish we had not changed our county government?

Lancaster County has the lowest taxes per capita (person). Vote NO to home rule.

Sunday, October 19, 2008

County Administrators should be elected

I'm not opposed to the concept of home rule, I'm only opposed to any proposed charter that would make things worse instead of better. And the currently proposed "home rule" charter would be guaranteed to create more problems than it would solve.

Early drafts of this charter clearly spelled out that the "county executive" was actually the administrative branch of Lancaster County government, and specifically used the term "checks and balances" to describe their role. If the county administrator were to have duties similar to the current county administrator, there would be nothing to complain about; however, this proposed charter greatly expands the county administrator's duties, while significantly reducing the responsibilities of the county commissioners.

This is why I oppose this proposed charter; a "county administrator" with such extensive duties must be elected, not appointed.

I also believe "county commissioners" should be chosen by district, not "at large".

And the "citizen initiative" in the current proposal is nothing more than an empty promise.

Questions value of "citizen initative"

The false promise of "citizen initiative" is nothing more than a red herring, designed to distract people from the negatives of the currently proposed "home rule" charter - and there are many. All it would take is a typical publicity campaign by the Lancaster Chamber or the Lancaster Newspapers to discourage people from signing a "citizen initiative" petition, or bring any "citizen initiative" to defeat at an election.

Besides, the charter's limits on "citizen initiative" render it impotent in most cases. Observe this quote from the proposed "home rule" charter, page 18:

"*Section 6.02 Subjects of Initiative.*

a. Each proposed ordinance shall be germane to County government and limited to one subject which shall be clearly expressed in its title.

b.The power of initiative shall not extend to the current budget or capital program, to the appropriation of money under the current budget or capital
program, or to the salaries of those employees of the County in collective
bargaining agreements."

Had there been a "home rule" charter like this one been in place during 1999 or 2003, this passage would have prevented a "citizen initiative" from blocking either the hotel and convention center project, its financing, or the "hotel tax".

Tom Baldrige to become County Administrator?

It certainly is within the realm of possibility [that Tom Baldridge would be named county administrator.]

As head of the Lancaster Alliance, Tom Baldrige was the individual most responsible for pushing the hotel and convention center project. As head of the Lancaster Chamber of Commerce and Industry, Tom Baldrige has been the individual most responsible for pushing the "home rule" proposal, immediately following the County Commissioners' legitimate questioning of the financing plan behind the hotel and convention center project. And Tom Baldrige is in the center of the Lancaster Chamber's current push to pursuade people to vote in favor of the currently proposed "home rule" charter.

As county administrator, Mr. Baldrige would be in the perfect position to lubricate the wheels of Lancaster County government in favor of the interests of the big businesses that he has been promoting. Since the county administrator under the current "home rule" proposal would be appointed, not elected, an individual could conceivably serve in that position for decades. After all, who in a position of power would dare to question Mr. Baldrige's "qualifications" for the job?

Homerule empowers people

I love conspiracies as much as the next guy so I understand your concern with the chamber's involvement.

That being said - the home rule charter FINALLY gives the citizens the power to modify and force issues on the ballot where the PEOPLE can make the call. Additionally - unlike now - home rule can allows the PEOPLE to alter their government. If we don't like what we get - just change it!

Now the people have to rely on the Pete Shaub's (sic) to make a change and we saw how well that worked!

Post missing out

I have been saying the same thing since the Post began. It has been all about Ron and his personal agenda. There are many other stories out there that need to be told, which are never covered by our local newspapers or TV.

These personal attacks on people are getting really old and dragging down what could be a great alternative newspaper...

Ron has made so many enemies in Lancaster that almost no one takes him seriously anymore. So thanks for hitting the nail on the head.

Home Rule benefits special interests

Without a doubt, Homerule will increase Bureaucracy.

The weaker party will never have a say in our County if home rule gets in.

Bottom line, home rule will not extablish a government that is more responsive to the taxpayer, it will benefit the private interests.

C of C a self serving network group

These special projects NEED funds and where better than taxes! The state and federal government are going to really clamp down on special project grants in the future; there is not enough money for the pork any more.

The Chamber of Commerce is like a network group. They need each other to survive. It promotes projects to keep the companies going. The little guy is left out of that group altogether.

Friday, October 17, 2008

Others comment on Home Rule:

1) From By an overwhelming majority, the Republican Committee of Lancaster County voted to NOT endorse the home rule charter and asks you to vote NO on the question of its adoption on the November 4 ballot."

2) "Looks like it should be"

3) "If 'home rule' is passed, there will be a lot more than just grumbling a few
years from now. People will wish for a return on the 'good old days' of Pete Shaub."

Wednesday, October 15, 2008

"Not questions and answers"

"Interestingly, Mayor Rick Gray refused to answer the NewsLanc reporter's questions during the public comment section of City Council's agenda, saying 'This is public comment, not question and answer. If you want to ask me questions, I'd be glad to answer them afterwards...'"

Clearly Rick Gray has studied at the Jim Pickard and the Ted Darcus School of Public Policy!

Tuesday, October 14, 2008

Who generates "skepticism and disbelief?"

In Jack Brubaker's "Rail yard" story in Friday’s New Era (Oct. 10), statements by John Fry and Keith Orris were given considerably more coverage than those of Bill Cluck, TRRAAC’s environmental attorney. And F&M was given its customary last word. All this suggests that the story was intentionally slanted toward F&M. But it is possible that these quotes may have unintended consequences.

Fry dismissed TRRAAC’s research with one short sentence, "This is really incompetent". Also, Fry was quoted as saying that he questions TRRAAC’s "credibility and capability". He emphasized this point by saying, "Anything in the future that TRRAAC puts out has to be met with immediate skepticism and disbelief."

Later in the story, regarding a statement by Cluck about F&M’s "cozy" relationship with DEP and PennDOT officials, Fry was quoted as saying, "That is clearly a false accusation." Fry summarized his position by saying that TRRAAC "should retract everything that was said and apologize to the neighborhood."

Orris’ statements were as "over the top" as those of Fry. Orris said, "It appears that Mr. Cluck is just making things up as he goes along." Orris dismissed Cluck’s dump site statements as being "disingenuous and again intentionally misleading". The final quote of the story was Orris’ saying that Cluck "can’t admit to his wrongdoing."

Why did Brubaker, a veteran writer for the New Era, use these overblown quotes from Fry and Orris? Could it be that Brubaker may have figured that the reader would be able to see through this hyperbolism, like the little boy in Hans Christian Anderson’s "The Emperor’s New Clothes"? As Abraham Lincoln said, "You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time."

Sunday, October 12, 2008

Economic Development Company of Lancaster County

Please take a look at this web site, the organization and who makes up this board. Do we have a lot of organizations that intertwine within each other?

Editor's Reply: Without reference to this specific situation, often organization create boards of a score of local luminaries to impress and facilitate. When there are so many people on the baord, few if any take the time or effort to provide proper oversight. That is except when they or their organization will benefit from the organization's activities. Thus the scene is set for abuse.

Tax payers, not F&M, paying for clean up

By reading several letters-to-the editor in Lancaster Newspapers, it is apparent that the public has several misconceptions about F&M and the Railroad Relocation Project.

These misconceptions are: (1) the entire area that was formerly used as a city dump will be cleaned-up and (2) F&M is paying for all of the clean-up.

The facts are: Only part of the city dump is planned for clean-up and the taxpayer – not F&M - is paying for most of it.

Will New Era acknowledge it panicked?

[An article from the London Times] ( confirms your commentary from October 2 that the bailout was not well thought out and that the haste of its passage by our legislators, at the panicked urging of the administration, failed to produce a plan that would work.

I wonder if the New Era will step up and acknowledge that they too panicked and foolishly endorsed a plan that brighter minds than theirs believe has
little chance of success.

Editor's note: Fortunately, likely due in part to pressure from the rebellious House Republicans (whose actions the New Era twice labeled "despicable"), the final bill allows flexibility that is permitting the redirection of funds from purchasing securities to better capitalizing banks, and in a manner that should enable the public to recoup its investment and possibly even profit.

Saturday, October 11, 2008

More re street car display

[Parking the street car on the pubic property] needs to be questioned. If so, then everyone should have the same accessibility to that lot, if in need.

Mayor Gray should be asked these questions: Was there a request, to whom and for what amount of rent to the city. Who put it there? Was there any city monies used to prepare or move this on? A city resident needs to ask these questions at a council meeting.

Unfortunately it is probably going to be another project like West Side with LGH and F & M, the convention center, and, of late, the Norfolk Southern relocation. All these projects have been tacitly approved and funded behind closed doors and made public after the fact.

We duped taxpayers are constantly herded into the project AFTER it has been a DONE DEAL thinking there still is a chance to have a fair an open meeting. Bull Crap!

We are absolutely not different from any other area in this country except that we do not have citizens that want to speak up, get involved and rock the boat. Those that do are considered crazy or trouble makers, while the mayor and commissioners continue to support their pet projects without any consideration to the taxpayers having to pick up the tab.

Street car a mis-use of city property?

One of the old streetcars already purchased by the Lancaster Streetcar Co. is on display on the vacant lot at Prince & Chestnut Sts. This lot is owned by the City of Lancaster, purchased as a part of the police station project.

I am concerned that this streetcar is being openly displayed on a Lancaster City owned piece of property. This makes it appear that the Lancaster City government is openly supporting the streetcar project. The truth is, this issue has come before Lancaster City Council only once (at a committee meeting in 2007), and only for informational purposes.

Does the Mayor of Lancaster have the right to allow a "private" corporation like the Lancaster Streetcar Co. to put on a public display on Lancaster City owned property?

Friday, October 10, 2008

Don't pull the big lever

NEVER CHOOSE THE STRAIGHT PARTY VOTE OPTION, because it alerts the computer as to your party preference and allows software code to trigger whatever function the programmer has designed.

F&M arrogance

Your editorial on the town/gown relationship in Lancaster was excellent and particularly timely, considering the recent press coverage of F&M’s Railroad Relocation Plan. The traditional respect that existed between the College and the surrounding Community has been severely eroded since John Fry became president of F&M.

The arrogance of Keith Orris, who is second in command to John Fry, was made evident by his quote in this morning’s paper: "(TRRAAC) have so discredited themselves it is our belief that anything they do from here on out has to be met with immediate disbelief and skepticism," Orris said.

Thursday, October 9, 2008

TRRAAC Effort: The Inevitability of The Big Five

Does anybody really believe that the Dillerville switching yard will not be relocated from the Armstrong dump site to behind the Post Office off of Harrisburg Ave?

The Rail Road Action & Advisory Committee (TRRAAC) should be commended for their efforts in dissuading this relocation. But, why am I so sure that this relocation will occur?

Because in Lancaster, there are three things that can always be counted on to happen: (1)death, (2)taxes and (3)the fact that "The Big Five" (Franklin & Marshall, Lancaster General Hospital, The High Group, The Fulton Bank and Lancaster Newspapers) always get their way.

In this case, the switching yard relocation would directly benefit Franklin & Marshall and Lancaster General Hospital (and I am sure that the three other members of "The Big Five" would eventually gain financial benefit from this transaction). The citizens of Lancaster County can gather and discuss alternative sites and plans for the relocation, but face it fellow citizens of Lancaster County, the switching yard relocation will occur as it is currently planned.

The tenet of local decision-making is always in line with the inevitable granting of the desires and wishes of "The Big Five".

Wednesday, October 8, 2008

F & M not open to press

I find it amusing that a letter writer should take NewsLanc to task for one-sided reporting on the TRRAAC meeting last night. The writer obviously had not read NewsLanc's site, since recently an article appeared about F&M's response to the TRRAAC alternative.

Perhaps the reason many news outlets carry more from the TRRAAC perspective is that TRRAAC holds public meetings and actually invites participation and input, and is open and honest it all their communications both with the citizens and with the
press. Since most of F&M's planning is done privately, in-house, is not open to the public, and does not include the press until all their plans are done, finished, and set in stone, it is a little unreasonable to blame the press for the silence.

I would be remiss if I failed to also mention that F&M has banned Ron Harper and the Lancaster Post from campus eliminating one of the two alternative news outlets from reporting anything about them, leaving only NewsLanc to present an alternative to
Lancaster Newspapers. TRRAAC seems to welcome all news coverage and seems to want to maintain a good relationship with all press outlets.

NewsLanc should post both sides of the story

I saw your report on the Traacc meeting and it seems your site is doing exactly what you accuse the Lancaster Newspapers of doing, which is reporting one side of the story without even bothering to contact the other.

Did Newslanc try to call John Fry or anyone else from F&M for comment? I realize Newslanc and other self-style truth tellers think they're giving a more fair and balanced account, but your reports are as one sided as the newspaper reports, just from the other side.

Finally, the Traacc people might want to consider that all the pollution on the dump site is now seeping into their groundwater but if F&M redeveloped the site it would have to clean it up as part of the process, meaning that in the long run the Farmindale Road environment would actually be cleaner than it is now.

Editor's response: We have recently posted "F & M's response to TRRAAC's alternatives" under News & Commentary. We also provided a link to F & M's relevant web page.

Tuesday, October 7, 2008

No alternative in the future

I strongly urge that the Lancaster Post and Newslanc join forces. If this could happen we could have a strong alternative.

As is, there may not be any alternative in the future and that would be a shame.

Spend and tax mentality

This AM Harrisburg announced that we are going to have the biggest deficit ever!

Forget the grant money that trickles down from Federal to State to County to Municipality. Forget the promises from the State and the County.

We are going to see tax hikes on all levels because of all the spend and tax mentallity over the years.

Keeping the count honest

For one thing election integrity activists can do on election night, view:

Voter fraud a conspiracy theory?

This stuff makes a nice conspiracy theory, but that's about all. If Obama does not win Pennsylvania you will be crying "election fraud", I'm sure. Problem is, no one has actually been able to demonstrate an actual case of voter fraud. The left (why is always from the left?) has made a lot of noise, but I have yet to see anything that's any more than a conspiracy theory along the lines of, "The results aren't what we wanted so the election must have been rigged."

You may recall that several major news organizations examined the "hanging chad" ballots in Florida and eventually concluded that the certified results were basically correct. (It may have meant that many of the voters were basically incompetent or could not deal with the ballots, but there was no election fraud.) Of course that was not a big story, so the media largely ignored it.

Pretty much the same thing happened in Ohio in '04. Lots of noise from the left, and plenty of conspiracy theories, but no facts. Plenty of wishful thinking, but no facts. Sheesh.

Then there was an ACTUAL case of apparent election fraud in Washington state 2 years ago. But since it was perpetrated by the Democrats, I guess that wasn't newsworthy either.

Oh, well.

Election machine manufacturers suppress report

Sad how we cannot even rely on the courts for transparency in U.S. elections. See below:

(Washington, D.C.) – Rep. Rush Holt (NJ-12) today issued the following statement in response to the New Jersey Superior Court's failure to release the report of computer security experts describing what they found in their analysis of two of the voting machines of the type used in 18 of New Jersey's 21 counties.

"It is regrettable that the report, due by court order to be released on Thursday, has been suppressed at the request of the voting system vendor. Clearly, if the report vindicated the equipment, the vendor would be eager for it to be released. The fact that the vendor requested that it not be released suggests it does not want New Jersey voters to know what it says about the equipment – equipment that failed in the Primary, resulting in the inspection order.

The Court's decision is very troubling, as it leaves voters with virtually no choice but to conclude that there is something wrong with the machines, that the vendor does not want us to know what it is, and that the court is allowing it to be kept secret."

Choice between litigation or insulated windows

In response to the recent material posted by F&M and the statements from Keith Orris, I make the following suggestions to those who oppose F&M’s actions regarding the Harrisburg Pike property…litigate or go home.

It is clear that F&M is not budging and no amount of reason will get them off their predetermined course. The only possible avenue for alternatives is litigating to stop them. I know this is costly and a long shot but it is unfortunately your only shot.

I will be the first to acknowledge that we are on overly litigious society that is ingrained daily with the wrong messages regarding personal responsibility and liablilty; however, when dealing with an adversary that quite honestly could care less about its neighbors…litigation is the only alternative left.

My advice to F&M opposing neighbors…you better get yourseolves some high powered counsel from outside of Lancaster County or insualted replacement windows to keep the train noise out.

Prefers no local newspapers

"So support our local newspapers. Let's keep them around as long as possible. "

Never have I seen an editorial on your website that was more subversive. 5th columnist award for sure.

Monday, October 6, 2008

Concern about voting machine testing

We are up against clueless officials here in Pennsylvania.

At the state level they are apparently saying they can send out a hash to verify software because "no one ever asked for it and we don't have a protocol." At the county level, counties are running some automated L & A tests and think they are doing serious testing.

Allegheny County (Pittsburgh) claims to run Parallel Testing but it's being done in an undisclosed location by an undisclosed "accounting firm" being paid an undisclosed amount to do so. And all these officials seem to think they know more than the national computer experts who have called these machines insecure and poorly-designed.

As they say in Star Wars, pay no attention to that nutball over there.... these voting machines are fiiiiinnnnnne...

Editor's note: A source explained to us that "L & A" and "Parallel Testing" are both methods of testing the machines. L and A is logic and accuracy testing used to test the software and hardware of computer voting machines. During the testing of the electronic voting process, testers cast ballots that mirror the current election from a pre‐determined "matrix". When they finish voting the entire matrices, the tabulations must be a perfect match in order for the equipment to pass the L & A test.

Sunday, October 5, 2008

Marriott to be three-star hotel

The hotel will be a 3-star/diamond hotel. Backers will purposely use terms such as "first-class" and "business-class" as a diversion. Remember, this project was sold, by them at their choosing, as a four-star hotel to be different.

As the only four-star property of significant size in the marketplace this "private" hotel was to be different and the other hotels were supposed to embrace it in that regard. As soon as the tax was passed, the language changed.

The reality is that there was never any intention to build (from a facilities standpoint) or operate (from a services standpoint) a four-star property...anyone with even the most basic knowledge of the business knew that this was far from economic reality.

Since this property will now have the same rating as all newly built properties within the county, they will use terms like I mentioned before in an attempt to differentiate themselves.

Conestoga View differed from Convention Center

[The Convention Center Project] is NOT like Conestoga View - [since] the taxpayers won with the selling/privatizing of this business. Government should NOT be in the business of doing what the private sector does better.

From what I understand: The county was losing money, as were other counties around the state, and there were lawsuits after lawsuits [over care] that the county settled for many, many years with no end in site...

There was a buyer that was willing to pay the appraised value...

The county is not [losing money over Conestoga View] any longer AND on top of that taxes are now being paid to the county/city.

The county/city and employees and residents were winners here... the winners are yet to be known with the convention center... but the design appears to be that PSP, LNP, Dale High are the winners financial.

The agreement was not a public as it should have been, but NO one did this to gain financially personally - unlike the convention center agreements.

Saturday, October 4, 2008

Rep. Joe Pitts explains vote against "Bail Out"

The following communication was sent by U.S. Representative Joe Pitts. It can be found in its entirety here

TO: Citizens of the 16th Congressional District of Pennsylvania

FROM: Congressman Joe Pitts

DATE: Friday, October 3, 2008

RE: H.R. 1424, The Emergency Economic Stabilization Act of 2008

Today I voted against The Emergency Economic Stabilization Act because I felt it attempted to do the right thing the wrong way. America is facing a credit crisis. It needed to be addressed quickly and well. Congress has acted quickly, but it has not acted well.

This crisis began in 1995 when the government began pressuring lenders to give mortgages to high-risk borrowers in order to increase homeownership in America . This created a new market for lenders who soon rushed to make as much money as possible by inducing people who could only afford small houses to buy large ones instead. In other words, this crisis began with the government botching an attempt to do something good. It should not have ended that way as well.

This week, Congress had an opportunity to try again to do this correctly. Instead, the Senate sent the House a bill full of tax breaks for special interests, unrelated provisions, and only minor improvements. Instead of earning more votes by improving the bill, the Senate bill bought votes by adding “sweeteners.”

The crisis we are facing is real. However, in this country I believe market problems should be addressed with market-based solutions. This bill is a big-government approach that increases the federal debt limit to $11.3 trillion, in order to create a quick fix. It gives unprecedented power to the federal bureaucracy. There are no reforms in this bill to correct the mistakes that caused this crisis. It does not address the basic problem. It does not adequately protect the taxpayer.

I and a great number of my colleagues advocated for a plan focused on market-based asset insurance, changes to the tax code, regulatory reform, and protections for homeowners and taxpayers. Unfortunately, our advice was not taken.

The bill does increase FDIC insurance limits, which should help. The Securities and Exchange Commission is reportedly also planning to alter the much-discussed “mark-to-market” accounting rules. That will also help. The bill passed today will probably have the desired effect of encouraging markets and removing “toxic” assets that are “clogging” credit markets. American workers and American businesses are the best in the world. We will make it through this crisis, and we will return to prosperity.

I do want you to know, however, what I and so many colleagues in Congress would have done if we had had the chance to offer an alternative for a vote in Congress. Following is a summary of provisions our alternative would have contained. I will continue to advocate for these actions and reforms.

Representing you in Congress is a tremendous honor. It is also many times a tremendous challenge. The economic problems we face today are complex and difficult. Two thousand of you reached out to me over the last week to let me know what you thought. While calls came in on both sides of the issue, the overwhelming majority of you opposed this legislation. Regardless of your position, I was gratified to hear from so many of you. The principled arguments you made encouraged me and reminded me of the fundamental wisdom of our system of government. Democracy works.

What the Government Should Do

1. Create an Insurance Program

Instead of buying assets, the Treasury should insure the bad assets of banks and investors by:

1. Stabilizing Financial Markets: Require that the Department of Treasury to create an insurance program to guarantee losses up to 100 percent, resulting from the failure of timely payment and interest from mortgage-backed securities (MBS) originated prior to the date of enactment. Such insurance would provide immediate value to the securities and a foundation for which they could then be sold.

2. Creating Risk-Based Premiums: Direct the Treasury Department to assess a premium on outstanding MBS to finance this insurance program. Participation in the program would be mandatory for all holders of such MBS in order to guard against adverse selection where only the holders of troubled assets participate. A risk-based premium would be assessed on those with troubled MBS to ensure those who have acted irresponsibly have to pay more than those who have acted responsibly. The premium would expire when the Treasury Secretary determines the fund has sufficient resources to meet any projected losses.

3. Currently the federal government insures approximately half of all mortgage backed securities (MBS). We can insure the rest of current outstanding MBS; however, rather than taxpayers funding insurance, the holders of these assets should pay for it. The Treasury Department can design a system to charge premiums to the holders of MBS to fully finance this insurance.

2. Create a Loan Program

Congress should work with the President, the Federal Reserve Bank, and the Federal Deposit Insurance Corporation to set up an additional loan program for failing financial institutions that would:

  1. Grant the Fed the authority to lend to financial institutions: The Fed currently has $400 billion in cash that they could inject into the market place. This money could be infused into the market immediately and would allow banks to free up existing capital.
  2. Reform FDIC Regulations: Congress should authorize the FDIC to backstop the Fed’s loans by ensuring more capital. Additional FDIC insurance would shore up confidence in banks and keep people from losing their savings.
  3. Keep the Federal Government out of the market: Fed loans to failing financial institutions should be backed by sell-only stock warrants. Backing government loans with sell-only stock warrants will be allow the government to recoup its investment and prevent it from controlling a private institution.
  4. When the government stepped in to rescue AIG, the government made a loan at an interest rate similar to what most people pay on their credit cards. The government also received sell-only stock warrants as collateral for their loan. In this arrangement, AIG is able to continue meeting the needs of the market place while the government is in a strong position to recoup its investment. Additionally, bureaucrats in Washington will not be able to control AIG because of their sell-only stock warrant arrangement.

3. Restructure the Tax Code

Congress should act immediately to increase private capital in the marketplace by reducing taxes to critical sectors of the economy:

  1. Two-Year Suspension of the Capital Gains Tax: Immediately suspend the capital gains rate from 15 for percent individuals and 35 percent for corporations. By encouraging corporations to sell unwanted assets, this provision would unleash funds and materials with which to create jobs and grow the economy. After the two-year suspension, capital gains rates would return to present levels but assets would be indexed permanently for any inflationary gains.
  2. Net Operating Losses: Allow companies to carry-back losses arising in tax years ending in 2007, 2008, or 2009 back 5 years, generating a tax refund and immediate capital. Despite the presence of willing buyers, many firms with MBS are not willing to sell at such a huge loss. This carry-back would provide cushion for any such loss, making firms more willing sellers.
  3. Repatriation Infusion: Allow a repatriation window for profits earned by U.S. firms overseas. Such repatriation amounts would be taxed at 0 percent if invested in distressed debt (as defined by Treasury) for at least one year.
  4. Bank Losses on GSE Stock: Allow banks to treat losses on shares of preferred stock in Fannie Mae and Freddie Mac as ordinary losses, not as capital losses.
  5. Instead of injecting taxpayer capital into the market to produce liquidity, private capital can be drawn into the market by removing regulatory and tax barriers that are currently blocking private capital formation. Too much private capital is sitting on the sidelines during this crisis.

4. Reform Market Regulations

The SEC and Congress should immediately act to increase Transparency, Oversight, and Market Reform by:

1. Limiting Executive Compensation: Require the Treasury to write rules prohibiting excessive compensation or golden parachutes to executives of failed companies at the expense of taxpayers.

2. Reforming the Credit Rating Agencies: Call on the SEC to review the performance of the Credit Rating Agencies and their ability to accurately reflect the risks of these failed investment securities.

3. Modifying Fair Value Accounting (Eliminate Mark-to-Market Rule): Fair Value Accounting dictates that financial institutions holding financial instruments available for sale (such as mortgage-backed securities) must mark those assets to market. Currently, there is no meaningful market for mortgage backed securities. Asset value should not be assessed at unrealistic fire-sale prices. Regulators must evaluate the assets on the basis of their true economic value. The SEC should exercise its immediate ability to suspend fair value accounting standards as applied to mortgage backed securities. The mark-to-market rule can be suspended for six months and then replaced with a more accurate three year rolling average mark-to-market.

4. Repealing Sarbanes-Oxley: Sarbanes-Oxley failed with Freddy Mac. It failed with Fannie Mae. It failed with Bear Stearns. It failed with Lehman Brothers. It failed with AIG. It is crippling our entrepreneurial economy. Many more firms would be able to go public if the law was repealed. It is Sarbanes-Oxley’s $3 million per startup annual accounting fee that is keeping these companies private.

5. Ending “Naked” Short Selling: In recent years the SEC has lifted restraints on short sellers of stock to allow “naked selling” (when a broker does not in fact borrow shares to deliver to the buyer) and to eliminate the requirement that short sellers could sell only on an uptick in the market. The SEC has temporarily restricted short sells on financial stocks. To prevent artificial price volatility, there should be no naked short sales and short sales should only take place when there are upticks in the market.

6. Creating a Blue Ribbon Panel: A blue ribbon panel with representatives of Treasury, SEC, and the Fed should make recommendations to Congress for reforms of the financial sector by January 1, 2009. (This has in large part, already been accomplished by Treasury, which produced the “Department of Treasury Blueprint for a Modernized Financial Regulatory Structure” in the spring of 2008. We should take its suggestions seriously)

7. Reforming GSEs: Since Congress chartered Freddie Mae in 1938 and Freddie Mac in 1970, these two Government-Sponsored Enterprises have consumed a lion’s share of the market, undermining the housing market and jeopardizing the economy. Congress must learn from its mistakes by reforming these GSEs and limiting Federal exposure to high risk loans. Freddie and Fannie should never again be allowed to securitize the unsound mortgages created by the greed on Wall Street and poor policies in Washington .

8. Reforming CRA: In 1993 President Clinton advocated for changes to the Community Reinvestment Act (CRA). These proposals were adopted by 1997, and had the disastrous effect of encouraging lending agencies to offer irresponsible mortgages that people could not afford. Congress should reform CRA and stop encouraging irresponsible lending practices.

5. Helping Homeowners

Congress should implement measures to encourage responsible homeownership and decreased mortgage foreclosures:

1. Tax Credits: Congress should provide additional tax credits for purchasing homes.

2. Assistance to Homeowners: Provide assistance to homeowners who have been caught up in the current mortgage crisis and are trying to save their homes by extending the Cancellation of Mortgage Indebtedness Forgiveness. In a foreclosure proceeding or write-down of principal on a mortgage, the forgiven debt is considered taxable income. The “Mortgage Forgiveness Debt Relief Act of 2007,” P.L. 110-142, excludes debt forgiven before the end of 2009 from taxable income. The proposal extends this treatment for 3 years, through 2012. It does not extend the relief to home equity loans.


Andrew Cole

Press Secretary

Rep. Joseph Pitts (PA-16)


Friday, October 3, 2008

New Era "panic" for Bail Out Plan off target

...Certain market players agree that giving [Treasury Secretary] Paulson "$700 billion in small unmarked bills in a paper bag" as one BBC commentator referred to it may not be the best way to deal with the crisis. Friday’s Federal seizure and sale of Washington Mutual and Monday’s Fed brokered sale of Wachovia to Citigroup clearly demonstrates the Fed’s determination to ensure the orderly sale of failing banks in a manner that protects depositors and minimizes disruptions to financial markets.

By guaranteeing "toxic assets" only to the extent it is necessary to facilitate the sale of failing banks to ones with stronger balance sheets, i.e. on a case by case basis, the Fed can minimize the impact of what essentially amounts to a massive consolidation of the US banking industry on financial markets without turning the free market system on its head.

How desperate are the HMA-owned hospitals?

I am writing in response to the recent newspaper (Lancaster New Era, Sept. 30) article detailing the most recent resurrection attempt of the Health Management Associates (HMA) owned hospitals, Lancaster Regional Medical Center and Heart of Lancaster Regional Center.

I have pity for the most recent CEO George Miller as he is again attempting to portray both hospitals as viable healthcare facilities in this county. From recent NewsLanc and Steinman Family newspaper printing , I believe that between both hospitals, there have been over a dozen different CEOs since HMA bought both hospitals since 2002. That is an abysmal rate of CEO positioning at an average of 6 months of tenure per person. This is Lancaster County and we do not like change.

How can a patient trust in their choice of hospital if the CEO changes every six months? A hospital is lead by its CEO and with these frequent CEO changes, how can a patient or even a doctor decide that the best care available is at one of these HMA hospitals when there is (what seems like) a new regime and with new direction with each successive CEO change.

Case in point, it seems that the HMA hospitals forecast a new approach to healthcare for doctors, patients and the community every six to twelve months. I read the newspaper everyday as well as look at websites such as the number of front-page re-definitions of the HMA hospitals has been boggling. Such marketing attempts as two years ago when an investment opportunity (partnership) to physicians only was coolly received by the medical community is one episode of the desperation of both of these hospitals to try to survive in this county where a top-50 hospital all ready exists -- Lancaster General Hospital.

Following this failed attempt to woo doctors into investing in the ho spitals, then there was the front-page article about the two hospitals merging into one with the Lititz based hospital being built out to over three hundred beds and the former Saint Joseph's Hospital being downsized to rehabilitation and outpatient services. Soon thereafter, this attempt to recurrent business at both HMA hospitals failed.

And now the recent new article states that, under Mr. Miller, both hospitals will exist separately and the former idea of merging services is no longer. And the craziest idea is that Mr. Miller thinks that Lancaster County physicians will actually invest in these hospitals now. Why would anyone (particularly an assumed intelligent doctor or at least the doctor’s financial advisor) invest with any HMA hospital?

By the most recent financial data available, Lancaster General Hospital was financially sound with a greater than 130 million dollar profit and the combined balance sheet for the two HMA hospitals barely broke even. On top of this readily available information, an intelligent investor would also look at the stock holdings of HMA to determine if such an investment would be sound. With a review of the business page or even, it doesn’t take long to note that HMA stock has plummeted (even before the recent Wall Street woes of Lehman Brothers and AIG)...

Unlike our federal government which is opting to bail out the multiple banking firms for bad investment, maybe we (the citizens of Lancaster County) should just let the two HMA hospitals financially fail and finally await HMA to close their doors. Only after these imminent HMA failures can Lancaster General Hospital finally take over both facilities and finally provide the quality of care at both of these facilities that the long-tenured citizens recall was offered by Saint Joseph’s Hospital and Community Hospital of Lancaster -- many, many years before HMA [took over] these healthcare facilities and prompted the ruination of both.

Sen. Casey writes about the "Bail Out."

Editor's Note: Below is the form e-mail received in response to an inquiry about the "Bail Out" from Senator Bob Casey.

Casey states below "After purchasing these assets, the Department of Treasury will hold them until markets for them recover. Treasury would then plan to sell these assets for a profit, recouping most or all of the $700 billion for the benefit of taxpayers."

It is unclear whether the Treasury will purchase securities at current 'market value' in which case the Treasury should earn a large profit over time (Warren Buffett said he would be pleased to invest with the Treasury in such an arrangement) or whether they will be purchased at a far higher than market value as though they were still highily rated bonds, in which case the loss will only be mitigated over the terms as some are paid off. In that case the taxpayers instead of the security owners will take most of the loss.

Thank you for taking the time to contact me regarding the proposal to stabilize the economy and our financial infrastructure. I appreciate hearing from all Pennsylvanians about the issues that matter most to them.

On Wednesday, October 1, the Senate passed H.R. 1424, the Emergency Economic Stabilization Act of 2008, a bill that will stabilize our credit markets, protect retirement and pension savings, modify troubled loans and protect taxpayers from paying for Wall Street's mistakes. After careful consideration, I decided to vote for this legislation.

This is a time of great economic uncertainty in our Nation's history. For many families in Pennsylvania and throughout the country, the recession has been part of their lives for many months now. Just this week we learned that the unemployment rate in Pennsylvania went from 5.4% to 5.8% in the month of August and for some parts of the state it went up far more than half a percentage point. We also learned that in the month of August the foreclosure rate in Pennsylvania went up by more than 60% from the previous year. The job loss and foreclosure rates are indicators of the economic trauma that many families have felt in Pennsylvania and across America.

Like you, I am not happy with the current crisis, and I'm angry about the climate of deregulation and deference to Wall Street over the last eight years that got us into this mess. However, failing to act will not simply punish those who brought us to this situation; it will punish everyone.

The Emergency Economic Stabilization Act of 2008 (EESA) provides up to $700 billion to the Secretary of the Treasury to buy mortgages and other assets that are clogging the balance sheets of financial institutions and making it difficult for working families, small businesses and other companies to access credit. After purchasing these assets, the Department of Treasury will hold them until markets for them recover. Treasury would then plan to sell these assets for a profit, recouping most or all of the $700 billion for the benefit of taxpayers.

You should know that Congress has significantly improved the original proposal presented by the Bush administration. In the version passed by the Senate, executives will be held accountable for their past decisions through limitations on compensation, prohibitions against golden parachutes or excessive retirement packages, and requirements that unearned bonuses be returned. As improved by the Senate, the legislation also requires participating companies to provide warrants and other forms of equity so that taxpayers will share in the profits if the stock of these companies goes up as a result of Treasury Department intervention.

The EESA also contains several provisions directed at stemming the tide of mortgage foreclosures thereby keeping families in their homes and addressing the root cause which has led to a loss of investor confidence and the freezing of credit markets. It would require the Treasury Department, where possible, to modify troubled loans to help American families keep their homes. It would also expand the HOPE for Homeowners program and require other federal agencies to modify loans that they own or control.

To ensure that Treasury isn't just getting a blank check, the legislation makes $250 billion available immediately, then requires the President to certify that additional funds are needed. The Treasury must report on the use of the funds and on progress in addressing the crisis. The bill establishes an Oversight Board so that the Treasury cannot act in an arbitrary manner and establishes a special inspector general to protect against waste, fraud and abuse.

The United States is in a financial crisis that could become worse than anything in a generation. In addition, our Nation's problems are already spreading into the global economy. If the federal government fails to take action right now, there is a real threat to small businesses and jobs, as well as mortgages, pensions and savings.

For all these reasons, I concluded that Congress must act now, and I decided to vote in favor of H.R. 1424. In the last two weeks, I have worked hard to be sure that this bill includes provisions to help families who are struggling. I've closely questioned and sent two detailed letters to Treasury Secretary Paulson, Federal Reserve Chairman Bernanke and also spoke to leading economists about this legislation.

Enactment of this legislation is only the first in a series of steps we must take to bring about economic recovery. We need to institute rigorous and aggressive regulation of players in the market place in order to prevent the abuses which caused our economic problems.

Again, thank you for sharing your thoughts with me. Please do not hesitate to contact me in the future about this or any other matter of importance to you.

If you have access to the Internet, I encourage you to visit my web site, I invite you to use this online office as a comprehensive resource to stay up-to-date on my work in Washington, request assistance from my office or share

Bob Casey

Thursday, October 2, 2008

Sen. Specter writes about the "Bail Out"

The following was received from Senator Arlen Specter in response to an e-mail communication from our publisher. Although a form letter, it is informative.

We can find no mention of any requirement that security acquisitions be at current market price. This is cause for considerable concern, since tax payers may well end up absorbing most or all of the losses, and the investors will lose little if anything.

The Editor

Thank you for contacting my office regarding the financial rescue legislation. I appreciate your views on this matter.

I reluctantly supported this package because the failure of Congress to act would run the risk of dire consequences, including an economic downturn which could cause more foreclosures, jeopardize retirement accounts, and further restrict credit which is necessary for small businesses to operate. I am philosophically opposed to bailouts. I think that when you have Wall Street entrepreneurs who take big risks to make big profits and they go sour, they ought to sustain the loss themselves and not look to the government for a bailout which ends up in the laps of the taxpayers. However, I supported the plan to avoid economic disaster that would extend well beyond Wall Street.

From the outset, I cautioned against Congress's rushing to judgment. When the initial proposal was made in mid-September, I wrote to Majority Leader Harry Reid and Republican Leader Mitch McConnell by letter dated September 21, 2008 urging we take the time necessary to get the legislation right. By letter dated September 23, 2008, I wrote to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke asking a series of questions which have not yet been answered. Then by letter dated September 27, 2008, accompanied by a Senate floor statement, I made a series of suggestions to the executive and legislative negotiators. Again, there has been insufficient time for a reply. Copies of these letters are available on my website:

Whenever we deviate from regular order which has been developed during more than 200 years of serving our country very well, we are on thin ice. On regular order, the legislative process customarily begins with a bill which members of Congress can study and analyze. After the legislation is in hand, there are hearings with proponents and opponents of the bill and an opportunity for members to examine, really cross examine, to get to the heart of the issues and alternatives. Regular order calls for a markup in the committee of jurisdiction going over the language line by line with an opportunity to make changes with votes on those proposed modifications. Then the committee files a report which is reviewed by members in advance of floor action where amendments can be offered and debate occurs. The action by each house is then subjected to further refinement by a conference committee which makes the presentment to the President for yet another line of review. The process used to finalize this legislation drastically shortcut regular order.

The legislation passed by the Senate is enormously improved over the first Paulson proposal. The $700 billion is not to be authorized immediately, but instead there are installments of $250 billion, $100 billion at the request of the president and $350 billion more subject to congressional objection, although the latter phase may be unconstitutional under INS v. Chadha, which requires following regular legislative process with passage by both houses and Presidential approval to overrule Presidential action and perhaps inferentially legislative conditions. For protection of the taxpayers, the proposal contains a provision that if the government does not regain its money after five years, the President would be required to submit a plan for compensating the Treasury "from entities benefiting from the programs." While that provision is a far way from a guarantee or even assurances that such recovery legislation would be enacted, it gives some important comfort to the taxpayers' position.

There are provisions for multiple layers of oversight including a Financial Stability Oversight Board that will meet monthly to oversee the program. The Treasury Secretary will be required to report to Congress on a regular basis on the actions taken, along with a detailed financial statement. These reports will include information on each of the agreements made, insurance contracts entered into, and the nature of the asset purchased and projected costs and liabilities. Additional oversight will be provided by the Comptroller General (reports to Congress), a new Inspector General (audits and quarterly reports), a congressionally-appointed oversight panel (market and regulatory review, and reports to Congress on the program and the effectiveness of foreclosure mitigation efforts), and by the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO) (cost estimates). A report will be required from the Secretary of the Treasury with an analysis of the current financial regulatory framework and recommendations for improvements.

There are substantial limitations on having benefits for entities which created the problem and limitations on executive pay. In cases where financial institutions sell troubled assets directly to the government with no competitive bidding and where the government receives a meaningful equity position, the legislation states that, until that equity stake is sold, executives would not get incentives "to take unnecessary and excessive risks" and would have to give up or repay bonuses or other incentives based on financial statements that "are later proven to be materially inaccurate." The bill also would prohibit "any golden parachute payment to senior executives."

The legislation is less stringent in provisions for financial institutions that sell their assets to the government through an auction. Such provisions would apply only to companies that sell more than $300 million in assets and would subject companies and employees to extra taxes. Corporations would not be able to deduct any salary or deferred compensation of more than $500,000, and top executives would face a 20% excise tax on golden parachute payments if they left for any reason other than retirement. In evaluating limitations on executive salaries, it is relevant to note that the Institute for Public Studies found that chief executives of large U.S. companies made an average of $10.5 million last year. That is more than 300 times the pay of the average worker.

The final proposal does provide for debt insurance, as advocated for by House Republicans, but leaves it to the Secretary of the Treasury to utilize that approach so it seems unlikely that it will be implemented in light of the fact that Secretary Paulson has bluntly stated his disagreement with it. Had there been floor amendments, Congress could have structured standards for utilization of debt insurance.

Had we followed regular order with an opportunity to propose amendments, consideration could have been given to my proposal, S.2133, which would have authorized the bankruptcy courts to restructure interest and scheduling of payments. The so-called variable rate mortgages have confronted many homeowners with the surprise that original payments, illustratively, of $1200 a month were soon raised to $2000 which resulted in defaults. Individualized examination by the bankruptcy courts might show misrepresentation or even fraud to justify revising the interest payments and rearranging the payment schedule. Or consideration could have been given to Senator Durbin's proposed legislation, S.2136, which would have authorized the bankruptcy courts to reset the principal balance depending on the value of the home. I opposed that bill because I thought it would discourage future lending, and in the long run raise the cost to homebuyers. But at least, following regular order, there would have been an opportunity to consider Senator Durbin's proposal as well as my suggested legislation.

The legislation contains authority for the Treasury Secretary to compensate foreign central banks under some conditions. It provides that troubled assets held by foreign financial authorities and banks are eligible for the Toxic Assets Recover Program (TARP) if the banks hold such assets as a result of having extended financing to financial institutions that have failed or defaulted. Had there been an opportunity for floor debate, that provision might have been sufficiently unpopular to be rejected or at least sharply circumscribed with conditions.

As a step to help keep borrowers in their homes, I proposed language found in Section 119 (b) of the bill to address the concern that some loan servicers have been reluctant to modify home mortgage loan terms because they fear litigation from investors who hold securities or other vehicles backed by the mortgage in question. The loan servicers have a legal duty to the investors to maximize the return on their investments. In testimony on December 6, 2007, before the House Committee on Financial Services, Mark Pearce, speaking on behalf of the conference of State Bank supervisors, discussed a meeting with the top 20 subprime servicers. He explained that "many of them brought up fear of investor lawsuits" as a hurdle to voluntary loan modification efforts. Because the rescue legislation encourages the government to seek voluntary loan modifications, it is important to remove any impediments to such modifications. To that end, the language provides a legal safe harbor for mortgage servicers making loan modifications, if the loan modifiers take reasonable mitigation steps, including accepting partial payments from homeowners.

On reforms to prevent a recurrence of this crisis, we need to question whether the rating agencies adequately analyzed mortgage-backed securities before issuing investment-grade ratings. These agencies appear to have failed. In July of 2007, when it became apparent that ratings issued by the big three rating agencies-Moody's, S&P and Fitch- could not be relied upon, I urged the relevant committees to look into the ratings that those agencies issued in recent years regarding mortgage-backed securities. Financial institutions that issue asset-backed securities obtain ratings for such securities. The failure to issue reliable ratings misrepresented the facts and fed the ability of financial institutions to tout the value of securities even though their value was declining. Congress and the regulators need to take up the rating agencies issue, and consider whether ratings agencies that have utterly failed to detect and reflect the risks associated with the securities they were rating should be accorded any reliance or role in our financial system. Some have suggested they should be regulated and we may need to consider that.

In addition, Congress and the regulators should review "off-balance sheet" transactions and leveraging. There should be a close examination on whether banks are sufficiently transparent and providing accurate accounting that truly reflects risk and leverage. Similarly there should be a review on Credit Default Swaps (CDS), which are privately traded derivatives contracts that have ballooned to make up what is a $2 trillion dollar market according to the Bank of International Settlements. They are a fast-growing major type of financial derivative. Many experts assert that they have played a critical role in this financial crisis as various financial players believed that they were safe because they thought CDS fully insured or protected them, but the CDS market is unregulated and no one really knows what exposure everyone else has from the CDS contracts. Consideration should be given to subjecting all over-the-counter derivatives onto a regulated exchange similar to that used by listed options in the equity markets.

Overleveraging has been a contributing factor in the turmoil that now threatens our financial institutions. We have seen a massive expansion of the practice of leveraged financial institutions (banks, investment banks, and hedge funds) making investments with borrowed money. In turn, they borrow more money by using the assets they just purchased as collateral. This sequence is continued again and again. The financial system, in its efforts to deleverage, is contracting credit. They must guard against future losses by holding more capital. Deleveraging is leading to difficulty on Main Street for individuals seeking to get a mortgage or buy a car. If a financial institution is able to unload its toxic assets onto the government, it will again be able to resume its lending activities that are crucial for economic growth in the United States. Unfortunately, much of the financial crisis has arisen from miscalculations of the risks involved with purchasing large amounts of securities backed by subprime mortgages and other toxic assets. We now see a situation where we are not just talking about a handful of firms. This is a widespread problem that should be addressed by this package and in future reforms of our financial regulatory structure.

In addition, the package crafted by Senate leaders includes two notable changes from the version that was rejected by the House on Monday. It includes a tax package that was previously passed in the Senate by a vote of 93-2 on September 23, 2008, but has since been rejected by the House in a dispute over revenue offsets. It includes tax incentives for wind, solar, biomass, and other alternative energy technologies. It also includes critically important relief from the Alternative Minimum Tax, which threatens to raise the tax liability of over 22 million unintended filers in 2008 if no action is taken. Finally, the package includes a host of provisions that either expired in 2007 or are set to expire in 2008, including the research and development tax credit, rail line improvement incentives, and quicker restaurant and retail depreciation schedules. I supported the Senate-passed tax extenders bill because it struck a responsible balance on the issue of revenue raising offsets.

The package also includes a provision to temporarily increase the Federal Deposit Insurance Corporation (FDIC) insurance limit to $250,000. Currently, the FDIC provides deposit insurance which guarantees the safety of checking and savings deposits in member banks, up to $100,000 per depositor per bank. Member banks pay a fee to participate. The current $100,000 limit has been unchanged since 1980 despite inflation. This approach is supported by both Senator McCain and Senator Obama, by House Republicans, and by the FDIC Chairman Sheila Bair. Raising the cap could stem a potential run on deposits by bank customers, particularly businesses, who fear losing their money. Such fears contributed to the collapse of Washington Mutual and Wachovia Bank.

Congress has been called upon to make the best of a very bad situation. Careful oversight of the authority given to the Treasury Department will need to be undertaken, and a review of our regulatory structure will be necessary as we move forward.

Again, thank you for writing. The concerns of my constituents are of great importance to me, and I rely on you and other Pennsylvanians to inform me of your views. If you require assistance with a federal agency, please contact my state office in your area. The contact information can be found on my website at

Arlen Specter