Matt Bevin, the Tea Party primary challenger to Senate Minority Leader Mitch McConnell (R-Ky.), is in trouble for having once held reasonable views on the financial crisis.
Politico obtained an October 2008 letter signed by Bevin, in his role as president of Veracity Funds, that assessed the then-developing crisis in the financial industry. The letter points out some bright spots in the economy, saying in part:
Most of the positive developments have been government led, such as the effective nationalization of Fannie Mae and Freddie Mac, the passage of the $US700 billion TARP (don’t call it a bailout) and the Federal Reserve’s intention to invest in commercial paper. These moves should help to stabilise asset prices and help to ease liquidity constraints in the financial system…
Some of the positive developments include the numerous programs from stimulus to the various Treasury acronyms (TARP, TALF, PPIP) to the Fed’s aggressive balance sheet growth. To what degree is open to some debate, but our government has taken the challenge head on and has responded like no other country.
Of course, all that is true: The American financial system was collapsing in late 2008, and the U.S. government prevented a much deeper crisis by bailing out financial institutions and nationalizing Fannie and Freddie. Fiscal stimulus also reduced the severity of the recession — and the U.S. government did much better in responding to the crisis than European ones.
Unfortunately, a history of accurate views about economic policy is a major barrier to a successful Tea Party candidacy.
As such, Bevin is now reduced to insisting he never believed what was in the letter he signed. Bevin always thought TARP was a bad idea; the letter reflects the views of Daniel Bandi, an investment manager who worked under him.
But that just raises another question: Why did Bevin employ someone with such wrongheaded views on the economy to manage his clients’ money? Is Bevin saying he was bad at being a hedge fund executive?
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