What Happened to Freedom of Speech?

by Don Boudreaux on May 17, 2009

in Politics

I can find no words to describe just how frightening and infuriating this letter is.  A private citizen objects peacefully to a proposed government action, and, as a result, is not only forced to appear before Congress to explain but also to be threatened with further burdens if he doesn't cooperate with the arrogant power-mongers on Capitol Hill.

(HT Bob Levy)

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{ 50 comments }

dg lesvic May 17, 2009 at 7:03 am

The gloves are off, and American fascism is now out in the open.

The next step will be the murder of dissenters.

Martin Brock May 17, 2009 at 7:07 am

Apparently, Frey's fund held no mortgaged backed securities before the "crisis". He created a fund specifically to buy the "distressed" assets and then to sue Countrywide and other MBS peddlers to repurchase the securities, using bailout money of course. He seems to be a rent seeker, pure and simple.

Martin Brock May 17, 2009 at 7:12 am

"Private citizen" my aunt fannie mae.

Bob May 17, 2009 at 7:29 am

He's making a business out of enforcing what, according to him, are the contractual obligations of lenders to the bondholders. It's not rent seeking any more than the bondholders who bought GM bonds at pennies but insist on being paid first.
On top of that, he is providing a valuable service to those who want to sue by keeping them anonymous, a service who will protect them from government hearings and 'personalized taxes'.

Pingry May 17, 2009 at 8:16 am

A group of thugs….

Dan Phillips May 17, 2009 at 8:47 am

Barney Frank, et al, have concluded they are no longer our representatives and servants, but have now assumed the role of our rulers. They are not afraid of us. They expect us to be afraid of them.

Bill Stepp May 17, 2009 at 8:51 am

The usual suspects–Barney Frank et al.
Btw, Carolyn Maloney is a real gun grabbing lowlife. Why she gets re-elected is beyond me.

Martin Brock May 17, 2009 at 9:18 am

He's making a business out of enforcing what, according to him, are the contractual obligations of lenders to the bondholders.

Apparently, he's not. He's holding the contractual obligations ransom to force Countrywide to buy back depreciated securities at face value knowing fully well that Countrywide can buy the securities only with funds from taxpayers. That's rent seeking.

It's not rent seeking any more than the bondholders who bought GM bonds at pennies but insist on being paid first.

No. He's not asking to be paid first. Countrywide is not in bankruptcy. If it were in bankruptcy, Countrywide would not be obliged to repurchase these securities, and the securities might fall further in market value.

I would be happier if Countrywide never received a dime from taxpayers, but it has, and Frey knows it, and he knew it before he ever bought the securities. He's a rent seeker.

On top of that, he is providing a valuable service to those who want to sue by keeping them anonymous, a service who will protect them from government hearings and 'personalized taxes'.

He's providing a valuable service by helping them seek rents. What they want is personalized entitlement to tax revenue. I have no interest whatsoever in their "privacy". I don't want people "privately" entitled to tax revenue.

Political Observer May 17, 2009 at 9:26 am

A while ago I had come to the conclusion that our government is at war with the people. This is just one more example of the war that is going on.

When the founders created the constitution they were well aware of the propensity of people like Barney Frank to assume powers over the lives and liberties of individual citizens. They thought that they had created enough safeguards in the document to minimize the potential for this to happen. However they were continually vigliant in there efforts to ensure that the constitution was faithfully followed through their lifetimes.

Today we have a federal government that no longer has any effective constraints. The President, Congress, the Courts and many of the States are clearly in an expansive mode. Over the next few years we will see the power of the federal government over nearly every aspect of our personal lives – all in the name of doing good for us. As Hayek reminded us, if something is truly good for me I don't need a law to make me do it.

While we still have the power to vote we can ultimately change this situation but only if we are united in our defense of liberty. We must acknowledge that government at all levels has usurped its authority and has become a burden on our lives and our liberties. We must be united in our demands that we must roll back this monstrosity to the levels originally envisioned by our founders. We must support only those candidates with the political will to act on our demands. And we must actively support them in their efforts when the malestrom of protest arise from the government entrenched interest who have for the past 70 years slowly eroded our liberties for their narrow and selfish interest.

Remember it took 70 years of continuous effort on the part of the leftist to turn our government into the socialist state it has become. However our liberty demands that we not wait 70 years to restore what we have lost. The attacks on our liberties are not progress. These attacks are nothing more than tryanny – dressed up in softer words but tyranny none the less.

Martin Brock May 17, 2009 at 9:30 am

I would be happy with the following resolution.

Frey's fund holds particular securities backed by particular mortgages. Countrywide has an obligation to collect on these particular mortgages in exchange for fees and to transfer funds collected to Frey's fund.

I suppose Countrywide may sell its obligation-to-collect/entitlement-to-fees to another agency. Let it put the particular assets related to Frey's securities on the market. I'll buy them for a dollar, and I'll make a good-faith effort to collect in exchange for reasonable fees. If can't collect, I'll inform Frey that his investment didn't pan out.

If Frey wants to bid more than a dollar, he can do that.

Mathieu Bédard May 17, 2009 at 9:38 am

The usual suspects–Barney Frank et al.
Btw, Carolyn Maloney is a real gun grabbing lowlife. Why she gets re-elected is beyond me.

According to Peters and Welch everyone is aware of their nature and they are re-elected because electors sell their votes for privileges.

LoneSnark May 17, 2009 at 10:11 am

"He's providing a valuable service by helping them seek rents. What they want is personalized entitlement to tax revenue. I have no interest whatsoever in their "privacy". I don't want people "privately" entitled to tax revenue."
No. When the government decided to bail out the firm it promised to make these debts whole; all he is doing is making sure these promises are honored. And I can see no better way to discourage future bailouts than to make the results of them as visible and public as possible.

Per Kurowski May 17, 2009 at 10:12 am

What I find the most outrageous with this issue, especially when coming from a House of Representatives, is the absolute lack of will to look at the problem from both sides since for each baby-boomer that might deserves having the value of his house preserved, so that he can reverse-mortgage himself into a decent retirement, there is a young person waiting for that value of the houses to fall so as to be able to buy his first house and start a family at affordable prices.

DAVE May 17, 2009 at 10:13 am

GOOD GOD I FEEL SICK AND INFURIATED BEYOND WORDS….

LoneSnark May 17, 2009 at 10:13 am

To put it another way, if the politicians don't want to pay this money at face value then they should put the firms into bankruptcy, as they should have done months ago.

Steve Gordon May 17, 2009 at 10:15 am

What is most shocking to me is that people posting to this blog item are commenting on Frey and not Congressional actions. Whatever Madoff, Frey, et al did is irrelevant to government actions to reduce freedoms.

Martin Brock May 17, 2009 at 10:18 am

No. When the government decided to bail out the firm it promised to make these debts whole; ….

First, the government didn't make this promise. Second, I don't care if it did.

… all he is doing is making sure these promises are honored.

No. There is no promise to make anyone whole. If this promise appears anywhere in any bailout statute, I'd like to see it.

And I can see no better way to discourage future bailouts than to make the results of them as visible and public as possible.

Bob tells us it's about "privacy", and LoneSnark tells us it's about making the results "as visible and public as possible".

I suppose you're both apologists for rent seeking. You could as easily apologize for poor welfare queens, but you here apologize for the rich welfare queens. Maybe, you imagine yourself more like the rich welfare queens.

Stewart Ulm May 17, 2009 at 10:25 am

This letter is dated Oct 2008, and the hearing was slated for Nov 2008. What happened in the end?

gator80 May 17, 2009 at 10:46 am

Is there any allegation at all that Frey did anything illegal?

Martin Brock May 17, 2009 at 10:56 am

To put it another way, if the politicians don't want to pay this money at face value then they should put the firms into bankruptcy, as they should have done months ago.

The politicians, including Frey, don't want bankruptcy. The want to seek rents.

Martin Brock May 17, 2009 at 10:58 am

Is there any allegation at all that Frey did anything illegal?

No. It's all too legal.

Sam Grove May 17, 2009 at 12:02 pm

So, is Frey like a Moray eel.

dg lesvic May 17, 2009 at 12:09 pm

If it's all legal, and Frey's only sin was playing by the rules, why should he be questioned rather than those who made the rules?

Frey's motives are a red herring. The issue is free speech, and an attack on Frey is simply the pretext for attacking free speech.

Martin Brock May 17, 2009 at 12:16 pm

If it's all legal, and Frey's only sin was playing by the rules, why should he be questioned rather than those who made the rules?

Many people outside of Congress make rules. Many more game the rules.

Frey's motives are a red herring. The issue is free speech, and an attack on Frey is simply the pretext for attacking free speech.

No one has done anything to limit Frey's speech. He's a rent seeker, and the rent collectors want to speak to him. If he doesn't want to talk to them, he can stop seeking rents.

dg lesvic May 17, 2009 at 12:25 pm

And, if you're really concerned about the peril, and we're at zero hour, how much longer will you wait before attacking the enemy where he is most vulnerable, in the old bread basket?

Ultimately, the excuses for not doing so and the distractions from it are cop-outs. At some point, you must address the "bottom line," as Boudreaux so aptly described it, the "crucial issue," as Hayek described it, and "the essence of the interventionist policy," as Mises described it:

Redistribution.

"Up there is where we need to go."

The Treasure of the Sierra Madre

Up there, to the real issue.

And, if not now, when?

SaulOhio May 17, 2009 at 12:25 pm

What I find most disgusting is the sentance "We believe it is essential for out policymaking function for you to appear at such a hearing, and if this cannot be arranged on a voluntary basis, then we will pursue further steps." When there is a threat like that involved, there is no such thing as "voluntary". But they want it to appear voluntary for some reason. I hope Mr. Frey didn't allow them to live with such an illusion.

These people we have in Washington have a very interesting conception of "voluntary".

Martin Brock May 17, 2009 at 12:30 pm

These people we have in Washington have a very interesting conception of "voluntary".

Right. Frey buys bonds for the sole purpose of suing the issuers to compel them to repurchase the bonds from him with taxpayer's booty, and he's Mr. Voluntary. No. He loves the force of the state. Force is his business. He'll happily testify before this committee.

jarhead May 17, 2009 at 12:42 pm
dg lesvic May 17, 2009 at 12:49 pm

Martin Brock,

Since it isn't for me to tell anyone else what to do, my challenge was directed to the pro-free market community rather than any particular member of it.

But since you apparently have nothing better to do with your time than support the attack on free speech, I don't mind putting it directly to you.

What will you be saying about redistribution?

Mathieu Bédard May 17, 2009 at 12:50 pm

Right. Frey buys bonds for the sole purpose of suing the issuers to compel them to repurchase the bonds from him with taxpayer's booty, and he's Mr. Voluntary. No. He loves the force of the state. Force is his business. He'll happily testify before this committee.

I'd go even further, he most probably disagreed with these fine gentlemens only in hope it would get him an audience with their highness.

Mike Farmer May 17, 2009 at 1:10 pm

Yes, the issue is not Frey, but the arrogance of government which now feels it can bully anyone, anytime, for any reason. The intent of the letter is outrageous.

Art Carden May 17, 2009 at 1:23 pm

I was particularly disturbed to see that the letter threatened "further steps" if Mr. Frey did not appear "voluntarily."

The Marginalist May 17, 2009 at 1:44 pm

I found the response that Frey wrote to Congress:

http://www.scribd.com/doc/8667729/Frey-Letter-to-Congress

SaulOhio May 17, 2009 at 1:47 pm

Martin Brock: You are trying to divert the subject. Getting people to pay back money they owe is not the initiation of coercive force that theatening "further steps" to get "voluntary" cooperation is.

And even if it was, it does not affect my point, that threatening "further steps" makes a joke of the idea of "voluntary".

BoscoH May 17, 2009 at 1:58 pm

Per wrote: there is a young person waiting for that value of the houses to fall so as to be able to buy his first house and start a family at affordable prices.

Per, you are half way to becoming a libertarian. The other half is realizing that Congress shouldn't be weighing that trade-off and making decisions. The market can sort out pricing on its own. And yes, lots of people get hurt when the market does that. And lots of people get hurt when Congress tries to do it. The market usually gets things right though, while Congress gets things right for favored constituencies.

Bob May 17, 2009 at 2:43 pm

Martin Brock: Have you read about what Frey is doing? He's basically saying that Countrywide et others' renegotiation of the underwater mortgages is done entirely to their benefit, by avoiding foreclosure at any cost, even when the loss to the holders of the securities is greater than it would be in a straight foreclosure.
Now I don't know whether he's right about that or not, or what protections the law affords the holders of mortgage backed securities. But I think it entirely proper that such a matter be brought before the courts. I know the issuers aren't themselves in bankruptcy, but if there is a renegotiation of the mortgages, this is similar to a bankruptcy, and the actual owners of the assets (ie. the security holders) are within their rights to expect any deal made not to be made solely at their expense (or maybe not: if the actual contract states they're to take losses before Countrywide has to, then though luck, but I doubt that's the case).

Martin Brock May 17, 2009 at 4:59 pm

But since you apparently have nothing better to do with your time than support the attack on free speech, …

There has been no attack on free speech.

What will you be saying about redistribution?

Redistribution is precisely what Frey is suing to accomplish.

Martin Brock May 17, 2009 at 5:08 pm

But I think it entirely proper that such a matter be brought before the courts.

Like I said above, I will buy Countrywide's obligation to collect on mortgages backing Frey's securities, with reasonable fees for the service, for a dollar. I'll collect on the mortgages as best I can, and if I can't collect enough to keep the promises Countrywide made when it sold the bonds, Frey's fund loses money to this extent.

If Frey wants to offer more than a dollar, that's fine with me. If he's only suing for this right, that' also fine with me, but I linked an article suggesting otherwise.

The article suggests that Frey is suing to compel Countrywide to repurchase securities. I oppose this outcome regardless of anything Countrywide is doing. I don't want mortgage obligors bailed out, but I don't want a dime of taxpayer's money making its way to Frey's fund either.

Frey knew he was playing a political game when he started, so he'll get what the political process delivers, and I don't have a bit of sympathy for him.

Kevin May 17, 2009 at 5:11 pm

Although I agree with what (I think) is the point of the post – that this incident is another example of the continued dissolution of the rule of law – I can't help but sympathize with Martin's position here. Frey is definitely doing business with the Mafia here, and the Mafia is doing what it does.

Martin Brock May 17, 2009 at 5:15 pm

Martin Brock: You are trying to divert the subject. Getting people to pay back money they owe is not the initiation of coercive force that theatening "further steps" to get "voluntary" cooperation is.

No. I'm sticking to the subject rather than apologizing for rent seekers and portraying them as victims. I have consistently favored foreclosing on the mortgages and putting the companies through bankruptcy or receivership or whatever from the outset.

I linked an article suggesting that Frey is not simply suing to force Countrywide to collect on the mortgages or foreclose but is suing to force Countrywide to repurchase securities. The article further asserts that Frey bought the securities only after the bailouts began. Are you disputing the article? Maybe it's mistaken, but I haven't seen the evidence.

And even if it was, it does not affect my point, that threatening "further steps" makes a joke of the idea of "voluntary".

Of course, "voluntary" is bullshit, but Frey isn't playing the "voluntary" game here. He's not the poor, innocent, voluntary victim. The idea is incredible.

dg lesvic May 17, 2009 at 6:26 pm

Martin,

The issue isn't Frey. The issue is freedom of speech. You say there hasn't been any curtailment of it. But here is a man threatened with drastic action for doing nothing than, if what you say is true, exercising his equal right to whatever sucker money the Feds are offering, and speaking out.

He hasn't done anything legal. He hasn't tried to avail himself of anything other than his equal rights under the law. I don't like the law. You don't like the law. So undo the law, but not equal rights under it, nor free speech.

dg lesvic May 17, 2009 at 7:28 pm

I meant he hasn't done anythin illegal.

Martin Brock May 17, 2009 at 7:50 pm

The issue isn't Frey. The issue is freedom of speech. You say there hasn't been any curtailment of it. But here is a man threatened with drastic action for doing nothing than, …

Drastic action? He's bought lots of securities sold by a company being bailed out by Congress, after the bailout, apparently only to gain standing to sue the company to benefit from the bailout, and a committee of Congress wants to subpeona him to testify before it, thus them opportunities to grandstand and providing him free advertising for the "service" he's providing.

That's "drastic action"? What's so freakin' drastic about it?

… if what you say is true, exercising his equal right to whatever sucker money the Feds are offering, and speaking out.

That's right. He has a right to seek rents just like everyone else, and if I seek rents similarly, politicians might make speeches in my face too. Oh the humanity!

dg lesvic May 17, 2009 at 9:18 pm

Why don't you read the letter they sent him?

Elisheva Levin May 18, 2009 at 12:12 am

The gloves are off; that letter was pure threat no matter what Frey did.
It's time to throw the b*****d's out!

I am sick.

Mike Laursen May 18, 2009 at 12:32 am

Oh, I didn't realize until I read through the comments that this happened last year. This looks like Frey's reply to Congress:

http://www.scribd.com/doc/8667729/Frey-Letter-to-Congress

It looks like he ignored their request to testify, and wrote them several pages of advice on what they should be doing.

Anybody know what happened after that? Did they make him testify?

vikingvista May 18, 2009 at 3:05 am

In the last few months I've been amused, angry, and even worried. This is the first time an actual chill went down my back.

I'm beginning to understand what many people must've felt during the interwar period of fascism. I hope it is not a taste of what is to come.

dg lesvic May 18, 2009 at 5:02 am

Martin Brock said there was no attack on free speech.

If forcing Frey to testify before Congress were a pleasure and not a pain, why must he be forced to it?

The whole purpose of it was to put him under a spotlight, hold him up to public scorn, subject him to harassment and threats to his safety, and discourage anyone else from speaking out against the powers that be.

If Martin can't recognize that as an attack on free speech, he is sure no guardian of it, and, if not a fascist himself, sure not much of an anti-fascist.

dg lesvic May 18, 2009 at 5:04 am

This is not just fascism any more, it is naked fascism.

SaulOhio May 18, 2009 at 5:54 am

But its still "voluntary"! How can that be fascism? :P

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