I shed no tears that incumbent Senator Robert Bennett lost his fight to get nominated for a fourth term. His support of the bailout and other big-government policies was a sign that he had become far too comfortable representing established interests and forgot that his job was to defend Utah taxpayers. I’ve received a couple of emails arguing that Bennett is being victimized because he was “brave” enough to support a bailout that “saved” us from another Great Depression. That is nonsense. Even if one believes that the banking system needed to be recapitalized with government money, it would have been far better to replicate what happened with the S&L bailout 20 years ago. That bailout also cost money, but at least insolvent institutions were shut down, managers were fired, and shareholders were wiped out. Unlike the recent bailout, which rewarded incompetence by propping up the people who made mistakes, the S&L bailout liquidated bankrupt firms and used the money to pay off depositors instead. Not a perfect approach, by any means, but at least it did not exacerbate the problems associated with moral hazard. By the way, I fully agree that the Fed, along with Fannie and Freddie, bear the blame for the financial crisis, but private sector institutions were not obliged to go along for the ride. Simply stated, capitalism without bankruptcy is like religion without hell. Bennett forgot that lesson, so let’s celebrate the news in this AP story:
Republican U.S. Sen. Bob Bennett of Utah has lost his bid to serve a fourth term after failing to advance past the GOP state convention. Attorney Mike Lee and businessman Tim Bridgewater are the remaining Republican candidates after Saturday’s vote. Bennett was a distant third in the voting among roughly 3,500 delegates. He garnered just under 27 percent of the vote. Bridgewater had 37 percent and Lee 35 percent. Bennett is the first incumbent to lose his seat in Washington this year, the victim of a conservative movement angered by rising taxes and the growth of government. Bennett was targeted by tea party activists and other groups for supporting a massive bailout of the financial industry, securing earmarks for his state and for co-sponsoring a bipartisan bill to mandate health insurance coverage.