Ryan Lau | @agorisms

Last November, Connecticut’s new governor, Ned Lamont, won a tight race against businessman Bob Stefanowski. During the campaign, many compared Lamont to the widely unpopular former governor, Dannel Malloy. In fact, Stefanowski frequently stated Lamont would be “Malloy 2.0”, citing agreement on social issues and a desire to put in tolls on the state’s highways.

Despite these attacks, though, Lamont has stated plans to reduce property tax burdens on the middle class. He also gave Malloy an “F” rating for his job on fiscal issues. And now, in the midst of the partial government shutdown, his market leanings have come to the table again.

Federal Employees Unpaid

As many are aware, federal workers do not receive paychecks during shutdowns. To top it off, essential workers who still have to work without pay are not eligible for unemployment benefits. This category makes up about 80% of the 1,500 federal employees in the state. Of course, this has left many families struggling to make ends meet for nearly a month.

But this Tuesday, Governor Ned Lamont made tremendous strides to aid those suffering families. Best of all, he did so without placing any burden on Connecticut citizens. All he had to do was contact and communicate with Webster Bank, and they stepped in to do the rest.

Ned Lamont and Webster Bank to the Rescue

Webster Bank, a regional bank with 177 branches in southern New England, agreed to provide interest-free loans to any essential state workers who cannot collect unemployment. John Cuilla, CEO of Webster Bank, affirmed that the company was “pleased to provide those interest-free loans”. Though the bank still needs to work out the exact details of repayment, this is a huge step forward for many families in need.

Of course, Webster Bank is the real hero in this situation. With nothing to gain but positive press and a resulting business boom, they have alleviated the suffering of many. By helping themselves, they have helped others. As occurs quite often, one group acting in its own best interest directly aids another and vice versa. But this is no great surprise; markets function in this efficient manner regularly.

However, one aspect of this situation is rather troubling. In an ideal situation, Webster Bank (and other banks, which Cuilla believes will agree to this policy, too) would simply write out terms for their loans. Other banks, in competition for the best rate, would do the same. In the end, the banks with the best terms would see the most business. Instead, Lamont is taking unnecessary government action.

Slaughtering His Own Plan

Everything that the government does takes time and money, and both are scarce. The state is on a tight budget, and should not waste time or money in any situations. Therefore, it is safe to say that if the government does not have to get involved in these agreements, then it should not do so. For every day of delay, more families can’t afford groceries. With every passing hour, young employees are running out of money for gas or rent or hot water.

Time is of the essence, and government involvement only invites delay. Now, haste does not make waste; haste makes taste, as children in incomeless homes regain food security.

Is it necessary, in order to secure the loans, to pass any new legislation? The simple answer: almost definitely not. In order for Lamont’s actions to be necessary, then they must either more strongly guarantee the loans or outline some specific terms. But looking closely, I find that neither of these situations rings true. At the very least, they are not strong enough claims to justify going through the legislative or even executive process.

In Defense of Webster

Webster Bank has already promised to warmly offer the loans to anyone meeting the criteria. As bankers, their own employees know how to optimize the terms of the loans to best benefit all parties involved. The state of Connecticut, without banking expertise, simply does not know how to craft such an agreement as well. After all, the state is a whopping $69 billion short of the money they need to pay their yearly bills. Moreover, the state’s 2017 Comprehensive Annual Financial Report gave the state an “F” in finances. Why should we trust them over the prosperous bank, which has nearly doubled its stock since 2015?

Alternatively, some may argue that the legal provisions are to hold Webster Bank to its word. However, we already have something for that: the media. In just one day, several articles by several different news outlets have circulated the web, reaching many people who don’t even live in Connecticut. In simpler terms: it’s a popular story.

Now, what would happen if Webster Bank was to go back on its word? Surely, this would receive a ton of press attention. As the bank is offering loans, not handouts, it loses no money by keeping its word. But if it refuses to follow through, then headlines will tear into John Cuilla and his bank for breaking a promise and harming struggling families. Business would tank, and any minuscule financial incentive would be more than made up for in lost customers. It is in Webster Bank’s best interest to give out the loans.

Delayed Success

But while this plan could have started already, Ned Lamont merely announces that it will eventually commence. Meanwhile, the people of Connecticut are waiting for action, action that could have already happened without involving legislation.

This was an excellent plan on his part, and it shows a free-market side of him that many would not have predicted. However, he threatens its success with every waiting minute. A simple agreement with Webster Bank would have been enough, but now federal employees must sit and wait for the creaky wheels of government to turn in their favor.

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