Don't Make Working People Bail Out Wall Street
This country faces many serious problems in the financial market, in the stock market, in our economy. We must act, but we must act in a way that improves the situation.
This bill does not effectively address the issue of what the taxpayers of our country will actually own after they invest hundreds of billions of dollars in toxic assets. This bill does not effectively address the issue of oversight because the oversight board members have all been hand picked by the Bush administration. This bill does not effectively deal with the issue of foreclosures and addressing that very serious issue, which is impacting millions of low- and moderate-income Americans in the aggressive, effective way that we should be. This bill does not effectively deal with the issue of executive compensation and golden parachutes. Under this bill, the CEOs and the Wall Street insiders will still, with a little bit of imagination, continue to make out like bandits.
This bill does not deal at all with how we got into this crisis in the first place and the need to undo the deregulatory fervor which created trillions of dollars in complicated and unregulated financial instruments such as credit default swaps and hedge funds. This bill does not address the issue that has taken us to where we are today, the concept of too big to fail. In fact, within the last several weeks we have sat idly by and watched gigantic financial institutions like the Bank of America swallow up other gigantic financial institutions like Countrywide and Merrill Lynch. Well, who is going to bail out the Bank of America if it begins to fail? There is not one word about the issue of too big to fail in this legislation at a time when that problem is in fact becoming even more serious.
This bill does not deal with the absurdity of having the fox guarding the hen house. Maybe I'm the only person in America who thinks so, but I have a hard time understanding why we are giving $700 billion to the Secretary of the Treasury, the former CEO of Goldman Sachs, who along with other financial institutions, actually got us into this problem. Now, maybe I'm the only person in America who thinks that's a little bit weird, but that is what I think.
This bill does not address the major economic crisis we face: growing unemployment, low wages, the need to create decent-paying jobs, rebuilding our infrastructure and moving us to energy efficiency and sustainable energy.
There is one issue that is even more profound and more basic than everything else that I have mentioned, and that is if a bailout is needed, if taxpayer money must be placed at risk, whose money should it be? In other words, who should be paying for this bailout which has been caused by the greed and recklessness of Wall Street operatives who have made billions in recent years?
The American people are bitter. They are angry, and they are confused. Over the last seven and a half year, since George W. Bush has been President, 6 million Americans have slipped out of the middle class and are in poverty, and today working families are lining up at emergency food shelves in order to get the food they need to feed their families. Since President Bush has been in office, median family income for working-age families has declined by over $2,000. More than seven million Americans have lost their health insurance. Over four million have lost their pensions. Consumer debt has more than doubled. And foreclosures are the highest on record. Meanwhile, the cost of energy, food, health care, college and other basic necessities has soared.
While the middle class has declined under President Bush's reckless economic policies, the people on top have never had it so good. For the first seven years of Bush's tenure, the wealthiest 400 individuals in our country saw a $670 billion increase in their wealth, and at the end of 2007 owned over $1.5 trillion in wealth. That is just 400 families, a $670 billion increase in wealth since Bush has been in office.
In our country today, we have the most unequal distribution of income and wealth of any major country on earth, with the top 1 percent earning more income than the bottom 50 percent and the top 1 percent owning more wealth than the bottom 90 percent. We are living at a time when we have seen a massive transfer of wealth from the middle class to the very wealthiest people in this country, when, among others, CEOs of Wall Street firms received unbelievable amounts in bonuses, including $39 billion in bonuses in the year 2007 alone for just the five major investment houses. We have seen the incredible greed of the financial services industry manifested in the hundreds of millions of dollars they have spent on campaign contributions and lobbyists in order to deregulate their industry so that hedge funds and other unregulated financial institutions could flourish. We have seen them play with trillions and trillions dollars in esoteric financial instruments, in unregulated industries which no more than a handful of people even understand. We have seen the financial services industry charge 30 percent interest rates on credit card loans and tack on outrageous late fees and other costs to unsuspecting customers. We have seen them engaged in despicable predatory lending practices, taking advantage of the vulnerable and the uneducated. We have seen them send out billions of deceptive solicitations to almost every mailbox in America.
Most importantly, we have seen the financial services industry lure people into mortgages they could not afford to pay, which is one of the basic reasons why we are here tonight.
In the midst of all of this, we have a bailout package which says to the middle class that you are being asked to place at risk $700 billion, which is $2,200 for every man, woman, and child in this country. You're being asked to do that in order to undo the damage caused by this excessive Wall Street greed. In other words, the "Masters of the Universe," those brilliant Wall Street insiders who have made more money than the average American can even dream of, have brought our financial system to the brink of collapse. Now, as the American and world financial systems teeter on the edge of a meltdown, these multimillionaires are demanding that the middle class, which has already suffered under Bush's disastrous economic policies, pick up the pieces that they broke. That is wrong, and that is something that I will not support.
If we are going to bail out Wall Street, it should be those people who have caused the problem, those people who have benefited from Bush's tax breaks for millionaires and billionaires, those people who have taken advantage of deregulation, those people are the people who should pick up the tab, and not ordinary working people. I introduced an amendment which gave the Senate a very clear choice. We can pay for this bailout of Wall Street by asking people all across this country, small businesses on Main Street, homeowners on Maple Street, elderly couples on Oak Street, college students on Campus Avenue, working families on Sunrise Lane, we can ask them to pay for this bailout. That is one way we can go. Or, we can ask the people who have gained the most from the spasm of greed, the people whose incomes have been soaring under president bush, to pick up the tab.
I proposed to raise the tax rate on any individual earning $500,000 a year or more or any family earning $1 million a year or more by 10 percent. That increase in the tax rate, from 35 percent to 45 percent, would raise more than $300 billion in the next five years, almost half the cost of the bailout. If what all the supporters of this legislation say is correct, that the government will get back some of its money when the market calms down and the government sells some of the assets it has purchased, then $300 billion should be sufficient to make sure that 99.7 percent of taxpayers do not have to pay one nickel for this bailout.
Most of my constituents did not earn a $38 million bonus in 2005 or make over $100 million in total compensation in three years, as did Henry Paulson, the current secretary of the Treasury, and former CEO of Goldman Sachs. Most of my constituents did not make $354 million in total compensation over the past five years as did Richard Fuld of Lehman Brothers. Most of my constituents did not cash out $60 million in stock after a $29 billion bailout for Bear Stearns after that failing company was bought out by J.P. Morgan Chase. Most of my constituents did not get a $161 million severance package as E. Stanley O'Neill, former CEO Merrill Lynch did.
Last week I placed on my Web site, www.sanders.senate.gov, a letter to Secretary Paulson in support of my amendment. It said that it should be those people best able to pay for this bailout, those people who have made out like bandits in recent years, they should be asked to pay for this bailout. It should not be the middle class. To my amazement, some 48,000 people cosigned this petition, and the names keep coming in. The message is very simple: "We had nothing to do with causing this bailout. We are already under economic duress. Go to those people who have made out like bandits. Go to those people who have caused this crisis and ask them to pay for the bailout."
The time has come to assure our constituents in Vermont and all over this country that we are listening and understand their anger and their frustration. The time has come to say that we have the courage to stand up to all of the powerful financial institution lobbyists who are running amok all over the Capitol building, from the Chamber of Commerce to the American Bankers Association, to the Business Roundtable, all of these groups who make huge campaign contributions, spend all kinds of money on lobbyists, they're here loud and clear. They don't want to pay for this bailout, they want middle America to pay for it.
The bailout package is far better than the absurd proposal originally presented to us by the Bush administration, but is still short of where we should be. We can do better.
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Even Old Tom J. was clearer about our current problem than this admin. Note quote below.
"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
-Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802)
3rd president of US (1743 - 1826)
"I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
-Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802)
3rd president of US (1743 - 1826)
I've always been a fan of Mr. Sanders and was happy to see him move from the House to the Senate. But, why no FILIBUSTER?
This sounds far more reasonable than anything I have heard on the MSM. Where are the calls to get the money from those that caused this mess? The corporate media is very unilateral in supporting the passage of this bill - I wonder why?
Tax-increases are one way to go. But they would come late, and they would broadly hit all rich people, not just specifically those that caused the mess.
Our country has been threatened with economic destruction by a handful of people and is now held hostage by them. While they sit on their gargantuan piles of cash that they made causing this crisis, they tell us that we should throw our money into a pot to fix the mess. Their profits are theirs to keep. Their losses are ours pay for.
I think the top Wall Street executives along with their top income earners need to be rounded up, like the criminals they are, their assets seized and all everything they own either turned into cash or held as a collateral to generate the cash that we apparently need. Only once they have been squeezed completely dry, and only then, do we ask the taxpayer to make up the difference.
This is now a "pork package" intended to assure Senators and Congress
they will get something for their vote. Nothing in the new package makes
my life better in any way. This does not take the core problem, mortgage
forclosures, and make it better. Or best yet, provide direct money to all tax
payers to take debt out of their lives. Would not paying off debt, credit cards,
loans and mortgages, stimulate the economy and Wall Street? And without
giving trillions to people who have already speculated away trillions. This is
not going away. Jobs will be lost, credit will dry up in a lot of markets, and
inflation will be so high as to affect generations. We, the real America, are
still being ignored by our elected representatives.
They're not ignoring us, they just don't want to ADMIT they're paying attention to us! The House Republicans made up that totally absurd excuse about having their feelings hurt by Nancy Pelosi, but the real reason they voted against the bill was their constituents were calling at a rate of 100 to 1 telling them if they voted for it, the ultimate socialist non-free-market act, they would not be reelected!
We SCARED them! We can KEEP doing it, it's easy! Just rant away to them over email and by phone. Put their number in your cell and just call whenever you think of something to say. Paste your best blog post into an email and send it off to them. Don't stop!
Right now they're very dismissive, mentioning the bill's "massive unpopularity" as if it were something unrelated to the question of whether or not the bill should pass, but if we keep it up, we might wake people up into remembering that, oh yeah, if something isn't supported by the people, it's not supposed to pass! This is supposed to be a republic!
Without addressing the issue of foreclosures, including bankruptcy "cram-down" of mortgage balances in the bankruptcy court, as used to be the practice, the homeowner is stuck with having a balance which exceeds the fair market value. Those homeowners who are "upside down" may find that renting is a reasonable option, especially in states that have "anti-deficiency legislation, such as California.
As homeowners walk out on their mortgages, inventories of homes on the market increase, making prices fall.
I don't trust Paulson because he is a former insider in Goldman Sacks. Why is the banking crisis a surprise to him? I have been reading numerous books since 2004 predicting the housing bubble will burst. The CEO executive compensation arraignments encourage taking risk for huge profits.
The derivatives are "weapons of financial mass destruction" acording to Warren Buffet. The implosion of the market for these toxic securities which have built up in the world financial system over the last decade and one-half, has rendered the international financial infrastructure subject to collapse. We are overdue for a new international financial superstructure and the abolition of the Federal Reserve Board.
But Wall Street is holding me hostage!
I have 401K money that is basically half it's value now. Until they get bailed I suffer too because of the Wall Street "confidence" and ability to get credit.
Hear ya bud.
We are finally hearing about this "minor problem" of 401K's cut in half.
It takes a baseball bat across the head to get them to act. God forbid they should be ahead of the curve on a crisis.
I feel they will approve but so much damage has been done it may be far too little far too late.
the long post by stusoto starts with this segment, then is in order of time,.
I have listened in amazement to all the major news outlets tell the american
people they cannot possible understand what is happening on wall street. we simple need to trust the people in charge.
okay, but ;
I submit that the banking problem is not difficult to understand. it is in fact very easy to understand
and the reason no one is explaining what happened is because the country would be outraged.
let me explain it. let me explain it with an example using simple numbers. lets say a bank has a millions on deposit. that means it can lend a million dollars if it secures collateral to secure the loan.
so
in simple terms a bank that has a million dollars can offer loans for 100 homes worth 100,000 each. when you come in for the loan the bank pays either the builder or the former owner the $100,000. then
you pay back the loan with interest. the interest is the profit for the bank and as the bank makes loans the value of the banks stock goes up based on the interest due. these loans are secure because if you default on the loan the bank can repossess your home and sell it to someone else and there is no threat to the original investment. this process used to be strictly regulated by the federal government. then along came george bush.,
As it has been explained to me, if 'lets say a bank has a millions on deposit. that means it can lend a million dollars if it secures collateral to secure the loan', the bank will leverage the collateral by 10 so it will loan $10,000,000 and that is a big part of the problem.
If I have it wrong then someone correct me.
they were
abe lincoln and John F kennedy. lucky break for the bankers that they did not live to implement their plans.
so
what is going on here? the federal reserve banks used AIG to create the useless loans. AIG is the insurance company that the US taxpayers have already bailed out. so who is AIG? AIG board of directors George Bush Sr and Bill Clinton. which is why clinton is supporting mcain. why would he support mcain?
the answer is simple: the banking fraud we are witnessing today happened twice in the past the first time led to the great depression. the second time was the S&L scandal of the eighties during the reagan administration. the man held responsible for that massive fraud was John Keating. John had two partners who escaped prosecution ; Jeb bush , Georges brother and another drum roll please;
John Mcain
so the bankers make money simply by printing money. when I was young the banks could only print money that was secured by gold,
but Nixon took the dollar off the gold standard and now we print money whenever we need it.
that is the reason for inflation. it is the reason why when I was young coffee was ten cents a cup and now its two dollars a cup. and here is the big kicker; the only thing we know about the federal reserve bank is that its true name is the bank of England.
so
the unknown bankers who created this criminal conspiracy made money on the original loans they made money selling the loans now they want to make money by having the taxpayers buy the worthless loans for a second time. then they want to make money by lending us the money to pay for the worthless loans. Yes, that is what is happening. the US constitution says that the US government has the right to print its own money, but instead of doing this we pay the bank of england to print dollars. two presidents have tried to print money and shut down the federal reserve. they were
drum roll please
'The Package' is at most a 'breather' not a 'bailout.' It may be a simple waste of money...throwing bad money after bad mney.
the package would likely only delay the coming financial retribution a few days or months.
Investors are focusing more on economic indicators and earnings they are not focusing as much on the bailout.
so in very simple terms that everyone can understand despite what the news tells us, every major banking institution in the country has committed massive fraud. fraud worth more than a $1000 is a felony punishable by ten years in jail. because home loans are typically for more than a $1000 every banker in this country faces serious jail time. but only if the justice department has the courage to take action. in my experience the justice department takes the position that it is not possible for white republicans to commit crimes. the justice department believes that criminal behavior is limited to non europeans, so dont expect any massive arrests.
so what was it that congress wanted to do?
banks stay in business by using their collateral to borrow money from each other; this is called liquidity. if the banks are holding worthless loans, they have no collateral to secure their loans and the banking business comes to a standstill. so congress proposed that the american people buy the worthless loans.
so
what happened ? the courts in the United States rules that laying off loans in this manor was illegal and that the second party bank (in this case the chinese banks) had no legal claim on the collateral for the loan. what does that mean? its real real simple:
if you buy a home and the bank sells your loan and you stop payment on the loan the bank cannot
repossess your home. you cannot lose your home. no one can do anything about it. that is the current legal situation.
okay
so that means chinese banks have close to a trillion dollars in worthless loans based on the decisions of the courts those loans have no value. the reason they have no value is because the secondary bank cannot foreclose on the home and take possession of the home based on failure to pay the loan.
so
the banks sold china commerical paper that has no value, based on the laws of the united states when you sell something that has no value and you represent the idea that what you sell has value you are committing a crime. the crime is called fraud. what the banks did is no different than if I were to sell you the brooklyn bridge.
same thing
so
using our original example, if a bank had a million dollars in deposits before george bush they could make 100 loans for 100,000 dollars, and the 100,000 dollars was secured by 100,000 worth of real property. with no regulations, the banks can now make unlimited loans and it does not matter how much money they have or how much collateral they have. what typically happened is the banks sold the loans to china. this means the bankers were paid the 100,000 by chinese banks plus half the interest and the chinese bank keep the other half of the interest. so for example a bank with a million dollars in deposits could easily make two million dollars in loans. the SEC removed its regulations of the banks so that the bank could say that it was worth two million dollars, which then doubles the value of the banks stock and most of that stock is owned by the bank executives.
who said the banks don't need regulations; we will let them do whatever they want, and because most bankers are white male republicans, letting them do what they want will be good for the economy.
so
the federal reserve bank, which is a key player in all of this, said banks are now free to lay off their loans. what does that mean? it means if you go to a bank and ask for $100,000 the bank can pay the buyer or the previous owner, then they can sell the loan to a third party.
NO BAILOUT - PERIOD!!!!!!!!!!!!!
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