The Middle Class Must Not Be Forced to Bail Out Wall Street Greed
For years, as a member of the House Banking Committee and now as a member of the Senate Budget Committee, I have heard the Bush administration tell us how "robust" our economy was and how strong the "fundamentals" were. That was until a few days ago. Now, we are being told that if Congress does not act immediately and approve the $700 billion Wall Street bailout proposal these "free marketers" have just written up, there will be an unprecedented economic meltdown in the United States and an unraveling of the global economy.
This proposal as presented is an unacceptable attempt to force middle income families (and our children) to pick up the cost of fixing the horrendous economic mess that is the product of the Bush administration's deregulatory fever and Wall Street's insatiable greed. If the potential danger to our economy was not so dire, this blatant effort to essentially transfer $700 billion up the income ladder to those at the top would be laughable.
Let us be clear. If the economy is on the edge of collapse we need to act. But rescuing the economy does not mean we have to just give away $700 billion of taxpayer money to the banks. (In truth, it could be much more than $700 billion. The bill only says the government is limited to having $700 billion outstanding at any time. By selling the mortgage backed assets it acquires -- even at staggering losses -- the government will be able to buy even more resulting is a virtually limitless financial exposure on the part of taxpayers.) Any proposal must protect middle income and working families from bearing the burden of this bailout.
I have proposed a four part plan to accomplish that goal which includes a five-year, 10% surtax on the income of individuals above $500,000 a year, and $1 million a year for couples; a requirement that the price the government pays for any mortgage assets are discounted appropriately so that government can recover the amount it paid for them; and, finally, the government should receive equity in the companies it bails out so that when the stock of these companies rises after the bailout, taxpayers also have the opportunity to share in the resulting windfall. Taken together, these measures would provide the best guarantee that at the end of five years, the government will have gotten back the money it put out.
Second, in addition to protecting the average American from being saddled with the cost, any serious proposal has to include reforms so that we end the type of behavior that led to this crisis in the first place. Much of this activity can be traced to specific legislation that broke down regulatory safety walls in the financial sector and allowed banks and others to engage in new types of risky transactions that are at the heart of this crisis. That deregulation needs to be repealed. Wall Street has shown it cannot be trusted to police itself. We need to reinstate a strong regulatory system that protects our economy.
Third, we need to address the needs of working families in this country who are today facing very difficult times. If we can bail out Wall Street, we need to respond with equal vigor to their plight. That means, for example, creating millions of jobs through major investments in rebuilding our crumbling infrastructure and creating a new renewable energy system. We must also make certain that the most vulnerable Americans don't freeze in the winter or die because they lack access to primary health care.
Finally, we need to protect ourselves from being at the mercy of giant companies that are "too big to fail," that is, companies who are so large that their failure would cause systemic harm to the economy. We need to assess which companies fall into this category and insist they are broken up. Otherwise, the American taxpayer will continue to be on the financial hook for the risky behavior, the mismanagement, and even the illegal conduct of these companies' executives.
These are the last days of the Bush administration, the most dishonest and incompetent in modern American history. It is imperative that, at this important moment, Congress stand up for the middle class and for fiscal integrity. The future of our country is at stake.
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If Bill Clinton's efforts to share the housing industry with others and Jimmy Carter had not passed the share the financial sucess with the poor we would not be here at this time doing this emergency bail
This kind of assessment of crucial moments in our economy makes me wonder if there are any smart individuals left. Clinton did not favor deregulation. The present crises, if you ask any analyst or any individual with an ounce of knowledge of what is going on, included McCain, will tell you is because of Deregulation, which has been a Republican practice for the past 20 years or so, so what is your argument here?
There should be a 10% surtax on all incomes over 2 Million to help fund this fiasco.
Please, keep repeating your PERFECT line from your previous post: "If a company is too big to fail, it is TOO BIG." This is something people CAN understand.
This isn't the first time things like this has happened..
Look back...eve
Just different this time....mu
Almost like trying to bail water out of a leaky boat.
Are we sinking yet ??? Or can another patch be put over another problem as history repeats itself.
Any government bailout of mortgage lenders should include amnesty for homeowners who are in danger of default on their mortgages. A bank does not need to foreclose; it can always renegotiate the terms of the mortgage. Foreclosure is optional, not required. If the government is buying up mortgages, it gets no money if there is a foreclosure, particularly if a house is vacant and there are no buyers in a soft housing market. If the homeowner was allowed to stay in the house and make some payment toward principal, then at least the government recoups some money on the loan. There is no reason to collect interest on the loan, since interest is essentially profit, and is of no value to the homeowner who needs to decrease the spread between the sale price -if the home is to be sold eventually- and the amount owed on the home.
Are you serious? There are so many flaws in your argument I wouldn't even know where to start. Let me guess, you're one of the homeowners who is in danger of being foreclosed on. Perhaps the government should give the foreclosed on houses to those of us who were smart enough to stay "thanks, but no thanks" to those juicy refi offers. Investors shouldn't be rewarded for foolish behavior, but neither should the people who got in over their heads.
Don't forget, the premise was, in the event of a bailout.
Guess what?
If there is to be any change between here and 7000 it will be based on the fact that WE are the most needed banker in this deal.
No bailout - hyperCapitlism.
Still waiting.
I would bet that most of those 'refies' were made by desperate people trying to find any capital they could get ahold of to pay their ever escalating bills. Lord knows our wages have never gone up like the cost of living has. This 'blame the victim' crap has got to go!
Bushes 'ownership economy' was a scam to bilk the lower middle class by offering them a way to get out of the rental market and into 'home ownership' market ... where they were taken with loans that were designed to balloon and fail.
HyperCapitalism,
I think that if these people with the ARMs had just been given a fair fixed rate, perhaps somewhere around 5 and a half to 6, and just left it at that, a good deal of this would never have happened. It was the constant elevating of the interest that messed a lot of them up, and why did the interest of the ARMs keep going up anyway when the FED was consistently lowering the interest rate these last two or three years, that is the question. Greed and profit mongering, which all went into the pockets of these scoundrel Banks and Loan agencies. Finally all of it ended up in off shore banks to protect the profits from taxation. Which now we are being hit up for via a bailout. Do you still feel like being held responsible for their greed? You wouldn't let your neighbor saddle you with his debt, why are you so willing to be saddled with the debt of Rich Corporations? Are you a member of one of them? Or just one of them?
I can't possibly be the only person who has sat and watched this all unfold who thought to him/herself "Hmmmm sounds like Iraq II." Why all the fierce urgency? As I recall, that urgency. That rallying cry that there was no choice is what cost us 4000+ soldier's lives and trillions of dollars.
PLEASE senators - especially Democrats - do NOT let them railroad you into thinking this is the only way and that is must be done now or we'll all die. It's bunk. The polar ice caps are melting and I don't see anyone desperately trying to cut carbon emissions.
Do not let the greed of Wall Street become Iraq II. Please!!! The American people are counting on you to get it right this time.
Well put MissEdith.
Senator,
I had just finished writing to my senators and congressperson when I read your article on Bush's corporate welfare plan.
I struggled with all the issues and had concluded the same solutions you are proposing.
Too bad I didn't read your article FIRST. Then I could have enjoyed my morning rather than have to think about the mess the Repulicans have made of OUR country.
Let the banks fail, take care of the PEOPLE and we'll also get a healthy economy back with accountable banks and finance companies. The fat cat casino bankers will not starve, we have plenty of soup kitchens in America where they can get fed.
Sen. Sanders,
I can live with your plan; I cannot however, accept a simple (?) 700 billion bailout. I understand the need to assist the failing corporations in oder to stave off a calamity which resulted in the Great Depression. I do not, however, feel that the American people should gleefully pay for the relentless greed without getting something in return and putting strict regulations back in place. I believe your plan is far more acceptable.
Think about it folks, we are paying in everyway. We bailout these Corporations, they have employees whom they don't like to pay any more than they have to. These same employees need services so they have to buy them from these same greedy Corporations. So with the small paychecks they make they have to pay taxes to save the very Corporations that don't want to pay them anything but want to extract huge sums for their goods. Pray tell where are we the taxpayer supposed to get all this money from. In addition the money that these Corporations will be making in the future is the money we make so little of and this money is the same money they will use to repay us the Taxpayers who bailed them out. Do you begin to see the weird circle yet folks. We are robbing ourselves to pay ourselves and getting nothing in the process. The only ones who stand to profit are the greedy execs who will continue to skim the profits for themselves by way of Perks, benefits, compensation, Golden Parachutes and exorbitant paychecks. We must demand that our Congressmen set conditions, otherwise it's just more of the same.
Senator,
Just one more thing, When a country, ie Iran or Korea, gets on our bad side for some reason we freeze their assets. It should be legal to freeze the assets of any and all CEOs whether here or abroad (offshore accounts), just as if they were a hostile nation. These execs actions were hostile to the financial well being of the U.S. in no less a fashion. A former AIG exec was interviewed by Charlie Rose recently. He said that we (The Government) should save AIG because it is a national asset. It does so much business around the world in so many countries that it in a sense represents Americans as a whole. If those are his own words then I would say that that means any actions taken by these fellows to do damage to the image of America and it's people, caused by their incompetence or corruption should be treated as hostile acts. This would justify freezing or confiscating their assets, in my view.
What about the incompetence of the American electorate for voting for Bush? What about the incompetence of the masses of people who took mortgages they should have known damn well they couldn't afford? Corporate America does not have the corner on greed -- trying to get something for nothing seems to be the new American Dream.
I agree that these irresponsible hogs should be held accountable just as any hostile nation but HyperCapitalism the American public did not vote for Bush the first time. He stole the election and if he had not done so and had not used 9/11 as a stepping stone for the next one he would not be in power right now. However, I do agree with you on Americans trying to pull a fast one on each other just to get what they want. That is what has gotten us into this mess to begin with, because the Republicans especially felt that they could do whatever they want, make all that money for their corporate friends and then get out while they can. I do not know why Bush has not been impeached for these ridiculous actions.
I agree that Bush stole the 1st election and should have been impeached long age, but the fact of the matter is that the American people elected him to a second term and bought his horse #$%^ about 9/11 -- and it wasn't hard so see right through it! Half our nation has been sleepwalking for too long.
I think you agree that none of this insanity would be happening now if not for the cooperation of the American people on many levels. Trying to scapegoat GWB or the banks is BS, we're all to blame -- we are co-conspirators with equal liability.
Scapegoating the banks is counterproductive, they (and remember the banks are just a collection of individuals) were doing the same thing the people making $60k a year who bought $500,000 homes did -- they were acting in their short term best interest and relying on someone else to do the hard thinking for them!
So, who is supposed to be doing the hard thinking about the long term big picture implications of economic trends? Oh yea, Bush, that guy the country thought would be a great drinking buddy. When will people learn that brains and critical thinking skills are important traits for our leaders to have?! McCain graduated 894 out of 899 in his college class and we don't even know what Palin's GPA was (although it might be hard to calculate accurately since she went to 5 different colleges). So you really want to know who's to blame -- it's the American people, but they can't handle the truth and the media and the politicians are too spineless to tell them!!! The only part that's unfair about this bailout is that those of us who saw through GWB's BS have to foot the bill too!!! What's truly amazing is how many of the fools haven't learned a thing in the last 8 years. If McCain and Palin win I'm taking my toys and moving to Europe (if they'll have me).
Although the Republicans are responsible for this after 12 YEARS, first in 6 years of a Republican Congress shoving these disastrous bills down our throats and hamstringing Clinton, and another 6 years under Bush and 2 more years of putting holds on or filibustering every bill that matters until they got their way, you still have to hold Nancy Pelosi accountable TOO. If impeachment had been an option, Bush couldn't have gotten away with this and whatever more he's got planned. He's already started a war, in Pakistan, a country that is nuclear armed. He's PLANNING to invade Iran and threatening war with Russia, another nuclear armed country. He's got almost 4 months and he and Cheney and the Republican party can do ONE HELL of a lot of damage with that much time. Nancy Pelosi needs to put her country and the Constitution FIRST and step down as speaker and let someone in who will do the job.
weslenforever,
Actually, on the point of replacing Pelosi an Reid I can agree with that. Neither one has shown me that they have what it takes to defend their constituents. I want People representing me who show me that they have some gonads and will fight back. These guys spend way to much time in the company of Republicans and smile alot. I don't like that at all.
Senator Sanders,
I had already contacted my own State Senators, Wyden and Smith as well as Representative DeFazio. I told them then that l as a citizen do not want our taxes handed over to the Corporations unless they met certain conditions, especially that of limiting the Pay of the Execs from these Corporations to minimum wage. They should also be made to return all bonuses paid them. Their prior contracts should be considered null and void thereby eliminating all Golden Parachutes, perks and whatevers. These individuals cannot benefit from their incompetence. They have either been incompetent or corrupt, that can be the only answer. We must hold them to these conditions and perhaps others I haven't even considered yet. The Corporations, and Republican allies have exclaimed that handouts, as they put it , were socialism. Now Socialism is just fine if if is saving their own bacon. Republicans and this Administration may well try to press for haste in order to have their way. Remember the adage "Act in haste Repent in leisure" Do not allow them to force you into something that will only serve to shaft the American public even further. They have stolen our civil rights by using Terror as an excuse for haste, what is to stop them from robbing and bankrupting the U.S. Government in order to permanently cripple it. Who knows where else they would go from there. We are on your side do not falter on this issue.
In 2002 Greenspan warned that we were heading for financial disaster with the lending practices at Freddie and Fannie. There was proposed legislation to correct this problem that came out of the Senate Finance committe and the Republicans voted in favor and the Democrats voted against it. If this legislation had passed we would not be in this mess today. Thanks, Democrats!
Excuse me? Where are your figures? In 2002 the Republicans were in the majority. If the Republicans had voted in favor it would have passed. As Daniel Patrick Moynihan said: You are entitled to your own opinion but not to your own facts.
I concur. Again please stop posting up ridiculous arguments that are a part of the Bridge to Nowhere
Bernie, you and the rest of Congress are about 500 billion too late. Where were you last week when Bush and the Fed bailed out private cos. without even a vote on the floor of Congress? It looks like we have a debating society there instead of a real Congress. Was the Congress even consulted or informed before the news media was informed or did you find out about it on TV such as the rest of us? The US Constitution says that only Congress has the right to appropriate funds, not the Decider nor the Federal Reserve. Add another article of impeachment to the 35 already presented in the House (and ignored).
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