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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E- mail and fax your Congressional Representative and Senators, asking them to vote No on anything other than FDIC protection until proper safeguards are put into place, including punishments and penalties for the perpetrators and beneficiaries of this debacle.
Nice try, but it is not all Wall Street Greed.... Clinton / Grahm era pandering , aka affirmative actions , forced leneders to loan to those who had no way of repaying,, legislators, aka yourselves , in 2003 , specifically Barandey Frank torpedoed legislation to put in safeguards.
No....The lenders were forced to make a decision; whether to jump on the greed train, or stand on ethics and not make bad, very expensive loans. NOBODY FORCED anyone to do anything.
Nice try but you'd better go back to your comfort zone...you
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Hi Bernie, yes it's going to be more of the same until we dump the Dems as readily as we denounce the repugs.
It's getting harder to find these citations, but I'm reminding our readers that Robert Rubin left Gov't service under President Clinton, to become part of CITI, in a job with no title.....
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Could you explain the "forcing" of lenders to loan money to those who cannot repay? I've heard this line before, but with no information to back it up-- specific sources, please.
LOL.
I'm so sorry your conservative ideology is crashing and burning under the weight of its own failure.
The long period in opposition that awaits the conservative movement can be constructively used by them to try and create an ideology that actually works in the real world.
Affirmative action? Sounds like you think non-whites are the only who were unable to pay back their debts. The lending crisis extended to all colors and all neighborhoods. While people should not have taken on more than they could pay back, the lenders should ot have told them that they (the lenders) could make it easier for them to pay it back. No one forced these banks to loan out the money just like no one forced the people to take the money. However stupid tax credits are given to homeowners as incentive to borrow money and play into the game that these banks were gaming at.
Poor, poor lenders. The business crumbles while they come out of this crisis with millions of dollars and golden parachutes; their lower level employees without jobs. The greedy affirmative action recipients lose their homes, their livelihood and their pensions. Boo hoo to the lenders.
Questions to ask your Congressperson before bail out package approval:
1. Why would Treasury need to be afforded immunity?
2. Why would Congress issue blank check to Treasury without right to Congressional oversight?
3.Why would reverse auctions have to be held by financial institutions which have a severe conflict of interest?
4. Why could an auction not be held for access to private funds, which would establish the real market value of the disfunctional paper and if that auction would fail Treasury could provide a backstop at better prices for the Taxpayer.
5. How can Treasury make statements that this bailout out will not cost the taxpayer anything, when currently no meaningful pricing is available?
6. Why would morgagees not be allowed to offer to buy back their mortgages from the Treasury within two years if the price is higher than what the Treasury paid for the paper?
7. Why would Congress not consider directly subsidizing defaulting mortgagees, this a) would be much less costly and b) improve the default rate immediately and as a result lift the prices of the respective assets on the banks books, decrease the writeoffs and as a result create higher tax revenue and the ability for the banks to raise more capital at higher equity prices?
8. Has Congress considered the repercussions on interest rates if $ 700 billion or almost 10% of all Treasury debt is added almost at an instant?It will increase cost for homeowners even more.
NYT: McCain chief of staff/lobbyist was paid $2m by Fannie and Freddie for access to McCain and to stop regulation of banking industry
McCain and staff admit outright that earlier this decade they were paid $2m to the man who is now John McCain's campaign manager in order to buy influence with John McCain as Senator and as possible president (they also paid him to derail legislation that would have increased federal regulation of the banking industry). There should be a campaign to demand that McCain's campaign manager, Rick Davis, give ever penny back to the American people. There had better be an ad about this out by COB Monday, and calls for Davis' resignation.
http://www
How is this not considered bribery?
This can in no way be considered the government of the People. It is clearly the government by and for the rich.
And it is rotten to its core.
I find it interesting that now the American taxpayer owns an Insurance company (AIG), yet many of those same taxpayers can't afford individual health insurance. This not only is ironic but absolutely absurd. Why the hell are we bailing out private companies whose CEO's epitomize greed with their outrageous salaries and bonuses? Enough is enough! Our politicians, on both sides, are nothing short of hypocrites allowing the rich to get a free pass and never once do they think of the small business person whose company goes under on a daily basis. What is fair for one should be fair for all, not just politicians rich friends. Let these rich b*st*rds pay for their own incompetence with the money they didn't earn which caused the damn failures in the first place.
Should we get Obama in the White House, maybe we can clear the execs out of AIG and just roll everyone into it - since they can negotiate pharma prices while MedicAid and MediCare are hamstrung.
And with an influx of 45,000,000+ individuals, we should get a lot of leverage.
We won't own squat. What will happen as Bill Maher's guest pointed out in this week's sit-down is that if McCain gets in the White House, over time the government will announce they have no money for healthcare, no money for infrastructure, no money for aid for the children (well, you can scatch this one because I believe they've already said they have no money to insure children). It is a disaster waiting to happen.
Pay no attention to the numbers for a moment: they are a distraction from the power grab.
Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency
YUP
VERY GOOD PRINCIPLES!
At long last some one speaking with the specifics.
The general idea is there. Thanks.
Granted, I don't know much about finances, but...
if we the taxpayers bail out these institutio
Or they owe us...big time...mea
The idea that "......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." is right in principle and somewhat wrong in the specifics.
The way to fix the problem faced by the financial institutions is to fix the problem faced by the mortgage holder. It is kind of a bizarre way to look at this crisis that there is some kind of debt instrument that is based on sub-prime mortgages that is causing these companies to fail, so.... uhhh..... we'll buy the debt instrument
Ensure that all three stakeholde
The way this treasury proposal is.... everyone else gets pain... and the financial institutions get of scott free. No way! Address the problem at the mortgage holder level. If that is done, what does the bank have to worry about?
hey bernie, why randomly impose a surtax on individuals who make over $500,000??? i know plenty of people who work really hard and make ZERO dollars off of wall street and banking that would fall under this category. my family would, and we were victims of the unbridled and unregulated mortgage market last year. we took a $200,000 loss on a home we had to sell because of the meltdown. why should we be taxed more because we work hard? unfair. make ceo's forfeit their ridiculous salaries instead of taxing WORKING people more. what are you thinking???????????
Sounds like you will be OK regardless.
The increase in the value of your home during the boom may have been artificially inflated as a result of the boom.
You're in the market in this country whether you are aware of it or not.
This is what happens when we decide not to enforce the anti-trust and monopoly laws. Is this REALLY a surprise to anybody that these mega corporations are in trouble? George did not get an MBA degree for nothing. Unfortunately it appears that the only classes he bothered to apply himself with were the ones that taught how to skirt laws, throw away ethics & honesty, and how to lie effectively.
But Paulson says that the bankers may not like having pages of self-serving contractual entanglements shoved across the table at them and told to 'sign' and here, and again here.
Has mention been made by anybody about going after those golden parachutes bestowed upon the heads of these financial institutions as a reward for having run them and our country into the ground?
What about imposing retroactive windfall profit taxes on the oil companies that post billions in profits each and every quarter while we little guys can't afford gas for the car or heat for the coming winter.
We can never, ever catch a break. . . us little guys. . .and the wealthiest self-described "beautiful people" look down their noses at us peasants but expect us to clean up their messes. . . literally and financially.
It's time to tell those Fat Cats,, "We're tapped out. Look to your millionaire and billionaire friends this time." You know, the ones favored with huge "temporary" tax breaks which would "trickle down" to us.
If there was ever a time for a taxpayer revolt, this is it.
Bernie you are a national treasure! I agree with you entirely..
Bush gave these people one of the biggest tax cuts in history and they were supposed to generate jobs....No
The tax rates in the 50s were 90%.... These people who have been spending all of this money supported BUSH TO THE MAX and I would think that they should be paying even more than you indicated.
In a span of 2 weeks McCain went from a so called Maverick, Change Agent, Deregulator, and a phoney Popalice candidate, "I feel your pain". This man head is spinning like the girl on the exorcist. McCain is so confused and he wants to take the american people down that state of confusion and recklessness. No coherent message at all. Whatever floats your boat, he'll try it. Presidenti
Something is not right about this bailout, I keep thinking about IRAQ. Could it be that the repub are trying to give McCain cover to fakely separate from Bush? Let the people make all of the money that they can make now. Cripple the economy so if Obama wins, his plan for the middle class gets squashed because we supposely don't have any money to spare. The truth will come out just like it did with IRAQ.
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