A lot of people are wondering why the right wing of the
Republican Party joined with the left wing of the Democratic
Party in voting down the thievery. Forty percent of Democrats and
two-thirds of Republicans voted against the bill.
Here's what happened:
The presidential race may still be close in the polls, but the
Congressional races are pointing toward a landslide for the
Democrats. Few dispute the prediction that the Republicans are in
for a whoopin' on November 4th. Up to 30 Republican House seats
could be lost in what would be a stunning repudiation of their
agenda.
The Republican reps are so scared of losing their seats, when
this "financial crisis" reared its head two weeks ago, they
realized they had just been handed their one and only chance to
separate themselves from Bush before the election, while doing
something that would make them look like they were on the side of
"the people."
Watching C-Span yesterday morning was one of the best comedy
shows I'd seen in ages. There they were, one Republican after
another who had backed the war and sunk the country into record
debt, who had voted to kill every regulation that would have kept
Wall Street in check -- there they were, now crying foul and
standing up for the little guy! One after another, they stood at
the microphone on the House floor and threw Bush under the bus,
under the train (even though they had voted to kill off our
nation's trains, too), heck, they would've thrown him under the
rising waters of the Lower Ninth Ward if they could've conjured
up another hurricane. You know how your dog acts when sprayed by
a skunk? He howls and runs around trying to shake it off, rubbing
and rolling himself on every piece of your carpet, trying to get
rid of the stench. That's what it looked like on the Republican
side of the aisle yesterday, and it was a sight to behold.
The 95 brave Dems who broke with Barney Frank and Chris Dodd were
the real heroes, just like those few who stood up and voted
against the war in October of 2002. Watch the remarks from
yesterday of Reps. Marcy Kaptur, Sheila Jackson Lee, and Dennis
Kucinich. They spoke the truth.
The Dems who voted for the giveaway did so mostly because they
were scared by the threats of Wall Street, that if the rich
didn't get their handout, the market would go nuts and then it's
bye-bye stock-based pension and retirement funds.
And guess what? That's exactly what Wall Street did! The largest,
single-day drop in the Dow in the history of the New York Stock
exchange. The news anchors last night screamed it out: Americans
just lost 1.2 trillion dollars in the stock market!! It's a
financial Pearl Harbor! The sky is falling! Bird flu! Killer Bees!
Of course, sane people know that nobody "lost" anything
yesterday, that stocks go up and down and this too shall pass
because the rich will now buy low, hold, then sell off, then buy
low again.
But for now, Wall Street and its propaganda arm (the networks and
media it owns) will continue to try and scare the bejesus out of
you. It will be harder to get a loan. Some people will lose their
jobs. A weak nation of wimps won't last long under this torture.
Neither the Community Reinvestment Act — the law most cited as the culprit — nor other affordable housing goals set by the government forced Fannie, Freddie or any other lender to make loans they didn’t want to. The lure of the subprime market was high yields and healthy profit margins — it’s as simple as that.
“The rest is a lie — and it’s industry propaganda,” said William Brennan, director of the Home Defense Program of the Atlanta Legal Aid Society, who, in 1991, began raising the alarm over predatory lending in poor neighborhoods. “It’s also racist.”
Popular belief now holds that government regulators ordered Fannie and Freddie to buy more loans made to low-income borrowers, and that housing advocates applauded the agencies’ move to enter the subprime market. In fact, the exact opposite is true, Brennan said.
He was among many advocates, back in 2000, who warned that subprime loans were dangerous and decried Fannie and Freddie’s decisions. By purchasing subprime mortgage-backed securities, the two agencies ended up providing capital to predatory lenders — leading to the foreclosures of borrowers Brennan and others saw in increasing numbers coming to them for help.
It makes no sense that housing advocates would have pressured the agencies. They were stuck with cleaning up Fannie and Freddie’s mess.
Thanks to JasonThe at the Sidetrack for the link.
A Gift for a Generation: A U.S. Financial System of Our Own
by Cynthia McKinney
September 25, 2008
Last week, I posted ten points (that were by no means exhaustive) for Congressional action immediately in the wake of the financial crisis now gripping our country. At that time, the Democratic leadership of Congress was prepared to adjourn the current legislative Session to campaign, without taking any action at all to put policies in place that protect U.S. taxpayers and the global community that has accepted U.S. financial leadership. Those ten points, to be taken in conjunction with the Power to the People Committee's platform available on the campaign website at (http://votetruth08.com/index.php/resour
1. Enactment of a foreclosure moratorium now before the next phase of ARM interest rate increases take effect;
2. elimination of all ARM mortgages and their renegotiation into 30- or 40-year loans;
3. establishment of new mortgage lending practices to end predatory and discriminatory practices;
4. establishment of criteria and construction goals for affordable housing;
5. redefinition of credit and regulation of the credit industry so that discriminatory practices are completely eliminated;
6. full funding for initiatives that eliminate racial and ethnic disparities in home ownership;
7. recognition of shelter as a right according to the United Nations Declaration of Human Rights to which the U.S. is a signatory so that no one sleeps on U.S. streets;
8. full funding of a fund designed to cushion the job loss and provide for retraining of those at the bottom of the income scale as the economy transitions;
9. close all tax loopholes and repeal of the Bush tax cuts for the top 1% of income earners; and
10. fairly tax corporations, denying federal subsidies to those who relocate jobs overseas repeal NAFTA.
In addition to these ten points, I now add four more:
11. Appointment of former Comptroller General David Walker to fully audit all recipients of taxpayer cash infusions, including JP Morgan, Bear Stearns, Fannie Mae, Freddie Mac, and AIG, and to monitor their trading activities into the future;
12. elimination of all derivatives trading;
13. nationalization of the Federal Reserve and the establishment of a federally-owned, public banking system that makes credit available for small businesses, homeowners, manufacturing operations, renewable energy and infrastructure investments; and
14. criminal prosecution of any activities that violated the law, including conflicts of interest that led to the current crisis.
Ellen Brown, author of "The Web of Debt" writes at http://www.webofdebt.com/articles/, "Such a public bank today could solve not only the housing crisis but a number of other pressing problems, including the infrastructure crisis and the energy crisis. Once bankrupt businesses have been restored to solvency, the usual practice is to return them to private hands; but a better plan for Fannie and Freddie might be to simply keep them as public institutions."
Too many times politicians have told us to support the "free market." The unfolding news informs us in a most costly manner that free markets don't work. This is a financial system of their making. It's now past time for the people to have an economic system of their own. A reading of the full text on the Congressional "Agreement on Principles" for the proposed $700 billion bailout reveals the sham that this so-called agreement truly is. Today our country faces an economic 9/11. The problem that is unfolding is truly systemic and no stop-gap measures that maintain the current bankrupt structure will be sufficient to resolve this crisis of the U.S. economic engine.
Today is my son's birthday. What a gift to the young people of this country if we were to present to them a clean break from the policies that produced this economic disaster, the "financial tsunami" that former Comptroller General David Walker warned us of so many months ago and instead offered them a U.S. economic superstructure that truly was their own.
Power to the People!
In the Public Interest
Congressional Backbone Needed
by Ralph Nader
Congress needs to show some backbone before the federal government pours more money on the financial bonfire started by the arsonists on Wall Street.
1. Congress should hold a series of hearings and invite broad public comment on any proposed bailout. Congress is supposed to be a co-equal branch of our federal government. It needs to stop the stampede to give Bush a $700 billion check. Public hearings should be held to determine what alternatives might exist to the four-page proposal advanced by Treasury Secretary Henry M. Paulson.
2. Whatever is ultimately done, the bailout plan should not be insulated from judicial review. Remember there is a third co-equal branch of government: the judiciary. The judiciary does not need to review each buy-and-sell decision by the Treasury Department, but there should be some boundaries established to the Treasury Department’s discretion. Judicial review is needed to ensure that unbridled discretion is not abused.
3. Sunlight is a good disinfectant. The bailout that is ultimately approved must provide for full and timely disclosure of all bailout details. This will discourage conflicts of interest and limit the potential of sweetheart deals.
4. Firms that accept government bailout monies must agree to disclose their transactions and be more honest in their accounting. They should agree to end off-the-books accounting maneuvers, for example.
5. Taxpayers must be protected by having a stake in any recovery. The bailout plan should provide opportunities for taxpayers to recoup funds that are made available to problem financial institutions, or to benefit from the financial institutions’ rising stock price and increased profitability after being bailed out.
6. The current so-called "regulators" cannot be trusted. The U.S. Government Accountability Office (GAO), “the investigative arm of Congress” and “the congressional watchdog," must regularly review the bailout. We cannot trust the financial "regulators," who allowed the slide into financial disaster, to manage the bailout without outside monitoring.
7. It is time to put the federal cop back on the financial services beat. Strong financial regulations and independent regulators are necessary to rebuild trust in our financial institutions and to prevent further squandering of our tax dollars. The Justice Department and the SEC also need to scrutinize the expanding mess with an eye to uncovering corporate crime and misdeeds. Major news outlets are reporting that the FBI is investigating American International Group, Fannie Mae, Freddie Mac, and Lehman Brothers.
8. Cap executive compensation and stop giving the Wall Street gamblers golden parachutes. The CEOs who have created the financial disaster should not be allowed to leave with millions in hand when so many pensioners and small shareholders are seeing their investments evaporate. The taxpayers are bailing out Wall Street so that the financial system continues to function, not to further enrich the CEOs and executives who created this mess.
9. Congress should pass the Financial Consumers’ Information and Representation Act, to permit citizens to form a federally-chartered nonprofit membership organization to strengthen consumer representation in government proceedings that concern the financial services industry. As the savings and loan disasters of the 1980s and the Wall Street debacles of the last few years have demonstrated, there is an overriding need for consumers and taxpayers to have the organized means to enhance their influence on financial issues.
10. The repeal of the Glass-Steagall Act, separating traditional banks from investment banks, helped pave the way for the current disaster. It is time to re-regulate the financial sector. The current crisis is also leading to even further conglomeration and concentration in the financial sector. We must revive and apply antitrust principles, so that banking consumers can benefit from competition and taxpayers are less vulnerable to too-big-to-fail institutions, which merge with each other to further concentration.
11. Congress should impose a securities and derivatives speculation tax. A tax on financial trading would slow down the churning of stocks and financial instruments, and could raise substantial monies to pay for the bailout.
12. Regulators should impose greater margin requirements, making speculators use more of their own money and diminishing reckless casino capitalism.
Ask your representative a few questions: “What should be done to limit banking institutions from investing in high-risk activities?" "What should be done to ensure banks are meeting proper capital standards given the financial quicksand that has spread as a result of the former Senator Phil Gramm's deregulation efforts?" And, "What is being done to protect small investors?"
P.S. Shareholders also have some work to do. They should have listened when Warren Buffett called securities derivatives a “time bomb” and “financial weapons of mass destruction." The Wall Street crooks and unscrupulous speculators use and draining of "other people's money" out of pension funds and mutual funds should motivate painfully passive shareholders to organize to gain greater authority to control the companies they own. Where is the shareholder uprising?
Here is a very quick explanation of the $700 billion bailout within the context of the mechanics of our monetary and banking system:
The taxpayers loan money to the banks. But the taxpayers do not have the money. So we have to borrow it from the banks to give it back to the banks. But the banks do not have the money to loan to the government. So they create it into existence (through a mechanism called fractional reserve) and then loan it to us, at interest, so we can then give it back to them.
Confused?
This is the system. This is the standard mechanism used to expand the money supply on a daily basis not a special one designed only for the "$700 billion" transaction. People will explain this to you in many different ways, but this is what it comes down to.
The banks needed Congress' approval. Of course in this topsy turvy world, it is the banks which set the terms of the money they are borrowing from the taxpayers. And what do we get for this transaction? Long term debt enslavement of our country. We get to pay back to the banks trillions of dollars ($700 billion with compounded interest) and the banks give us their bad debt which they cull from everywhere in the world.
Who could turn down a deal like this? I did.
The globalization of the debt puts the United States in the position that in order to repay the money that we borrow from the banks (for the banks) we could be forced to accept International Monetary Fund dictates which involve cutting health, social security benefits and all other social spending in addition to reducing wages and exploiting our natural resources. This inevitably leads to a loss of economic, social and political freedom.
Under the failed $700 billion bailout plan, Wall Street's profits are Wall Street's profits and Wall Street's losses are the taxpayers' losses. Profits are capitalized. Losses are socialized.
We are at a teachable moment on matters of money and finance. In the coming days and weeks, I will share with you thoughts about what can be done to take us not just in a new direction, but in a new direction which is just.
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green_jenni- Jennifer Killpack-Knutsen
- I'm on Common Circle.net
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