- ‹ previous
- 1482 of 7916
- next ›
In Dealing with the $700 Billion Bailout, Dems Ought To Point Fingers
I am often reluctant to give advice to members of Congress. But in this case, it was hard to resist. Here's a posting initially put up elsewhere....
In reaction to the financial crisis, here's what the Democrats who control Congress ought to do:
1. Work vigorously on the bailout proposal submitted by Treasury Secretary Hank Paulson but add the populist provisions that Robert Reich and others are suggesting.
2. Point fingers.
Assigning blame ought to be a key component of the Democratic response to the current meltdown. And that ought not be hard to do. House Speaker Nancy Pelosi and Senator Harry Reid could set up a joint select committee to investigate the causes of the financial crisis. This committee then could start holding hearings immediately and haul before it the heads of the companies that have screwed up and imperiled the economy. This will not be a short list. Call in top officials from Lehman Brothers, Merrill Lynch, AIG, Bear Stearns, Countrywide Financial, Fannie Mae, Freddie Mac. Demand explanations from them. Explore how much money they pocketed personally while overseeing their institutions.
That's just a start. The committee should bring in experts who can explain (clearly!) how these players and others abused credit default swaps, subprime loans, mortgage-backed securities, and other hanky-panky financial products.
And there's more: the political side. Invite (or subpoena) lobbyists to appear and reveal what they did to win favorable treatment (that is, less regulation) for their Big Finance clients. Phil Gramm, the former Senate banking committee chairman, should be asked to explain what he was thinking when he used a sly legislative maneuver in late 2000 to win approval of a bill that kept swaps from being regulated. And he ought to be asked what role financial industry lobbyists played in drafting that bill. Ditto for the 1999 legislation that tore down the firewall between commercial and investment banks.
Sure, this won't be easy. Members of Congress--Democratic and Republican--are complicit; many of them went along with the rush to deregulate. They will be reluctant to scrutinize their own actions and those of lobbyists who have donates to their campaigns. But self-examination is not too large a price to pay for putting $700 billion of taxpayer money on the line. Actually, anything less would be rather irresponsible.
From a market perspective, it would be quite useful to (a) learn who messed up and how they did so (so others can avoid similar mistakes) and (b) shame those who did (so they are driven out of the market and others fear similar sanction). If markets work, they should operate better with more accountability and transparency. The bottom line: blame is good.
Digg
Reddit
Twitter
Facebook
Buzz Up!
StumbleUpon
MySpace
LinkedIn
Delicious
Furl
Google
Yahoo
All good and reasonable points!
I do think Congress should not give the Bush Admin. 700 billion all at once. Perhaps, half now and in 3 months release the remainder with the understanding that Congress has the right to stop the release if the money is not necessary or if the plan is not working.
On one hand, I do believe this is a real crisis with dire consequences. Yet, I am concerned that this is yet another attempt by the Bush administration to dupe Americans. Again, we are faced with a crisis where Congress is pressured (through fear tactics) into signing onto something that is based on trust with little or not transparency.
I would like to know if the 700 billion of tax payer dollars will be used at the discretion of the Bush Administration. Could they use portions of the money to build more bases in Iraq or fund a war against Iran? Are we sure the Bush Administration won't be allowed to borrow against this money or if all the money is not used for the crisis--will it be used pay for something other than the bailout.
We have seen Congress pressured into giving Bush the right to attack Iraq, signing the patriot act, homeland security, etc., and now this crisis. We definitely need to make sure that Congress does not sign another blank check to Bush--this is so reminiscent of the fear tactics used to get us into Iraq.
I have a couple issues that I'd like to see addressed in these banking committee hearings, if anyone can get them addressed:
1) Why was short selling ever allowed? Does it provide a useful function in the marketplace, and what is that function, if so?
2) If, as Sec. Paulson suggested, everyone needs to keep borrowing more money to stay in their homes and to keep their businesses running, what is the indicator that they should NOT be buying a home or running a business?
Financial-market wise guys, who had been seized with fear, are suddenly drunk with hope. They are rallying explosively because they think they have successfully stampeded Washington into accepting the Wall Street Journal solution to the crisis: dump it all on the taxpayers. That is the meaning of the massive bailout Treasury Secretary Henry Paulson has shopped around Congress. It would relieve the major banks and investment firms of their mountainous rotten assets and make the public swallow their losses--many hundreds of billions, maybe much more. What's not to like if you are a financial titan threatened with extinction?
If Wall Street gets away with this, it will represent an historic swindle of the American public--all sugar for the villains, lasting pain and damage for the victims. My advice to Washington politicians: Stop, take a deep breath and examine what you are being told to do by so-called "responsible opinion." If this deal succeeds, I predict it will become a transforming event in American politics--exposing the deep deformities in our democracy and launching a tidal wave of righteous anger and popular rebellion. As I have been saying for several months, this crisis has the potential to bring down one or both political parties, take your choice.