Turning a Wall Street Giveaway Into a Rescue for All Americans

• subscribe to print magazine

• stay in touch with our email newsletter

  Subscribe to our regular weekly e-mail newsletter. It's packed with updates on recent and upcoming stories, events, campaigns and things every progressive should be informed about.

   

• email this article to a friend

  Your Name Your Email Recipient Email

  Personal message Thought you might be interested in this article from In These Times.

   

  Please help us prevent spam by verifying the word you see in the image above

  Send to multiple recipients. Just separate each email address with a comma.

• Reader Comments (6)

  Page 1 of 1 pages

  I suppose we could regard this bill as a litmus test for our democracy… its passage would pretty much translate as a gigantic “F-you” to everyone who pays taxes in America, letting us all know that these legislators care nothing for us, our homes, or the future of this country.  Alternatively, if we WERE able to beat this thing, it might mean there’s hope yet for our democratic process, despite everything that is weighing against it. 
  I’ll be calling both Senators today, and my congressman if this bill makes it through the Senate… I guess that’s the best we can do in the face of so much hysterical propaganda.
  I just want to say, this bill seems to me like we’re giving a known arsonist an unlimited supply of gasoline and matches, and then asking him to help the firefighters put out the fire that HE actually started.  Completely ridiculous, right?  It seems to me, a better approach would be to provide the arsonist with intense psychotherapy (far, far away from the fire or anything flammable), and arm the people of the town with buckets, garden hoses, and anything else that will help the firefighters keep the town safe. 
  The media-military-industrial complex has lied to us too many times to be trusted… even the democrats should be regarded as part of the problem (in my eyes).  This time, we’re just going to have to let the wolf eat the little boy.

  Posted by diciteco on Oct 1, 2008 at 12:50 PM

  Those in congress are putting on a show of reluctance in order to keep their cushy jobs. They, like Bush, are saying we need to rework the system to prevent this ever happening again. It is pure BS!

  Most of these guys were there when the Glass Stiegall Act was repealed, when commercial and investment banks, insurance companies, savings and loans were all allowed free reign.

  They were charged with oversight along with the Fed, SEC, Treasury, rating agencies, insurers — all were gaining in some way by ignoring this fraud.

  Avoidance of taking the only real medicine for this affliction has been and still is the battle cry.

  These greedy, self-centered actions brought this on and aiding the perpetrators based on the too big to fail excuse will lead to repetition.

  The proposed “solution” will simply delay judgment day and extend suffering at the lowest levels of society.

  Americans should push back and take back our country. Fight this crap and those who are protecting the vile bastards who brought it on.

  We need to rebuild our manufacturing base to be competitive globally and stop rewarding those whose loyalty is to self alone.

  In my city unemployment is now at 10% (unofficially, I’m sure it is higher and job quality is pitiful) and the doom criers are still saying, “We could get a recession if we don’t fund this.”  Give me a BREAK!

  All of the candidates are clueless about what it is like for ordinary citizens today and are willing to let the same “experts” who brought us to this sorry state take charge of the cure.

  Our Congressman, Don Manzullo, is bellowing “FOUL!”  But he has been a backer of all those policies which precipitated the crisis. (He is up for reelection. Hmmmm.)

  Let the bankers and lenders sell off their assets and cover their own liabilities.

  Let the market readjust housing prices and set interest rates.

  The banks won’t foreclose — that problem is too big for them to do so. Individuals can renegotiate knowing that.
  If we really believe in FREE markets, now is the time to demand them.

  If congress can’t resist more spending — make low-interest loans available to citizens who can’t cope with thiis “crisis” for themselves.

  Posted by whattheheck on Oct 2, 2008 at 3:25 PM

  I oppose the bailout, the rescue, the whatever we are going to call it today plan that rewards failure both at the corporate and personal levels.

  I despise the idea of the .gov dictating what a CEO can earn. Who the hell are they or anyone else to tell me how high I can rise? I equally despise the “we must” mentality to corporate welfare.  Finally I don’t want the .gov stepping in an arbitrarily deciding that a valid contract between a CEO and his company is summarily invalidated.

  Since all three of those actually conflict with each other the only solution is to let Darwin take its’ course. Those that can survive, will do so. Those that cannot will die. Trust me on this, there will still be someone ready, willing, and able to accept your mortgage check at the end of the month.

  Finally, please site the appropriate authority in the US Constitution for this action. Only an imagination capable of envisioning Alice In Wonderland while not stoned will try to stretch the Commerce Clause to fit this. Apparently there are 545 People who possess such an imagination.

  http://the—realist.blogspot.com
  http://the—realist.blogspot.com/2008/08/545-people.html

  Posted by Phillip on Oct 3, 2008 at 4:06 AM

  Progressive politicians and movements missed a great chance in responding to the “financial crisis.” Since the banking systems freezing up was due to holding a large number of “subprime” loans to low and moderate income people, many of which were behind in payments or expected to default, the progressive answer should have immediately addressed this root problem. We should have proposed a “rescue” plan for the borrowers, in the form of government-financed mortgage payment vouchers, covering the difference between what a family at a given income level could afford to pay, and the actual payments the borrowers were asking for.

  This would have had three effects: (1) The moderate and low-income people who had bought badly needed houses would not be thrown out of them or forced to give up essentials to make their payments; (2) the financial institutions would immediately have their assets restored by the fact that the mortgages were no longer risky or nonperforming but were actually going to be paid off over their term; (3) since the mortgages were no longer “sub-prime” but essentially guaranteed by the government assistance to the borrowers, the lenders could be required to lower the excessive interest charged on them to a normal prime rate, so the taxpayers would not be helping to pay excessive interest rates.The size of the vouchers could be adjusted up in cases of unemployment or serious illness reducing family income, or reduced (but not dollar for dollar) when family income increased.

  A “rescue plan for homeowners” would have been be enormously more popular than a “bailout of Wall Street.” Of course money would “trickle up” from them to the financial institutions (at a normal rate of interest), restoring their assets and ability to engage in normal transactions.But it would help large numbers of lower and moderate income people become homeowners, and maintain their ability to buy other goods, helping the overall economy. And the terms of the mortgages could be stretched out to eventually repay the taxpayers for the subsidies advanced.

  Furthermore the “bailout” would not be an enormous sum quickly advanced to financial institutions, but much more modest sums paid out in mortgage vouchers annually over the term of the mortgages.

  In this crisis everyone - including progressive politicians and social movements - had their attention narrowed to the issue of “whether or not to give huge sums to Wall Street,” and failed to see the alternative of a “bottom-up” solution which helps borrowers while restoring the ability of financial institutions to function. The Democratic Party leaders are particularly at fault for this, as are the chaotically organized progressive organizations, and the professional economists, especially those writing coumns or making public statements.

  Once a more progressive government wins power it could offer to extend housing subsidies to all low income people, by offering non-homeowners mortgage vouchers under strictly regulated conditions, and expanding the miserably limited sums available for low-income rental subsidies.This would implement the basic progressive principle that housing is a right which the government should help provide to families who can’t afford it on low incomes. This would be a major redistributive program alongside free public education, college scholarships, social security,  and subsidized health services.

  Posted by allenbarton on Oct 4, 2008 at 3:57 AM

  Well, the bailout (sellout) has saved us!  We can sleep well once again.

  Yeah, sure.

  At least someone benefitted by the time pondering how to vote for it without appearing to — those people who get a bit of pork from it.

  I love the one which gives tax credit to people who bike to work. The guy that threw that into the hopper gets double credit — a greener and healthier America for only $777B +.

  Posted by whattheheck on Oct 4, 2008 at 8:32 PM

  Whattheheck,

  Apparently we mostly agree about this stuff as in the past. I haven’t seen scorp around lately to defend the failing economy or rather blame it all on Democrats.

  Your first post correctly points out the bipartisan corruption. Any member of the Senate or House that sits on Finance Committees always gets nice campaign contributions from Wall Street, particularly the Chairs. And the free as the wind marketeerism has had support from members of both parties since the late 1990s.

  Of course how could we expect Congress to regulate the financial instruments that have developed when I have my doubts any of them ever understood what had been unleashed. I still have trouble accepting that hedge funds are totally unregulated simply because you must be a rich person to start one (the premise being rich equals intelligence), especially as we had Long Term Capital Management as an example of rich people screwing up a hedge fund.

  And the pork! Old so-called anti porker McCain had no problem voting the bill without a peep of complaint about the pork. Amazing that it took pork to get more of Congress on board. They took a bad bill and made it worse, our democracy is screwed up to the max at this point.

  But in my opinion the bailout is only a delay in the inevitable, the continued bursting of the housing bubble. We still have a few years to go until we reach some sort of realized bottom. The foreclosures coming down the pike will need to be dealt with, another bailout I suppose and more national debt.

  There is not a part of our economy that isn’t in debt, from the personal, to the business big and small, to local, state and federal government. The United States of Debt.

  There was an email going around claiming that the $700 billion distributed to every adult would amount to $350,000 per adult. The actual math was $3,500 per adult, still a decent sum. That would have been some stimulus package. People could have caught up on late house payments, paid down debt, put it in savings (thus giving banks money to ease the credit crunch). Other people would have gone on a spending spree, thus spurring the economy in other ways. At least we the people could have had a say in how our added national debt would have been spent.

  Posted by Jon B on Oct 4, 2008 at 10:26 PM

  Page 1 of 1 pages

• register a new account »Posting Security

  To participate in our forums, please register for a free account.

  Username Password

    Remember me
  

  Retreive lost password »

Also by David Sirota

• We Are What We Trade and How We Trade It
  
• TARP on Steroids
  
• A Party With No Punch
  Three parables for progressives and the Grand Old (Democratic) Party.
• A Tale of Two Supermen
  
• Say It Ain’t Snowe
  
• The Zombie Zeitgeist