Rep. DeFazio has introduced a plan based on what JD refers to as an "extremely important point below - the FDIC intervention in the 80s.
The "No BAILOUTS Act" http://www.thenation.com/blogs/thebeat/366595 On Wed, Oct 1, 2008 at 11:40 AM, Jim Devine <[EMAIL PROTECTED]> wrote: > > [This suggests that the reason why the original plutocratic Paulson > Plan did not involve the feds taking over bank equity was precisely > because the bankers did not want the feds take over their equity.] > > Wall Street Held a Gun to Our Heads > > The $700bn bail-out bill is a victory for wealthy bankers who > exploited fears of a financial crisis for their own gain > > By Dean Baker > > Most authors of books on politics or economics are happy when they get > one or two prominent members of Congress to endorse their work. It > looks like I'm about to get majorities of both chambers to endorse my > book, The Conservative Nanny State: How the Wealthy Use the Government > to Stay Rich and Get Richer (free download available). There is no > other way to describe Henry Paulson's $700bn bail-out deal. > > The point of my book is that the battle between progressives and > conservatives is not about a policy of government intervention as > opposed to free market policies. Rather, it is a battle between those > who want to use the government to benefit the middle and bottom of the > income distribution and those who want to use the power of government > to redistribute income upward. > > The bail-out is a big victory for those who want to redistribute > income upward. It takes money from school teachers and cab drivers and > gives it to incredibly rich Wall Street bankers. These bankers have in > turn distinguished themselves by their incompetence, having driven > their banks into the ground. > > This upward redistribution was done under the cover of crisis, just > like the war in Iraq. But there is no serious crisis story. Yes the > economy is in a recession that is getting worse, but the bail-out will > not get us out of the recession, or even be much help in alleviating > it. > > The best argument that the bail-out proponents had was that the > failure to do the bail-out could lead to a collapse of the financial > system, leaving us unable to use credit cards or ATMs, or otherwise > conduct normal financial transactions. This would indeed be scary, > since it would imply a complete economic collapse. (I had actually > accepted this line.) > > Actually this was entirely an idle threat. In the event the banking > system really did freeze up, then the Federal Reserve would step in > and take over the major banks. (It had contingency plans for such a > takeover in the 1980s, when the money centre banks were saddled with > billions of dollars of bad developing country debt.) [this is a > extremely important point. -- JD] > > The banks would not be happy about a Fed takeover. The top executives > would be out of their jobs, and the shareholders would likely lose > their full investment. However, the rest of us would be able to carry > on with our lives as we did before. After maybe a few hours of > disruption, we would be able to cash checks and use credit cards and > ATMs just as we did before the crisis. > > In effect, the big banks had a gun pointed at their heads. The banks > told Congress that if they didn't get $700bn, then they would pull the > trigger. Given this choice, Congress coughed up the cash. > > While the final version is an improvement over the original request, > there is little by way of hard commitments on the key points. Which > executives will see their pay limited and by how much? How much equity > does the government get for buying the banks' bad debts? How many > mortgages will be renegotiated? If this were a serious bill, there > would be specific wording on these points. > > Henry Paulson did not sign a contract when he was CEO with Goldman > Sachs that gave him "fair compensation". He signed a contract that > specified that he would get tens of millions of dollars in salary and > bonuses. Similarly, when Warren Buffet invested $5bn in Goldman, he > got a 10% stake in the bank, not a generic promise of "equity". That > is the way business is usually done when people are serious. > > The bill also does not change the bankruptcy rules to allow people to > stay in their homes. Nor does it provide for any real stimulus. > Undoubtedly, the spending on the bail-out will be used in future > months as an argument against real stimulus. > > Wall Street may have won this one, but this is the battle not the war. > The whole country now knows that these millionaire and billionaire > high-flyers are the biggest bunch of welfare cheats around. The folks > with the yachts, private jets and personal servants lack the skills > and diligence to make it on their own. They need the tax dollars from > the rest of us to make ends meet. > > Every progressive in the country should be working to ensure that this > bail-out is incredibly costly for the Wall Street crew. They should > wish that they never took our money. > > -- This article was published on September 29, 2008 by The Guardian Unlimited. > -- > Jim Devine / "Nobody told me there'd be days like these / Strange > days indeed -- most peculiar, mama." -- JL. > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l -- Robert Naiman Just Foreign Policy www.justforeignpolicy.org [EMAIL PROTECTED] Ambassador Pickering on Iran Talks and Multinational Enrichment http://youtube.com/watch?v=kGZFrFxVg8A _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
