Rep. Barney Frank (D-Mass), chairperson of the House Financial Services Committee, is calling for the release of the remaining $350 billion of the $700 billion financial bailout package. Hearings in the House are scheduled for tomorrow (Tuesday) with a vote as early as Wednesday.
Our message should be: NO MORE BLANK-CHECK BANK BAILOUTS
The first $350 billion was an early holiday gift for the largest banking corporations in the US. Most banks receiving the funds banked them rather than using them to help people facing foreclosures. What funds that banks did spend were used for two purposes:
1. To provide large banks resources to buy other banks, further consolidating financial wealth and power. The takeover of National City bank by PNC bank in Pittsburgh was but one example.
2. Executive pay increases. An Associated Press study found that $1.6 billion went to bailed-out bank executives in bonuses and other benefits.
The Northeast Ohio American Friends Service Committee was categorically against both versions of blank check bank bailout – its original version (which was too much for even Congress to swallow) and its revised version with a few added token conditions. Limiting executive pay was supposed to be its major addition.
Now Frank is back wanted the remaining $350 billion.
Treasury Secretary nominee Timothy F. Geithner and President-elect Barack Obama economic team are promising big changes.
They claim they want to use rescue funds to help homeowners avoid foreclosure and unclog the credit markets that finance loans to consumers, small businesses and municipalities.
Frank says he wants to restrict executive bonuses and, according to the Washington Post article, “require firms that receive federal aid to explain how they are spending the money.”
Transparency and accountability would be welcome improvements but is this all we the public should expect? Frank and his colleagues should DEMAND how public money will be spent rather than giving banks the virtual freedom once again to do what they want.
We the People may also want to advocate for these 3 items:
1. Any future financial bailouts of private companies (banks or otherwise) should include the conditions of public ownership — i.e. exchange of preferred shares of corporate stocks in exchange for public funds. Voting shares of corporate stock should be used to leverage companies to act with more transparency, to treat workers more fairly, and to create more sustainable company practices. It could also be used to extend political democracy into the economic arena by encouraging democratic workplaces, thousands of which exist throughout the world.
2. Those responsible for the banking crisis be held personally liable — i.e. prosecution of financial institution leaders and no bonuses or golden parachutes.
3. An immediate moratorium on foreclosures and evictions of low- and moderate-income people until the economy stabilizes.
Contact your Representative and Senators right away.
Making and enforcing new rules is necessary, but that will not be enough. The nation needs a new perspective on the markets, one that acknowledges the self-destructive bent of unfettered capitalism and its ability , unchecked, to wreak havoc beyond Wall Street.
– New York Times editorial, September 16, 2008
Whoever controls the volume of money in any country is absolute master of all industry and commerce.
– James A. Garfield, President of the US, from Ohio