Many years ago my father asked his children in a dinner-table conversation, “Why will capitalism always survive?” His answer: “Because socialism will always be used to save it.”
The cause of the financial markets meltdown is simple: powerful greed fanned by fraud and reckless risk transfers. Wall Street wanted something for nothing. This fairy tale was written by an army of Wall Street lobbyists who tore down regulations and safeguards meant to protect savers and shareholders.
The financial black belts who made billions from this Ponzi scheme deserve the brunt of law enforcement. But deregulation meant there was very little law, much less enforcement. Instead, the socialist superman has swept down to New York City from Washington to bail out casino capitalism on Wall Street, which is spewing forth ever more kryptonite.
Every time Congress has acted in haste, it has led to a boondoggle, from the $3 billion synthetic fuels legislation of 1980 to the Iraq War resolution of 2002. Without public hearings, without safeguards, accountability and Congressional oversight, without comprehensive regulation and shareholder governance, King George and Comrade Paulson’s $700 billion blank check of cash for trash will be the goliath of domestic panic legislation.
Slow down, Hank!
§ Taxpayers must get prudent participation for taking the risk of bailing out Wall Street (the bill for which is edging up to $1.6 trillion), ideally in the form of stock warrants.
§ Homeowners and neighborhoods must be protected by passing a law with a sunset clause allowing below-median-value homeowners facing foreclosure the right to rent-to-own their homes at fair-market-value rates.
§ Conflicts of interest must be reduced by taking away the power of auditor and credit-rating-agency selection from companies and placing it in the hands of the Securities and Exchange Commission, to be administered on random assignment.
§ Accountability must be restored to financial markets by introducing covered bonds for the majority of mortgage products as they do in Western Europe, which prevents originators of mortgages from passing the buck.
§ And before the taxpayer gambles on bailing out Wall Street, we need to implement restraints on Wall Street’s dangerous habit of gambling with other people’s money. This should start with a securities-speculation tax and effective margin requirements to refocus the financial markets on their proper function.
OTHER CONTRIBUTIONS TO THE FORUM
Doug Henwood
William Greider
Nomi Prins
Thea M. Lee
Robert Pollin
Thomas Ferguson and Robert Johnson
James K. Galbraith and William K. Black
The Rev. Jesse Jackson
