Freethought San Marcos: A column
by LAMAR W. HANKINS
After spending the past year trying to understand the financial crisis, I thought there wasn’t much more important information to know. I had concluded that the deregulation of the financial industry that started under President Clinton (spearheaded by former Sen. Phil Gramm) and continued under President Bush was mostly responsible for bringing us within a hair’s breadth of a second Great Depression. While I don’t want to forget the contributions of Ronald Reagan and George H. W. Bush to the crisis, the steamroller of deregulation gained warp speed during Bill Clinton’s presidency.
The deregulation allowed the financial part of our economy to become interconnected, inbred, and incestuous to the point that there were few distinctions between the different financial institutions. They stopped providing useful services, such as lending a family money to buy a house with a reasonable down-payment and under reasonable terms. Instead, they began engaging in speculation, using mortgages as leverage to make their company more money, rather than providing a needed service. The deregulation had allowed them to do nearly anything they wanted, only to be bailed out by the taxpayers when their schemes started failing.
Then I discovered U. S. Rep. Marcy Kaptur from Toledo, Ohio, thanks to Michael Moore’s new film “Capitalism: A Love Story.” I always was amused by Moore’s films, seeing them as a bit too self-indulgent for my tastes, but crediting them with making some good points. That was until “Sicko” came out. Moore seemed to get the condition of the health insurance marketplace just right. Now, with his new film about capitalism, he has found the soft underbelly of the greed-driven corporatists and introduced America to Marcy Kaptur, someone whose name I knew, but about whom I knew little.
What I have learned from her is that not all politicians have to be feckless lapdogs of corporate America and their lobbyists. It has been a refreshing experience. Over a year ago, on September 22, 2008, when Hank Paulson and President Bush claimed to be saving the country from economic failure, Rep. Marcy Kaptur spoke up plainly and directly on the floor of the House about the scheme that was being proposed:
“Mr. Speaker, here is the latest reality game. Let’s play Wall Street Bailout.” She went on to complain of the unnecessary rush to legislate. She warned of the fear mongering that was once again being used to move the Congress and the country to spend trillions of dollars based on questionable assumptions, much as the Iraq War was sold; the warnings “that the entire global financial system will collapse and the world will fall into another Great Depression” served also to “control the media enough to ensure that the public will not notice this.”
Kaptur warned that the “bailout will indebt (the American people) for generations, taking from them trillions of dollars they earned and deserve to keep.” She complained that the entire scheme was hiding “from the public and most of the Congress just who is arranging this deal.” There was limited public communication and few “open congressional hearings.” The Congress was manipulated by the financial system’s wise men who treated “members of Congress condescendingly, telling them that the matter is so complex that they must rely on those few insiders who really do know what’s gong on.”
She further explained that one of the methods used to pass this unwarranted, self-serving bailout on behalf of the financial rulers was to “(d)ivert attention and keep people confused. Manage the news cycle so Congress and the public have no time to examine who destroyed the prudent banking system that served America so well for 60 years after the financial meltdown of the 1920s.”
Finally Marcy Kaptur explained the game plan: “Always keep in mind the goal is to privatize gains to a few and socialize loss to the many. For 30 years, in one financial scandal after another, Wall Street game masters have kept billions of dollars of their gain and shifted their losses to American taxpayers. Once this bailout is in place, the greed game will begin again.”
Kaptur went on to explain that America doesn’t need to bail out Wall Street, it needs to bail out the average American. America “needs to secure the real assets and property, not (Wall Street’s) paper, that means the homes and properties of hardworking Americans who are about to lose their homes because of your mortgage greed. There should be a new job for regional Federal Reserve Banks. We want no home foreclosed if a serious work-out agreement can be put into place.” A work-out agreement is a restructuring of mortgages so that they are affordable, do not gouge families, and give mortgage companies a reasonable return on their investment, an investment fully backed by the full faith and credit of the American government.
Kaptur goes on to call for a rebuilding of America’s major infrastructure. This alone would put most out-of-work Americans back to work. She calls for a return to the regulatory framework of the Glass-Steagall Act and similar regulatory measures that require the separation of bank types according to their business (commercial and investment banking), so that conflicts of interest are prevented. Allowing one financial institution both to give credit (lend) and to use credit (invest) led to abuses that originally produced the Act in 1932 and its subsequent amendments and companion regulation. Because institutions that take our deposits possess enormous financial power through their control of other people’s money, they must be limited to ensure the safety of the deposits and assure competition for both loans and investments.
No one has to be told today that securities activities can be risky, leading to enormous losses. Because the government insures deposits and could be required to pay large sums if depository institutions collapse, the government–the people–have a vested interest in making sure that these institutions do not operate without some controls. It was the lack of controls that allowed the trillions of dollars of speculative investments, based on bundled mortgages, that led to our current situation.
A year later, Rep. Marcy Kaptur again addressed the failure ot our government to correct the circumstances that led to the near-collapse of our financial system.
Mr. Speaker, today marks the 1-year anniversary of the fall of Lehman Brothers. Just prior to that, former Treasury Secretary and former Goldman Sachs executive Hank Paulson; Fed Chairman Ben Bernanke; and then-President of the Federal Reserve Bank of New York and now Treasury Secretary, Tim Geithner, bailed out Fannie Mae, Freddie Mac and orchestrated the first of multiple tranches of taxpayer money to AIG.
Some mark the fall of Lehman as the start of our financial crisis, but it started long before. It started on Wall Street. … Wall Street has responsibility for the greed they bred, for ripping off American taxpayers and taking exorbitant profits, destroying anything and anyone in its path, and then taking more bonuses and continuing to live their high life.
Wall Street will never willingly and openly accept its responsibility for their role in our financial system’s downfall. It’s our responsibility to hold them accountable. It is too late to ask Wall Street to play nice and make reforms. They had their chance, and they blew it. You can be sure they are going to pay millions to lobbyists and PACs to protect their bonuses, loopholes, their safety nets, and the current structure of banking in this country.
It’s time to face down Wall Street and stand up for Main Street. The time spent waiting for Wall Street’s willingness to change is over. The results of the taxpayer bailout are clear: More profits for Wall Street, plus massive bonuses, while foreclosures skyrocket across this country. Wall Street had its chance to open credit lines to business, as well as to direct funds they got from the taxpayers to help millions of families facing foreclosure work out those loans, but instead they took the money for themselves and racked up huge profits in the last quarter. Wall Street had its chance to be responsible as stewards of the tax dollars they got. They failed. They didn’t even try. Wall Street banks cannot even tell us where the TARP dollars, that is, the taxpayer dollars, went. …
Will America allow itself once again to be bought out by Wall Street? Or will we stand together thoughtfully, deliberately to empower regulators and to reform this system with a new banking system that respects communities, encourages savings, assures sound credit? Will we break up the megabank trusts or continue to allow the concentration of financial power in the few greedy hands that are holding it today? Will we move forward with a stronger, more creative, more prudent, more sound community-orientated financial system again?
… (W)e must shift the balance of credit power from Wall Street back to Main Street and the American people. The challenge is crystal clear. The question: Do we have the will to do it here — to create a financial regulatory system again for the betterment of all people in our Nation, to strengthen community lending and sound and prudent credit practices at the local level and, in turn, the world’s financial system? The jury is out.
I thank Michael Moore for giving Marcy Kaptur a broader forum so that all Americans have a chance to learn about and hear the wisdom of her ideas.
The one mistake Moore makes in “Capitalism: A Love Story,” is that he doesn’t call the kind of capitalism we have in this country by its proper name. It is not capitalism in its original meaning, but corporate capitalism or state capitalism or lemon capitalism or corporate socialism. It is the kind of capitalism that takes over the state and uses public resources to be successful–it privatizes profit and socializes the risks and misconduct. What Moore does do is point to state capitalism’s failures–its lies, its abuses, its betrayals. And it is America’s families who are paying the price for state capitalism in the loss of their homes, their jobs, their savings, and even their families.
Moore’s focus on “dead peasants” insurance, the life insurance policies bought by big corporations like Wal-mart and AT&T, on the lives of their employees, is a welcome exposure of an insidious practice that improves the bottom lines of some of America’s largest corporations. When a “dead peasant” (insured employee) dies, the company collects the value of the insurance policy, thereby profiting from the employee’s death, sometimes in amounts over a million dollars. And the employees don’t even know about the insurance policies.
Perhaps the most interesting part of Moore’s movie is the mostly-forgotten film and audio footage of President Roosevelt from January 11, 1944, announcing his intention to have passed a second bill of rights that would give every American the following:
“The right to a useful and remunerative job…The right to earn enough to provide adequate food and clothing and recreation…The right of every family to a decent home…The right to adequate medical care… The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment… (and) the right to a good education.”
What could be more advantageous to a just and prosperous society than an adequate job, a decent home, adequate medical care, a good education, and protection from the “economic fears of old age, sickness, accident, and unemployment?” A government “of the people, by the people, and for the people” should provide no less. And you can call such a system whatever you want. If it’s socialism for the people, I’d much rather have that than socialism for the corporations, where small businesses, along with the rest of America’s people, get controlled, manipulated, and shafted by big business.
© Freethought San Marcos, Lamar W. HankinsEmail | Print