There a few stories online noting that voters from all walks of life got organized and assisted in convincing their representatives to defeat this terrible bailout. Here is one from the Wall Street Journal: ["How Voter Fury Stopped Bailout"]. The subhead reads: "Left-Right Combo By Opponents Put Plan on the Ropes" ... This reminds me a lot of the Halloween Coalition during the NAFTA debate, where both sides of the spectrum - Pat Buchanan and Ralph Nader, Ross Perot and Jesse Jackson - came together in an attempt to stop that bad legislation. The difference is that we are just a few weeks away from an election this year and NAFTA was done in 1993, a year after the presidential election. However, it should be noted, that the Republicans swept into office a year later, in 1994, mostly due to Reagan lunchbucket Democrats abandoning their party and swinging right.after the Democrats abandoned them. After that, then-President Bill Clinton swung right too, agreeing with and approving eight of the 10 Republican "Contract with America" planks. The counter effect to that was the Republicans swinging even further right. This eventually led to a small revolt on the left, a serious Ralph Nader candidacy and the almost-establishment of a national Green Party via his campaign in 2000. It will be interesting to see what happens in the wake of all of this.
Sidebar: I was at a small gathering on Saturday night for a reporter source who has become a pretty good friend. At the event was a Democrat insider we all know and we started talking about the bailout. He, like many Dems, seemed to be reluctantly supporting the bailout. I passionately made the case against it. He countered with the possibility that the entire financial system and economy could go down. I said, "Well, let it ..." and then paused and started talking about health care. I said, You know, the best thing about all of this is that we could get a non-profit national health care system established. He looked at me a bit puzzled and I continued. Let's say the economy collapses, credit freezes up, things look bleak. What will happen? Companies will start cutting things to save jobs and find ways of getting more money to do business. One thing they will probably cut is health care stipends or maybe even eliminate plans entirely. What will happen if the private sector dumps insurance plans for workers? There would be 100 million people, maybe 200 million, screaming, the next day, about not having health care. There would be so many people screaming - not tens of millions without insurance now - but hundreds of millions who used to have it, that Congress would have to act. And act they would. They would have no choice but to implement a Canadian-style system with a 5 or 10 percent tax like Medicare is taxed and be done with it. Instant problem solved all because the economy is collapsing at the hands of the corrupt. I added that administrators from cities and towns are already worrying about the high cost of health care now, and how they could better use the money for other things like cops, firefighters, teachers, if they didn't have to pay millions for private insurance. Since public health care would be a tax on paychecks, the physical public entity wouldn't have to pay it, the individual would. They would also get into the plan and renegotiate their contracts with unions and everyone would all be in the same boat instantly. Again, problem solved all because we didn't save Wall Street. I said, And you know, that's just one thing that could be fixed if Wall Street collapses. Imagine all the other things that could be fixed ... He seemed impressed that I had already thought of this idea. The fact is that we have to think about these things in a broader context. Solutions are out there which have nothing to do with bailing out these people. I almost didn't think about writing my exchange about health care on Sunday. It looked like it was all a done deal. Well, I thought wrong, and the American people showed us that they still are boss and when prompted, they can galvanize themselves to stop incredibly bad things from happening. Let's hope they can now get together and start working on solutions to problems now.
On my ride into work this morning, I began thinking about the $700 billion bailout a lot and what a huge chunk of money that is. During the arguments about "free" trade and the trade deficit, many of us compared the amount of money the trade deficit was, to the amount of money that could be put into a home. For example, if the trade deficit annually was $100 billion dollars, that is the same as sending 1 million modestly-built $100,000 homes overseas per year. It is a giant transfer of wealth from America to other countries. So, let's look at the $700 billion plan in the same way, considering what it would be in mortgages. Let's say that all the default foreclosures were $100,000 in debt. $700 billion would pay off the $100,000 debt of 7 million people. When you take $700 billion and divide it by $200,000, probably closer to an average mortgage, you get 3.5 million. If you take that figure and divide it by $300,000, you get 2.3-plus million. Question: Does anyone out there now exactly how many mortgages are at default from ordinary folks, not speculators? I bet it isn't 7 million people. Maybe it is. Second question: Why are we bailing out the banks when we could be bailing out Americans? Wouldn't it be better to bail out Americans with with failed mortgages and give them a chance to pay the country back over a longer period of time? They would get to keep the homes, stabilize neighborhoods, and get back on their feet. Since the fed caused this problem - by raising interest rates to stop inflation back in 2004 and 2005 when there was no inflation - why are we bailing them out? The question then becomes, what do you do for the folks who have no problems or are just scraping by but don't go into default? You are essentially punishing folks who succeed by putting debt on them which they will have to pay to bail out the default mortgages. My kids didn't have anything to do with that but they will be paying it. So, better to not do anything at all and let the market correct itself. The bailout does nothing but reward all the people who ripped folks off. That is why it must be defeated.
A real solution to our financial imbroglio is reasonably clear. Merrill Lynch showed the way. First, sell bad paper at 20 cents on the dollar to those willing to bet it will eventually be worth much more. Second, sell the company to a well capitalized entity more than happy to acquire the good assets. The immediate pain was felt by the investors and speculators both most culpable and most able to bear it. Instead of squandering $700 billion buying bad debt to recapitalize the imprudent, the U.S. government should follow the Merrill Lynch example. The government buys troubled financial industry companies, or at least a controlling interest, and sells the bad debt at market prices. Don’t want to sell to Uncle Sam? OK. The market will decide what happens to your company. By combining the infusion of public capital and the de-leveraging of companies with a strong position in junk, after a decent interval the U.S. government could sell its now profitable investments at a tidy profit for the taxpayer. Problem solved. That’s the way market systems are supposed to work. Put up the cash. Take the profits and the losses. The George Bush-Hank Paulson bailout scheme is a speculator’s dream. Socialize losses. Keep the profits. Haste in this case will not only make waste; it will make some people lots of money at public expense The Bush-Paulson plan can happen only if they can stampede the congress into acting today to keep a highly leveraged house of cards from collapsing for just a bit longer. It’s worth recalling the implications of Gresham ’s law from the 16th century updated for the age of financial derivatives before we squander $700 billion on bad paper. Cheap drives out dear if they exchange at the same price. Was true then. Is true now. Caveat emptor.
I'm on the email list for the PickensPlan, an energy plan which makes a lot of sense on many levels. One of the reasons I'm on the list is that I agree with much of the plan and was impressed when I saw T Boone Pickens on television. I believe in having as many domestic energy resources as possible. I also believe that we shouldn't be exporting our oil production. I have come to agree with the position that we should have liquified natural gas available for our cars. Also, I agree that wind and solar power are a major part of the equation and there should be a national movement to implement these options now.
Earlier this week, people on the PickensPlan email list were invited to join an online chat to talk about the debate. The invitation stated:
After the debate is over, I want us to have an online chat about what we heard and what we DIDN'T hear the two candidates say about the foreign policy aspects of sending 700 billion US Dollars to foreign counties [sic] every year to pay for the oil we are buying from them.
So, I decided to watch a bit of the debate and check out what people were chatting about in the PickensPlan chat room.
It was quiet at first but livened up later, including a lot of praise for Pickens and his plan.
During the debate, when John McCain started going off about nuclear power and how the country could create 700,000 jobs building a slew of new nuclear power plants over the next few decades, I found something to speak about. I think this is a major mistake. So I chimed in about it in the chat room.
I wrote that I didn't nuclear power was a good idea, since there was no way to dispose of the waste. Nuclear power plants also make good strategic targets for terrorists. I waited for my comment to come up in the chat room but it never did. After a few minutes, I typed up the comment again and hit send. Still, it didn't appear. So I tried one more time. But the comment didn't come up.
I figured maybe there was a problem on my end so I signed out and resigned in again, figuring I would try it again. I wrote the same message up and sent it in. Again, it didn't come up. I then sent an email to the moderator asking why my comments about McCain's support of nuclear energy being a mistake were not being posted. No response. I continued to enter the same response and they continued to censor it.
There were a ton of interesting comments allowed into the conversation with some positive and negative comments about the candidates. But it was clear that censorship was going on: There were no comments about nuclear energy being dangerous or being something that the country should avoid. I was a bit surprised that of the thousands of potential people participating not one would say nuclear power was a problem.
What is interesting is that Pickens is the guy who complained about his commercial being censored by NBC. This is also the guy who invited people to join his chat to comment on what the candidates "did and didn't say" about energy policy. Not saying nuclear power is dangerous was be something worthy of stating, something the candidates clearly did not say. So, why censor someone who comments on something one of the candidates didn't said after inviting people to participate?
Pickens has been painting himself as a man with a plan, one who wants to have a discussion about this extremely important issue. But how can you have a discussion if you don't allow dissenting voices into the conversation? You can't. And the fact that anything bad said about nuclear power was censored out of this chat is a worrisome.
Tax trading on Wall Street!: ["How Wall Street Can Bail Itself Out Without Destroying The Dollar"]. Create an agency to help bail them out, tax the transactions on Wall Street to pay back the bailout loan. The key here is "investment" versus "speculation" ... the difference between investing for the long haul and flipping. I have been talking about this for a very long time. The nation needs long-term investing, something that actually creates jobs, and not speculation. Brilliant column and a great idea, coming out at just the right time.
I received this via email earlier today from a Mass. conservative talking about the bailout issue:
Massachusetts is an overwhelmingly Democratic Party State. I just got off the telephone with Congressman John Tierney's (D-6th) office. They have received over 1,200 telephone calls on the bailout. ONLY 15 CALLERS SUPPORTED IT.
OVERWHELMINGLY, callers don't want any golden parachutes for the perp executives, want ALL the perp executives to lose their homes, etc., go to jail, and let the perp corps. go bankrupt. Tierney's office says that they are hearing that this is happening accross the board. That, reportedly, this type feedback has never happened before.
Yup, looks like it: ["House clears $25bn for carmakers"]. This is not as bad as the bank situation but it reeks. Essentially what the Congress is saying is that you can run a company into the ground, make bad products, make high-ticket items that no one wants to buy and that are irresponsible to the health of the environment, and our government writes you some low interest loans to help you get by. What happened to, Sorry, you screwed up and made bad decisions, file for bankruptcy? Instead of doing this, why don't we bring back tariffs and raise more money on the imports? Or, let the big three go under and Toyota and Honda will hire all those folks who are out of work to make more fuel-efficient cars that we all want. The more of those cars they make, the more the price goes down and the more regular folks can afford those cars. It's a win, win, win proposal unless you are one of the big three who have made all of these poor decisions. They could even retrofit all the factories to make solar panels so those prices can go down. This would allow the consumer to be less reliant on the power companies who are creaming us with their high rates. This all seems like a better investment of $25 billion than to prop up the big three who have no one to blame but themselves for their terrible business model.
Editor's Note: This update was sent by the NHCPFE. I think it is worthy of publishing:
Hello Everybody, Welcome to this New Hampshire Coalition for Public Funding of Elections update on our efforts to take big money out of politics in NH and put our elections back in the hands of voters. Whether you've found your way onto our list through your love of Granny D or your concern for our democracy, I hope you'll take a minute to read about our progress and the part you might play in it. The NH Coalition for Public Funding of Elections (NHCPFE) has been working for over a year to achieve a voluntary system of publicly financed election campaigns in the Granite State, for the offices of governor, executive council and state senate. Our website (www.publicfunding.org) will be ready soon. Our first major success was to pass a bill this spring establishing a new commission of public funding advocates to develop recommendations for the legislature on how NH could implement--and particularly fund--a system of publicly-financed elections. The NH Public Elections Financing Commission's recommendations are due to the legislature Dec. 1, 2008. This seven-member bipartisan body held its first meeting on Aug. 15, followed by a public hearing on Sept. 2, and meetings on Sept. 5 and Sept. 19. The commission meets every Friday from 10:30 a.m. to 2 p.m. in Room 104 of the Legislative Office Building in Concord (except the Friday before the election and after Thanksgiving), with a break for lunch for part of the hour between noon and one. See the commission's Web site at http://nhcommission.demos.org/ for more information. Check out these news stories from the Hippo and NHPR on the public hearing: http://www.hippopress.com/080918/news2.html (Sept. 18, 2008) http://www.nhpr.org/node/17311 (Sept. 2, 2008) NHCPFE is working on three fronts to make publicly funded elections a reality in NH, and we need your help. 1) We're supporting the work of the commission by attending its meetings, providing data and policy recommendations, and facilitating connections with state and national allies as resources. The commission is examining how much candidates have traditionally spent on their races in order to determine how much a public funding system should allocate for each race. Allocation amounts and likely candidate participation rates will then help determine how much it will cost to fund the whole system. NHCPFE provided the commission with some initial data, but now we need to look more closely at candidates' expenditure reports to cull out reported expenditures (such as contributions to other candidates and transfers to other accounts) that should not be considered campaign-related expenses. We are meeting this Sunday, Sept. 27, at Antioch University NE in Keene, 2-4 p.m., to reexamine campaign expenditure data. Can you bring your laptop and join us? It's interesting work and we'll provide all the training you'll need. Please call me at 603-856-6723 or email me at csilber@publicfunding.org if you can help. We need several more volunteers to get this done for the commission by Oct. 3. Meanwhile, our policy subcommittee is working to develop NHCPFE's recommendations to the commission. Please call me 603-856-6723 or email me at csilber@publicfunding.org if you'd like to join our policy work group. 2) We're working with legislators to be sure that we'll have a good bill with wide and strategically placed support, laying the groundwork to ensure that we'll have the votes to pass the bill. We've reached out to our current list of eighty legislative "champions," and are lining up at least one key supporter on each House committee to serve as our liaisons. If you would like to join our effort to work with legislators, including arranging a meeting for a group of constituents from your town with your representatives or senator, please let me know! 3) We're organizing at the grassroots--this means you! To give our legislators the backing (or pressure) they need from their constituents to pass a good public funding bill in 2009, we're identifying people now who can help build and mobilize grassroots support in their district.. We've planned a house party next Tuesday, September 30, at Rep. Susi Nord's house in Candia, featuring an address by Granny D. Activists in the Peterborough area are planning a house party for next month. If you'd like to host a house party to help spread the word about public funding, or would be willing to help organize one at someone else's home, please let me know. We've also got four phone banks planned, and we need more volunteers to begin calling our list of the more than 1,300 potential activists. Let me know if you can help us make calls! Thursday, Oct. 2, 5:30-8:30 p.m., at 4 Park Street, 2F, Concord Sunday, Oct. 5, 1-5 p.m., at 4 Park Street, 2F, Concord Monday, Oct. 6, 5:30-8:30 p.m., at Staff Development for Educators, 10 Sharon Rd., Peterborough Tuesday, Oct. 7. 5:30-8:30 p.m., at SDE, 10 Sharon Rd., Peterborough YES WE CAN put our elections in New Hampshire back in the hands of the voters, if we lay the groundwork now for when the legislative session begins in January. But we need all hands on deck! The Coalition meets by phone Mondays at 3 p.m. and in person on the first Wednesday of the month, 10 a.m.-1 p.m.. Our next meeting is Wednesday, Oct. 1, at 10 a.m. at Sulloway and Hollis, corner of School and State streets, Concord. Come join us and find out what you can do to help make votes count more than dollars. Let me know if you have any questions or would like to join our work to strengthen democracy in New Hampshire.
Congress needs to show some backbone before the federal government pours more money on the financial bonfire started by the arsonists on Wall Street.
1. Congress should hold a series of hearings and invite broad public comment on any proposed bailout. Congress is supposed to be a co-equal branch of our federal government. It needs to stop the stampede to give Bush a $700 billion check. Public hearings should be held to determine what alternatives might exist to the four-page proposal advanced by Treasury Secretary Henry M. Paulson.
2. Whatever is ultimately done, the bailout plan should not be insulated from judicial review. Remember there is a third co-equal branch of government – the judiciary. The judiciary does not need to review each buy-and-sell decision by the Treasury Department, but there should be some boundaries established to the Treasury Department's discretion, and judicial review is needed to ensure that unbridled discretion is not abused.
3. Sunlight is a good disinfectant. The bailout that is ultimately approved must provide for full and timely disclosure of all bailout details. This will discourage conflicts of interest and limit the potential of sweetheart deals.
4. Firms that accept government bailout monies must agree to disclose their transactions and be more honest in their accounting. They should agree to end off-the-books accounting maneuvers, for example.
5. Taxpayers must be protected by having a stake in any recovery. The bailout plan should provide opportunities for taxpayers to recoup funds that are made available to problem financial institutions or to benefit from the financial institutions' rising stock price and increased profitability after being bailed out.
6. The current so-called “regulators” cannot be trusted. The U.S. Government Accountability Office (GAO), "the investigative arm of Congress" and "the congressional watchdog,” must regularly review the bailout. We cannot trust the financial “regulators,” who allowed the slide into financial disaster, to manage the bailout without outside monitoring.
7. It is time to put the federal cop back on the financial services beat. Strong financial regulations and independent regulators are necessary to rebuild trust in our financial institutions and to prevent further squandering of our tax dollars. The Justice Department and the SEC also need to scrutinize the expanding mess with an eye to uncovering corporate crime and misdeeds. Major news outlets are reporting that the FBI is investigating American International Group, Fannie Mae, Freddie Mac, and Lehman Brothers.
8. Cap executive compensation and stop giving the Wall Street gamblers golden parachutes. The CEOs who have created the financial disaster should not be allowed to leave with millions in hand when so many pensioners and small shareholders are seeing their investments evaporate. The taxpayers are bailing out Wall Street so that the financial system continues to function, not to further enrich the CEOs and executives who created this mess.
9. Congress should pass the Financial Consumers' Information and Representation Act, to permit citizens to form a federally-chartered nonprofit membership organization to strengthen consumer representation in government proceedings that concern the financial services industry. As the savings and loan disasters of the 1980s and the Wall Street debacles of the last few years have demonstrated, there is an overriding need for consumers and taxpayers to have the organized means to enhance their influence on financial issues.
10. The repeal of the Glass-Steagall Act, separating traditional banks from investment banks, helped pave the way for the current disaster. It is time to re-regulate the financial sector. The current crisis is also leading to even further conglomeration and concentration in the financial sector. We must revive and apply antitrust principles, so that banking consumers can benefit from competition and taxpayers are less vulnerable to too-big-to-fail institutions, merging with each other to further concentration.
11. Congress should impose a securities and derivatives speculation tax. A tax on financial trading would slow down the churning of stocks and financial instruments, and could raise substantial monies to pay for the bailout.
12. Regulators should impose greater margin requirements, making speculators use more of their own money and diminishing reckless casino capitalism.
Ask your representative a few questions: "What should be done to limit banking institutions from investing in high-risk activities? What should be done to ensure banks are meeting proper capital standards given the financial quicksand that has spread as a result of the former Senator Phil Gramm’s deregulation efforts? And, “What is being done to protect small investors?”
P.S. Shareholders also have some work to do. They should have listened when Warren Buffett called securities derivatives a "time bomb" and "financial weapons of mass destruction.” The Wall Street crooks and unscrupulous speculators use and draining of “other people’s money” out of pension funds and mutual funds should motivate painfully passive shareholders to organize to gain greater authority to control the companies they own. Where is the shareholder uprising?
Republican officials said that Paulson had bowed to demands from critics in both parties to limit the pay packages of executives whose companies benefit from the proposed bailout.
This isn't about executive pay packages. This is about the free market. They have to live with the mess they created. We should not have to pay to clean them up. We shouldn't have to pay to ensure their profits. Let them live with losing everything. Let them live with homelessness. Let them wonder where dinner is coming from. Let them wonder how come you don't have money for a decent vacation once a year because you have to pay more money for oil this year. Live by the free market, die by the free market. You know, just 10 years ago, the stock market was at 7,000. A healthy correction still means shareholders have a decade worth of gains.
I wrote this column for the weekly newspaper I work at:
While driving into work last week, I just about swerved off the road when I heard President Bush unveiling his $700 billion Wall Street bailout plan. If approved, along with the other bailouts, the federal reserve will basically print $1 trillion worth of money to protect the financial markets and the taxpayers of the United States, as always, will be expected to foot the bill.
Watching what has been going on in the financial markets now for a number of years, I have been truly amazed as to what these people have done. And now, they want us to bail them out for their failed policies and procedures.
I say, forget about it. You live by the free market, you die by the free market. That is essentially what economists, pundits, and supposed leaders from both political parties have been telling regular folks for a very long time. Those people who created this financial climate should have to live with it. Putting your money in the stock market is risky. It’s no different than a casino. Win or lose, the gambler has to live with the result.
Let’s look for a second at what has gone on in the last six days and compare it with a recent chunk of history.
The speculators expect us to protect them from their bad investments, crazy short-selling strategies, scheming, lying and rumors, and their volatile commodities market. They get to keep their huge salaries, commissions, golden parachutes, mansions, and Maseratis, and we get handed the bill. If it were public policy to bail out those who have been harmed by the free market, there would be precedence. But in America’s case, there isn’t.
For example, no one is bailing out the tens of thousands of workers in the journalism field being let go because most folks think news is “free” and the market doesn’t think newspapers are important anymore. No one is bailing out the tens of thousands of people in the music industry who have lost their jobs because the market is changing. No one is bailing out the tens of millions of Americans who lost their jobs because of globalization and the fact that workers in other countries will produce goods for virtually nothing. And no one is bailing out the millions of people who live in cars and under bridges, including hundreds of thousands of veterans, because of the free market.
Politically speaking, both sides have done their very best to point the finger at the other. But the fact is that this a bipartisan problem. It is one of the reasons you can’t trust bipartisanship. Both presidential candidates have advisors who have their fingerprints on this mess. When I saw Citibank’s Robert Rubin standing with Barack Obama as part of his “solution” team, the same guy who deregulated markets under President Clinton, I cringed as much as seeing all the lobbyists running John McCain's campaign.
The only person who has warned us about this for many, many years is Ralph Nader, someone I used to work for. And he, unfortunately, won’t be in the debate on Friday to tell everyone, “I told you so.”
There is, however, one positive thing about all of this: Maybe those of us who didn’t lose our shirts in the market can finally get the vacation home we have always dreamed about in one of those distressed housing markets like Miami, for example, for pennies on the dollar. But like the S&L scandal before it, the insiders will probably get to pick up all the sweet deals.
The simple truth is that this bailout is a disaster and it should be rejected. The people who created this mess should have to live with the same pain, suffering, difficulty, and just about everything else that has been foisted upon millions of Americans, at their hands. Fair is fair.
In the end, the Democrats will probably cave to Bush, as they have time and time again, and we’ll get stuck with the tab as we have time and time again. If this happens, hopefully, there will still be a country left worth living in.
Fail. That's right. Fail. Just say no to the bailout and let it all fail. Round up the white collar criminals and throw them in jail. We can start over. We're Americans. We are reslient. We have initiative. We'll get by. Trust me. I'll have a column up tomorrow on the subject.
The Big Three are in big trouble, and they have themselves to thank for it.
Ford and General Motors have reported substantial losses in the second quarter amounting to $15.5 billion, and $8.7 billion, respectively, while Chrysler, which was bought off last year by a private equity firm, Cerberus, refuses to reveal its financial standing.
It is no wonder why their lobbyists were spotted schmoozing with members of Congress at the Democratic and Republican National Conventions, liquoring up in their plush suites and private parties while they made their case for direct government loans which, if approved, would likely add to our federal deficit.
Last December, Congress approved a $25 billion loan to automakers and their suppliers under the Energy Independence and Security Act, though it has yet to be funded. That bill includes a modest requirement for automakers to increase their average vehicle fuel efficiency to 35 mpg -- a benchmark we should have set decades ago, and would allow the companies to have their way with virtually no oversight or accountability.
This corporate Congress cannot be expected to issue serious demands, set tough conditions, or impose strict rules on the auto companies to ensure their workers receive fair pay and benefits, and prevent their fat-cat executives from making off big while leaving their companies in shambles.
Such blatant giveaways have become the norm in Washington since the corporate stranglehold of Congress and the White House have smothered the forces seeking worker, consumer and environmental justice.
But this recent example should not discount our long history of dealing with corporate failures in more public and effective ways than just ponying up billions on demand at any big corporation's whim.
In 1979 when Chrysler was on the verge of bankruptcy, the automaker came crying to Congress for a bailout, which they eventually got, but Congress wasn't as much of a pushover.
Back then, at least the corporate chieftains were grilled by Congress and had to agree to give something back for Uncle Sam bailing them out -- good jobs and pensions for their workers, and more efficient cars to reduce reliance on foreign oil and reduce prices at the pump.
Now the CEOs don't even have to leave Detroit and they get much more money for almost no return commitment to America, while they outsource jobs and pollute our environment.
During discussion on a proposed loan bill to bailout Chrysler in October 1979, Senator William Proxmire (D-WI) who chaired the Senate Banking Committee issued his opposition to Chrysler's request and noted: "We let 7,000 companies fail last year -- we didn't bail them out. Now we are being told that if a company is big enough... we can't let it go under." He went on to call the proposed deal “a terrible precedent.”
Raising the government's demand for performance standards, President Carter's Treasury Secretary William Miller told Chrysler officials, “it's going to be so awful, you'll wish you never brought the whole thing up.”
Today, we rarely hear such candid opposition to corporate orders shouted at their congressional servants who lack the fortitude to put serious restraints and conditions on mismanaged, reckless big business and their overpaid CEOs seeking tax-payer salvation.
As a part of the Chrysler deal in the late Seventies, the government took out preferred stock warrants and after the company turned itself around and repaid its loan seven years early, the government ended up cashing out, receiving $400 million in the appreciated stock.
And Congress made clear to Chrysler that it had specific conditions the company had to meet before receiving the loan guarantee. It forced the company to contribute $162,500,000 into an employee stock ownership trust fund geared to benefit at least 90 percent of its employees, design more fuel efficient autos to help reduce consumption of foreign oil, and prohibit wages and benefits from falling below a level set three months before the legislation was passed.
Today, congressional actions to grant multi-billion dollar loans to the corporations lack the reciprocity some in Congress demanded 30 years ago. Before Congress irresponsibly dips into the public piggy bank, this time it would be wise to look back at how the government once dealt with Chrysler's dilemma, require clear benchmarks to deliver on the next generation of green collar jobs, improved fuel efficiency and gain a substantial return on its investment, not just in monetary value, but in the longterm viability of the domestic motor vehicle fleet.
Congress needs to call on the auto industry to innovate their way out of this morass into which they've engineered themselves into. A sensible strategy would be to issue stock warrants to the government, like in the 70s, which would create an incentive for Congress to keep pressure on the auto industry to improve. Public Congressional hearings are a must.
Will Congress echo its actions of 30 years ago when it scrutinized corporate demands, grilled company executives, and imposed conditions to ensure fair compensation and safety for workers? Or will Congress continue down the road of corporate servitude, refusing to stand up for workers, consumers, taxpayers and the environment in its session-ending stampede and flight away from auto industry accountabilities?
When Members of Congress or the Administration or the corporate CEOs or the empirically starved right-wing ideologues start whining about regulation the right-wing echo chamber goes wild. When the absence of adequate regulation lets an industry wreak havoc, Congress and the Administration meekly admit a bit of regulation might have averted disaster. The corporate CEOs, expelled with their lucrative golden parachutes, have “no comment.”
The taxpayers, who are too often the guarantors of last resort and who are stuck with the tab, are asking each other why their public watchdogs were asleep at the switch. The Washington merry-go-round is something to behold.
As the recent headlines note, the Federal Government has taken over the giant companies Fannie Mae and Freddie Mac. The Federal Housing Finance Agency (FHFA) is using the legal process of a “conservatorship” to “stabilize” Fannie Mae and Freddie Mac. Talk about regulation!
On Sunday, Sept. 7, 2008, U.S. Treasury Secretary Henry Paulson said, “Since this difficult period for the GSEs began, I have clearly stated three critical objectives: providing stability to financial markets, supporting the availability of mortgage finance, and protecting taxpayers - both by minimizing the near term costs to the taxpayer and by setting policymakers on a course to resolve the systemic risk created by the inherent conflict in the GSE structure.”
Nice words – but they will provide little comfort to the many common shareholders who have seen the value of their Fannie Mae and Freddie Mac stock collapse to pennies per share. And more than a few taxpayers are wondering what the Fannie/Freddie debacle will end up costing them.
We and others have been telling members of Congress, government regulators and members of the media about the structural and operational problems of Fannie and Freddie for years. I have written many columns about the lack of proper regulation of Fannie and Freddie. I testified before Congress about the need to focus Fannie and Freddie and my long-time associates Jonathan Brown and Jake Lewis have spent countless hours advocating that federal regulators push Fannie and Freddie to meet housing goals that would benefit under-served populations.
In 1991, lawyer Tom Stanton, a former colleague, warned about the risks and non-regulation of Fannie and Freddie in his prophetic book—"A State of Risk" (Harper Business).
In May 1998, we even held a conference dedicated to Fannie and Freddie. In my welcoming statement to the conference participants, I noted that we would be discussing the adequacy of capital required of Fannie and Freddie and the efficacy of regulation of the two GSEs. I noted that both corporations had been enjoying good times. And, I cautioned that one of the unintended consequences of fat profits over a long period is the tendency of governments and private corporations to start believing in fantasies about living happily ever after in the glory of ever-rising profits.
My statement asserted that, “Taxpayers have learned that contingent liabilities such as those inherent in the GSE structure do, at times, become quite costly. It wasn't long ago--in the high interest rate period in the late 1970s and early 1980s – that Fannie Mae was having serious financial troubles. And the Farm Credit System, another GSE, required a bail out of approximately $5 billion in the 1980s when the agricultural industry had a severe downturn.”
In July of this year I lamented the fact that Fannie and Freddie have been deeply unregulated for decades which allowed their capital ratios to be lower—far lower—than they should have been, adding:
Over at the multi-trillion dollar companies Fannie Mae and Freddie Mac, the shareholders have lost about 75 percent of their stock value in one year. Farcically regulated by the Department of Housing and Urban Affairs, Fannie and Freddie were run into the ground by taking on very shaky mortgages under the command of CEOs and their top executives who paid themselves enormous sums.
These two institutions were set up many years ago to provide liquidity in the housing and loan markets and thereby expand home ownership especially among lower income families. Instead, they turned themselves into casinos, taking advantage of an implied U.S. government guarantee.
The Fannie and Freddie bosses created another guarantee. They hired top appointees from both Republican and Democratic Administrations (such as Deputy Attorney General Jamie Gorelick) and lathered them with tens of millions of dollars in executive compensation. In this way, they kept federal supervision at a minimum and held off efforts in Congress to toughen regulation.
So here we are. On Monday Sept. 8, 2008, the value of common Fannie and Freddie stock dropped to under one dollar – just one day after Secretary of the Treasury announced the government takeover. White House Press Secretary Dana Perino said, “[F]or years we have encouraged Congress to put in place a strong, independent regulator to oversee the institutions. We believe the actions will help to improve conditions in the housing market.”
Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., has questions for the Administration, so there is more to be revealed. And, reporters are spilling buckets of ink talking about the takeover of Fannie and Freddie and the lack of proper oversight by regulators and Congress which brought us to this day of appreciation for regulation. Too bad it is all a little late for the small shareholders, and pensioners and taxpayers who pay the bill for speculators and executives, many of whom seem to escape with lots of money.
Don't forget to vote today! Polls across New Hampshire are open until 7 or 8 p.m. tonight with contested races in both Democrat and Republican ballot lines. So, there is no excuse, get out there and vote!
There is some interesting give and take here on Dick Hesse's letter attacking Ralph Nader's candidacy in the Monitor: ["Nader again?"].
There is also some interesting give and take on this Denver Post blog entry about Dems throwing away flags after their convention: ["Republican Recycling"].
The New Hampshire Coalition for Public Funding of Elections (NHCPFE) on Tuesday released data on campaign expenditures in 2004 and 2006 by candidates for governor, executive council and state senate. The data show sharp increases in spending from 2004 to 2006; they also demonstrate a wide range of expenditures by candidates for the same office. In 2004, for example, an Executive Council race cost as much as $88,292 or as little as less than $500; in 2006, the priciest Executive Council race cost $253,366. In 2004, the average state senate race cost $40,478; in 2006, the average cost had climbed to $54,643. Costs for 2008 are also expected to increase. NHCPFE released the data at a public hearing held in Concord by a new commission convened to explore possible funding mechanisms for a system of publicly financed of elections in N.H. The hearing, which lasted more than three hours, was attended by dozens of organizational representatives, activists and legislators, many of whom shared ideas on how a system of publicly financed elections could be funded in our state. The commission must make its recommendations to the legislature no later than Dec. 1 of this year. In speaking before the seven-member, bipartisan commission, NHCPFE Coordinator Cathy Silber summarized the commission's charge as "figuring out how much such a system will cost, and then figuring out how to pay for it." Determining the overall cost of the system, she said, depends on which offices it covers, the amount of public funds allocated to candidates for each office, and the number of candidates that participate in the voluntary system. "Analyzing recent spending by candidates for governor, state senator and executive council is the first step in determining how much money will be needed to fund a system of voter-owned elections in New Hampshire," said Silber. "The data show a good deal of variability in what candidates are spending. NHCPFE is going to be looking more closely at these data and will soon provide the commission with a recommendation for what we believe is enough to run an effective campaign. Enough, but no more." The data compiled and released by NHCPFE makes these expenditures readily comparable, over time, across districts, by political party, by margin of victory, and other factors. "These data will be very helpful to the commission as it costs out a new system," said Silber. State Senators Martha Fuller Clark and Jackie Cilley, both of whom spoke at the hearing, attributed rising campaign costs most directly to the cost of political advertising. Demonstrating their strong commitment to making public funding a reality in NH, the two senators also brought ideas for potential funding to the table. Among them were: a surcharge on political advertising, fees for posting political signs on public lands, and fees paid by parties or others seeking to access town voter files. NHCPFE also provided the commission with other resources, such as a report by the Center for Governmental Studies that reviews a myriad of possible funding sources for the public financing of elections, including those used in other states. Most of the speakers agreed that House races, the majority of which are relatively inexpensive, should not be included in a public funding system in New Hampshire, a position supported by NHCPFE. All who spoke stressed the importance of public funding of elections as a way to make public service accessible to all qualified candidates, not just those who can raise the most money. "The growing expense of running for office effectively bars people without access to money from public service," said Linda Garrish Thomas of New Hampshire Citizens Alliance.
From State House News Service email blast from the RNC yesterday, no link:
NADER PULLING WILD-CARD NUMBERS IN KEY STATES Ralph Nader helps Sen. John McCain in Nevada and Sen. Barack Obama in Pennsylvania, and plays an uncertain role in New Mexico. A recent poll shows Nader registering between 6 and 8 percent in four battleground states, with 8 percent in New Mexico, 7 percent in both Colorado and Pennsylvania, and 6 percent in Nevada. Among registered voters in Nevada, Independent Bob Barr collects 5 percent. "When the field of candidates was expanded beyond the major parties, it's clear that Ralph Nader could again have a significant impact," pollsters wrote.
Labor Day just isn’t what it used to be.The parades are smaller, the unionized workforce is smaller, the share of the economic pie available for working people in the United States is smaller and the demands by organized labor on Congress and the presidential candidates are embarrassingly smaller than the times demand.
Last year I issued a Labor Day statement noting that the Taft‑Hartley Act, one of the great blows to American democracy, had been in effect for 60 years. Well another year has come and gone and this law is still in place.Taft-Harley continues to: impede employees' right to join together in labor unions; undermine the power of unions to represent workers' interests effectively; and authorize an array of anti‑union activities by employers. (See: http://www.nader.org/index.php/archives/1220‑Repeal‑the‑Taft‑Hartley‑Act.html for a more detailed description of the anti-worker provisions of this anti-worker law.)
Union officials should speak out for abolition of Taft‑Hartley, and not concede this monumental employer usurpation of worker rights.Against the backdrop of the assault on labor that has included aggressive employer demands for concessions, the downward pull of international low-wage workers, weak and barely enforced labor and workplace safety laws, most workers have seen wage rates almost stagnate over the past severaldecades—even as CEO salaries have skyrocketed.
Major union leaders in the United States do vocally support the Employee Free Choice Act (H.R. 800, S. 1041) which according to the AFL-CIO will: “Establish stronger penalties for violation of employee rights when workers seek to form a union and during first‑contract negotiations. Provide mediation and arbitration for first‑contract disputes. [And,] [a]llow employees to form unions by signing cards authorizing union representation” On March 1, 2007 H.R. 800, which has introduced by Congressman George Miller, D-CA, and which has 233 co-sponsors, passed on a roll call vote with 241 votes in favor of the bill and 185 opposed.On June 26, 2007 the Senate tried to pass the Employee Free Choice Act, but the Republicans, with the exception of Republican Senator Arlen Specter of Pennsylvania filibustered the bill.TheEmployee Free Choice Act should, however, be but one battle in the fight to restore worker rights in the United States.
Remember the “fat cats” continue to accumulate and concentrate wealth.And George W. Bush’s recession has only exacerbated the plight of working men and women.
Employers have slashed benefits for those workers lucky enough to retain a job. And many workplaces remain far more hazardous than necessary.
Most people struggle to get by and they are working more and more—either working longer hours or picking up a second or third job—to pay the bills and meet rent or mortgage payments.In two-parent families, increasingly both parents are in the workforce. Just to meet everyday expenses, they’re borrowing more and more from credit cards, home equity loans, or second mortgages, or from legal loan sharks at check-cashing operations. If someone in the family gets sick and lacks health insurance—forty-five million Americans are in that boat—the economic pressures on the family can be overwhelming. Even if a family has insurance, the exorbitant price of medicine may not be covered, or covered entirely, and paying for the pills can drive a family into despair.
The Economic Policy Institute reports that: “The inflation‑adjusted value of the minimum wage is 19 percent lower in 2008 than it was in 1979. Since September 1997, the cost of living has risen 32 percent, while the minimum wage, even after the increase to $6.55, has fallen in real value.”
In recent times, the gap between haves and have-nots is more severe and the demands for worker rights have never been more powerless since World War 2.
Consider the following:
· S&P 500 CEOsnow make about 344 times more than the average worker at their firms.
· The top fifth of households own more than 84.7 percent of the nation’s wealth, the middle fifth percent less than 3.8 percent of the nation's wealth.
· The percent of wealth owned and controlled by the wealthiest 1 percent of households, now equals that of the bottom 92 percent.
· Women and minority males earn 69 percent to 80 percent of what White men make.In addition, more than a third of single mothers with children live in poverty.
Repealing Taft-Hartley would certainly help workers to organize for better wages and working conditions.The fight would be monumental, but so would the gains.
