If their toxic assets have really frozen lending, although not actually jeopardized their solvency, then the shareholders would have a great lawsuit against any bank executive who refused to act in the interest of the shareholders in order to preserve their own high pay. Such instances would presumably be rare, but could nonetheless provide a great source of free entertainment to a nation suffering through a severe downturn.
In short, there is good reason to believe that the Obama administration is trying to slip hundreds of billions of dollars to bank shareholders and their top management.
My comment on the bank bailouts: The bailouts seem to be the ultimate result of supply-side thinking. The thinking seems to be that since people and businesses are tapped out from so much borrowing and no longer credit-worthy enough to risk loaning money to we should give literally all the rest of the country’s money to those at the top of the finance food chain, and maybe they’ll make loans again anyway, and get the bad-loan-making system rolling again.
They say that people who want to buy cars can’t get loans. Well a credit-worthy buyer CAN get a loan. -I’LL- give a credit-worthy buyer a loan because then I can get a much higher return than I can get anywhere else. As long as I am sure I’ll be paid back.
They say people can’t buy houses. Well in the SF Bay Area the lowest-priced two-bedroom, one bath house (bad meighborhood, bars on the windows) requires an income of $10K/month to get a mortgage, now that they’re again requiring no more than 28% of income be spent on housing. Is the government’s idea that giving bad banks literally all the rest of our money will get them to give loans to people to take on mortgages at 50% of their income again?
And what about the GOOD banks, the ones that carefully managed their loan portfolios and didn’t get into trouble? Why doesn’t the government give cash to them, to help them give more good loans?
There’s just one pathway to happiness in which this deep, human need for power is given pride of place: democracy. By this I mean democracy as a living practice that enables us to have a real say in every dimension of our public lives, from school to workplace and beyond.
[. . .] Including power in our definition of happiness changes everything.
Obama’s economic team does not see themselves as working for the PEOPLE of the country, they see themselves as defenders of the Wall Street Elite. In the words of the new Treasury Secretary, “we’d like to do our best to preserve that system.”
This is the justification for the new plan to just use government money to buy up all the bad loans made by the big Wall Street firms. They screwed up the economy. WE pay for it. They stay rich. We get ever poorer.
From the referenced post,
Consider this statement from Geithner, who said that Treasury is considering a “range of options” for its financial rescue plan, with the goal of preserving the private banking system. “We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system.”
They are trying to avoid “nationallizing” the banks. But what that means is that the government takes them over, reorganizes them, and then privatizes them again — in the process wiping out the current shareholders and selling the good parts to new shareholders.
This is what we have always done with bad banks. This is what the FDIC does. This is what we did in the S&L crisis. But they don’t want to do that this time.
What they are doing instead is using taxpayer dollars to prop up the current shareholders. The ones who currently own insolvent banks will receive an infusion of taxpayer dollars.
But not the people who are losing their homes, jobs, health care. God forbid THEY should get something. All they did was pay their taxes. Unlike the current Treasury Secretary.
This post originally appeared at Speak Out California
The key to California’s successful business environment are education and infrastructure. It is not an accident that our semiconductor and computer and Internet industries, and biotechnology and pharmaceutical and genetic engineering and our other world-class competitive industries developed in California instead of in “low tax” states like Mississippi and Alabama. These industries thrived here because of our well-educated people and our modern, well-maintained infrastructure.
There has been a dramatic wealth-building return on our investment in education and infrastructure. Investors could count on California as a good place to start and grow a business, and it has paid off.
But how much would it cost if businesses had to pay fair market value for use of the infrastructure that We, the People built? What would it cost if companies had to pay the full education cost every time they hire someone who was educated at a California public school or state college or university?
What would it cost if companies had to pay to be provided with police and fire protection? Should companies pay a fee to have the police investigate, catch the perpetrators, and then put them through the criminal justice system?
What would it cost if companies had to pay fair value to use our roads and air- and seaports.
What would it cost if companies had to pay for access to the legal system that We, the People set up. We passed the laws and paid for the courts. We set up the entire legal structure.
We, the People pay to regulate (and apparently bail out) the banking and financial system. What would it cost if businesses had to pay us for setting up this system that (used to) keeps our money sound? This is what government and taxes are for. We, the People built up California’s comprehensive physical, legal, cultural, education and societal infrastructure. Businesses rely on that infrastructure, and we want them to thrive. This benefits us all. Many, many people became wealthy by betting on California as a great place to do business, and we are proud of that. Now it is tome to give something back.
Building and maintaining that infrastructure does cost money, and that is where taxes come in. For several years California has been cutting taxes and cutting back on our investment in education and infrastructure. Businesses cannot continue to thrive as they have if we continue along this path. We have reached a point where the tax-cutting has brought our state’s education spending to the second-lowest per-pupil of all the states! We have been and are deferring maintenance on roads and other infrastructure. We are cutting back on all essential services and we still have a $40 billion budget shortfall!
Our companies are getting a good deal. If we charged fees that were based on the actual value of the service that the infrastructure provides businesses would have to pay much, much more than any level of increased taxes companies and wealthy individuals might be asked to pay to help California meet the budget shortfall. The businesses and individuals who thrived because of the infrastructure we built need to contribute to the future by agreeing to pay taxes to help invest in rebuilding that infrastructure.
The payoff is clear. As I wrote above, there is a reason that Silicon Valley and genetic engineering and other wealth-creating industries developed in states like California and Massachusetts instead of “low tax” states like Mississippi and Alabama.
Click through to Speak Out California.
The stimulus bill passed the House but not one Republican voted for it.
Repeat: every single Republican voted against the stimulus bill.
The Democrats pre-compromised on the bill, added business tax cuts that won’t stimulate the economy, threw out lots of infrastructure projects, mass transit and others, threw birth control for poor women out, got rid of health efforts to fight STDs, and lots of other nonsense, trading all of that for NOTHING.
They threw good stuff out of the bill without first securing one single Republican vote. Shame on them. Update – I’m angry and I am going to rant. (It’s what I do best.) So who were they were negotiating WITH when they threw out infrastructure, mass transit, birth control for poor women and other important things? It’s like someone was just reacting to Drudge Report headlines. When I have been in negotiations I would say, “OK, I can give you that, but if I do, then what do I get in return?” You start with a bill that has in it more than you want or expect to get. Then you throw things out in exchange for a promise to vote for it. Otherwise what is the point of making the bill worse?
At this critical juncture progressives have a unique opportunity to reassert themselves as agents of bold ideas and catalysts of political and social transformation. This volume presents new and innovative solutions to some of the most difficult problems we’re facing: the financial crisis, healthcare reform, greening the economy, expanding the middle class, improving America’s standing in the world, and many more.
This book comes from the Progressive Ideas Network – an alliance of progressive think tanks. The job of these organizations is to think through today’s problems and propose solutions according to our progressive values.
For example, the first essay in this book is titled, “Building Shared Prosperity.” This is about building an economy that works for all of us rather than just making us all work to death to make a few already-wealthy people richer.
Progressive values: Do we want to live in a dog-eat-dog world where everyone is in it for themselves and only themselves? This is the conservative vision. OR do we want to live in a world where we take care of each other, watch out for each other, and lift each other up? This is the progressive vision.
The website for the book is here.
Quick thought: It wasn’t the Republicans who didn’t put restrictions and controls into the $700 billion TARP Wall Street/bank bailout bill. Democrats wrote and passed that bill.
Now the money is being used for union busting, lobbying, bonuses, dividends…
Three days after receiving $25 billion in federal bailout funds, Bank of America Corp. hosted a conference call with conservative activists and business officials to organize opposition to the U.S. labor community’s top legislative priority.
HOW much of OUR money was used for lobbying against our interests, funding conservative causes, etc?
We may never know. THANKS to all the Democratic members of the House and Senate who voted to hand this money over to Bush with few restrictions or requirements or transparency written into the legislation. The TARP bill should have banned all lobbying of any kind by any corporation receiving TARP funds. Good job!
I’m curious to know which Republicans, specifically, said they will vote for the bill with more tax cuts added — like the ones they took out mass transit money for. I’d also like to know which Republicans, specifically, are now promising to vote for the bill with family planning funds removed.
The Republicans say they are being left out of the negotiations — yet more and more real stimulus is disappearing, and more and more useless Republican-style gimmicks are being added.
Who are they negotiating with, that they are giving more and more away to? If it is buying votes they need, that’s OK I guess. If it isn’t, I’d like to know more about this interesting strategy.
Or, on the other hand, if Republicans say they aren’t going to vote for the bill, will they put mass transit and family planning back in?