Or, 13 Reasons for Ruin and Maybe a few Routes for Recovery
Dear Senators, Representatives and those who want to be President:
As near as I can figure out, up until the last few days, the Republican policies regarding our nation’s financial institutions and financial security seem to have been to:
(1) eliminate most scrutiny and regulation of financial institutions of any sort by changing or reinterpreting the laws,
(2) cut the staff and funding of the existing regulatory agencies,
(3) put agency heads in power who come from the regulated financial institutions and/or who are openly opposed to scrutiny and regulation on principle,
(4) replace the remaining professional staff doing the day to day regulating with either party zealots or those who will do what they are told,
(5) encourage embarrassingly massive campaign contributions from the institutions that were supposed to be scrutinized and regulated,
(6) conduct most public business in private,
(7) arrogantly and patronizingly insist that the “experts” (i.e. themselves and only themselves) know best, no matter how obvious or elementary the proposition,
(8) attempt to impose a particular ideology on the market regardless of present circumstances,
(9) proclaim that the many questionable practices being produced, such as loaning large sums to people who could not possibly pay it back, secured by overpriced housing, were somehow sound investments,
(10) assume sales prices of stocks, bonds and homes would continue to increase forever,
(11) cut taxes whether the economy is going up or down,
(12) discourage savings while simultaneously allowing heavy, heavy borrowing by consumers, businesses and the government itself to accumulate to ridiculously high levels, thereby shifting the burden to future generations, and
(13) mortgage that future to largely foreign country creditors.
There seems to be little doubt left that above mentioned “baker’s dozen” of boneheaded decisions, bilious due diligence, bad deals and big debt not only busted our dollar’s standing, but caused a cascading collapse posing a deadly threat to our entire economy. The failure has been spectacular, to say the least. It is not as if this was impossible to predict, however. Some of the reasons behind the disaster are not too dissimilar from the destruction of the Savings and Loan Industry a few years ago, a debacle, by the way, in which another Bush, Neil, played a prominent role. In hindsight, if the question had been posed as above, that is reciting simply the 13 financial policies on which the economy was retooled starting with Ronald Regan, how could anyone with even a high school education not have concluded those cumulative policies could lead to a new meltdown? It is one thing to gamble, but on this scale?
Has no one in the Republican Party ever heard of the Mini/Max concept in which you try at least to minimize your maximum losses? Has no one with a (Chinese made) American flag pinned on their pin stripe suit read Adam Smith? Did everyone in charge assume the law of supply and demand can be violated with impunity? How did “Conservative” with a large “C” come to mean the opposite of “conservative” with a small “c”? Does an MBA degree stand for Must Blow All?
The harm may have been unintentional, but speaking as a practicing business lawyer, the case law has always been quite clear on such situations. Those whose wilful acts or omissions cause reckless endangerment of others should be held responsible. And it was dangerous, extremely so given the size and interlocking aspects of the undertakings. Frankly, if the five Republicans on the Supreme Court had put self declared terrorist, Osama bin Laden, in the White House in 2000 instead of the self declared “Business President,” bin Laden probably would not have been able to do as much harm to our nation. At least his policies would have received better scrutiny than the current occupant.
There were some greedy Democrats among the many, many Republicans who were more interested in lining their pockets and protecting privileges than protecting the country. And, other Democrats no doubt deserve a certain portion of the blame for being too weak, too cowardly, or too ineffective to be able to stop the looting that has gone on for the past decade or so, when Republicans either controlled Congress or had enough votes to block changes. I am not a Democrat and do not care for the present Democratic Party leadership and almost all need a swift kick in the pants or replacement. But, for the most part, blame for this latest in a series of monumental crippling fiascos must be laid squarely at the feet of the Republican Party as a whole and those the party members gleefully selected to lead them. Democrats may be stupid or naive, but the Republicans are truly scary. Extremely frightening to me, in fact. Worse, they succeeded at all or almost all they sought and the direct result is the potential equivalent of bankruptcy not merely for millions of citizens and companies, but the country itself.
Good grief. The number of zeros in the amount demanded by the White House, $700,000,000,000.00, for its so-called “bailout” plan to hopefully slow down the hemorrhaging is approaching the gargantuan sized pile the Pentagon spends on everything it does, including two separate wars and trying to refit a tired and badly used military. Yet, the hundreds of billions in this supposedly needed instant “bailout” was not even on the budget. Talk about budget busters, it is the biggest “bailout” of all time and may be greater than all the past ones put together, especially when the other buyouts of the past few weeks are counted in dramatically upping the total. It’s staggering in its implications, almost unimaginable in scale. In any event, much of it is likely a net loss, maybe all. And, there is no reliable evidence that the hemorrhaging stops at a mere trillion or so. Shouldn’t there be some nagging doubt or scepticism about the concept as well as the amount, since those telling us so are the same ones who told us the Iraq War would “only” cost $20 billion?
So, what to do? Bush’s Treasury Secretary has proposed a “bailout” which will give him an initial three-quarter trillion to play with. That Treasury Secretary and his boss had the nerve to initially demand Congress abdicate its Constitutional responsibility to oversee the taxpayer resources being possibly squandered. The Secretary (who came to his position straight out of the same group of preening, cover storied, “geniuses” on Wall Street who made a lot of other promises and representations) asked, no - demanded, that he be given the power to do whatever he jolly well pleases with that huge pile of cash. He insisted that there be no oversight and especially no penalties or future liability for him. As to what he plans to do with it, he has already indicated he intended to simply hand the money over to the malefactors who caused the problem with no strings attached. He apparently planed to buy up his buddies' stupidities (or thefts) and happily stick the tab with the taxpayers. If there are any profits later, those would have been kept solely by those who caused the losses. The Treasury Secretary still insists this be done almost immediately with next to no debate or investigation. The unmitigated gall and arrogance of such a proposal is something only the current Administration could have come up with. In light of their track record on this and almost everything else, they could have at least acted humble when they were proposing a pocket picking and power grab of such magnitude.
Senator McCain has said only days ago he greatly admires that Treasury Secretary. Of course, the Treasury Secretary McCain likes so much is the same guy who in March of this year was still going on TV to say the economy was great and let’s keep doing what we have been. McCain has voted for almost every financial deregulation plan his party has proposed over the past few decades and is showing us nothing really different even now. So, McCain just lost my vote for sure.
That leaves the rest of you in Congress, such as my own Senator Gordon Smith, who wants to be re-elected for another two to six years even though he has supported so many of those Republican policies that led us to this juncture. Whether I vote for him will depend on what he and the rest of you do about this between now and election.
If you vote in Congress to pass anything like what has been proposed by the Treasury Secretary, you do not deserve my or anyone else’s vote. What might get my vote for an incumbent?
• For one, there needs to be denunciation of President Bush and the Treasury Secretary for even proposing such a “bailout” as initially proposed. There should be a public admission by Republicans that the Republican platform and policies on the economy over the past decades was a terrible idea. As for the Democrats, no gloating. You spineless wonders caved in on the abandonment of the concept that financial institutions should be fiscally conservative (with a small “c”). You have complicity in the tragedy thanks to your incompetency in stopping the rape of the system by the Republicans.
• Words are not enough though. If there is to be a transfer of taxpayer money from desperately needed other programs such as rebuilding our national security readiness and protecting our health, jobs and infrastructure, then NO CASH FOR TRASH!!!! Either buy the assets at current market value or buy appropriate shares of the company stock so that taxpayers can have at least a chance as owners, albeit a slim one, of protecting their investment. Or, possibly only allow the money to be given out loans secured by all the assets of the businesses obtaining the money.
• Maybe instead of giving the money to the idiots and maybe criminals directly responsible, perhaps use it instead to take over the mortgages of those poor homeowners suckered into the subprime mortgages with the escalating rates. By the way, didn’t anyone in charge begin to have suspicions once they heard about the “miraculous” growth of what turned out to be aptly named “subprime” mortgages? What part of “subprime” did they not understand? Certainly change the bankruptcy laws to once again allow the court to write down interest rates to fair market rates. Why should the banks be given a write down unless the people they duped or misled get one too?
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