How can America recover from the financial crisis?
What's the most important measure America and its leaders can take to right the terrible wrongs that have created this turmoil?
Three prominent politicians (two of them presidential candidates) have plans for how to respond to the bailout. Neither suggest that they would support the Bush administration's or Paulson's proposal, which is being advanced in the halls of Congress right now (despite the fact that many details about the proposal are unknown).
Barack Obama proposed that: -There must be no blank check when American taxpayers are on the hook for this much money. -Taxpayers shouldn't be spending a dime to reward CEOs on Wall Street. -Taxpayers should be protected and should be able to recoup this investment. -This plan has to help homeowners stay in their homes. -The United States must insist that other nations join us in helping secure the financial markets. -We need to start putting in place the rules of the road I've been calling for for years to prevent this from ever happening again. -This plan can't just be a plan for Wall Street, it has to be a plan for Main Street. We have to come together, as Democrats and Republicans, to pass a stimulus plan that will put money in the pockets of working families, save jobs, and prevent painful budget cuts and tax hikes in our states.
Heavy on rhetoric, lacking in specifics---These are Barack Obama's proposed ideas for how to recover.
Dennis J. Kucinich has offered a plan to help Americans refuse the "cash for trash" proposal being pushed by the Bush Administration: Reinstatement of the provisions of Glass-Steagall, which forbade speculation Re-regulation of the finance, insurance, and real estate industries Accountability on the part of those who took the companies down: a) resignations of management b) givebacks of executive compensation packages c) limitations on executive compensation d) admission by CEO's of what went wrong and how, prior to any government bailout Demands for transparencey a) with respect to analyzing the transactions which took the companies down b) with respect to Treasury's dealings with the companies pre and post-bailout An equity position for the taxpayers a) some form of ownership of assets Some credible formula for evaluating the price of the assets that the government is buying. A sunset clause on the legislation Full public disclosure by members of Congress of assets held, with possible conflicts put in blind trust. A ban on political campaign contributions from officers of corporations receiving bailouts A requirement that 2008 cycle candidates return political contributions to officers and representatives of corporations receiving bailouts
These points are very specific. Clear and concise---these are Kucinich's ideas for how to recover.
Ralph Nader has a 10-point plan. Since he predicted this crisis in much the same way that Ron Paul did, his ideas for how to recover are worth considering:
Immediate Changes Required for Any Bailout - No bailouts without conditions and reciprocity in the form of stock warrants - No more lobbying for any company that is bailed out - No golden parachutes and get out of jail free cards for guilty executives - No bailouts without public hearings
Changes to Housing Market - Reduce the moral hazard in U.S. mortgage markets by introducing covered bonds for the majority of mortgage products as they do in Western Europe. That gives institutions that finance mortgages an incentive to be prudent, because they cannot just unload them and wipe their hands clean of the liability, but are instead on the hook if the homeowner defaults. - Maintain neighborhood stability and housing security 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. - Avoid future housing bubbles by removing implicit government guarantees for new mortgages that exceed thresholds of greater than 15-20 times the annual fair market rent value of the home. Structural Changes to Financial Markets - Make the Federal Reserve a Cabinet Position, so it is accountable to Congress, as well as making sure all Federal Reserve Bank presidents are appointed by the President and answerable to congress. - Reduce conflicts of interest by taking away power for auditor and rating agency selection from companies and placing it in the hands of the SEC to be administered on random assignment. - Implement a securities speculation tax, starting with derivatives to deter casino-style capitalism.
All are food for thought. We
might even choose to consider Newt Gingrich's plan for recovery if Naomi Klein hadn't warned us that Gingrich's plan is exactly what she predicted would be proposed after a shock like this.
So, how can we recover? Kucinich's and Nader's plans have some similarities. Obama's has some political rhetoric for uniting us in a way forward. What are we the people going to stand for?
Which side are we going to be on? The corporations? The people?
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