This week America witnessed Black Thursday for workers and families as the Senate defeated a bankruptcy bill that would have protected distressed homeowners and the House passed a bill that encourages and guarantees banks will continue abuses the bill pretends to remedy for a full year.
Politically and financially, Americans will look back on these years, and judge what happens when a Democratic president and Democratic Congress use the government as an instrument of reform, change and problem-solving. To state my conclusion at the outset, I do not believe Treasury Secretary Timothy Geithner has carried this mantle well and what I see in current policy is little more than a gigantic transfer of wealth from taxpayers to banks, which is being abused and misused by most banks.
It will be a disaster if this becomes the historic, political and financial legacy of Democrats using government to solve problems, and I believe it is essential for Democrats and progressives to join a great debate on the side of workers and families and against the abuses that are front-page news and continue every hour of every day.
It is outrageous that banks take trillions of dollars of taxpayer money for the purpose of lending to Americans while they raise credit card rates, turn fixed rates to variable rates that guarantee huge additional rate increases when the Fed resumes raising its rates, while they raise banks fees, cut customer lines, and increase foreclosures when trillions of dollars were spent for them to do exactly the opposite.
It is time to break ranks with an almost universal Washington consensus about how business is done in this town, a consensus that is leading our country to financial disaster.
My “epiphany” came when I glanced at the recent campaign finance report of Sen. Chris Dodd (D-Conn.), which shows a stunning lack of support from home-state donors and a deluge of donations from companies doing business with his Senate Banking Committee.
While Wall Street pay is quickly moving back to bubble levels, the system of speculation for compensation (which creates perpetual bubbles) remains intact. Campaign money still flows like a mighty river in a legalized pay-for-play system that corrupts our financial and political systems alike.
The source of public anger is this: The core policy is fundamentally a multi-trillion-dollar transfer of money from taxpayers to banks, which borrow money from taxpayers at low interest, punish taxpayers by charging them higher interest and pay themselves a king's ransom for doing it.
The president speaks of transparency and accountability, but: Does anybody know exactly how much money the various government agencies have spent rescuing banks that still refuse to lend? Four trillion dollars? Seven trillion? Ten trillion?
What, exactly, have taxpayers received in return? These monies were provided to increase lending, but net lending is down.
When banks receive trillions of dollars to increase lending, they insult the intelligence of taxpayers and the integrity of government by increasing credit card interest rates, increasing bank fees, lowering credit limits, increasing home foreclosures and lowering net lending. Where's the accountability?
While money is doled out to banks by Congress, money is doled out to Congress by banks.
It is a direct attack against economic recovery, a direct attack against economic stimulus and a direct attack against economic growth for interest rates to be hiked, credit limits to be cut, bank fees to be raised and lending to be lowered.