Monthly Archives: September 2008

Opposing a Blank Check for the Financial Industry

My letter to my Congressmen

Dear Senators Durbin and Obama and Representative Emanuel:

I’m writing to ask you to oppose Secretary Paulson’s proposal for a blank check to bail out the financial industry. While some form of government intervention may be essential to safeguard the economy, it doesn’t make sense to funnel taxpayer funds, without restrictions, to the very people that got us into this mess.

Privatizing profit and socializing risk is no way to run our economy. It’s disconcerting that the very people who have enshrined personal responsibility and the perfect utility of the free market are being rescued by the public from their own mismanagement.

I support the conditions given by Robert Reich as preconditions for any bailout, namely:

1. The government (i.e. taxpayers) gets an equity stake in every Wall Street financial company proportional to the amount of bad debt that company shoves onto the public. So when and if Wall Street shares rise, taxpayers are rewarded for accepting so much risk.

2. Wall Street executives and directors of Wall Street firms relinquish their current stock options and this year’s other forms of compensation, and agree to future compensation linked to a rolling five-year average of firm profitability. Why should taxpayers feather their already amply-feathered nests?

3. All Wall Street executives immediately cease making campaign contributions to any candidate for public office in this election cycle or next, all Wall Street PACs be closed, and Wall Street lobbyists curtail their activities unless specifically asked for information by policymakers. Why should taxpayers finance Wall Street’s outsized political power – especially when that power is being exercised to get favorable terms from taxpayers?

4. Wall Street firms agree to comply with new regulations over disclosure, capital requirements, conflicts of interest, and market manipulation. The regulations will emerge in ninety days from a bi-partisan working group, to be convened immediately. After all, inadequate regulation and lack of oversight got us into this mess.

5. Wall Street agrees to give bankruptcy judges the authority to modify the terms of primary mortgages, so homeowners have a fighting chance to keep their homes. Why should distressed homeowners lose their homes when Wall Streeters receive taxpayer money that helps them keep their fancy ones?

Please oppose any unrestrained bailout.

Sincerely,

James Seidler

It’s shouting into a tornado, sure, but what else are you going to do?

The Banks Built Their Own Pyre, Then Lit a Match

Dean Starkman has an excellent story, “Boiler Room,” at the Columbia Journalism Review exploring how greed and irresponsibility inflamed our current financial crisis. Predatory lending, abandoned regulations and amoral financial industry groupthink led to an atmosphere where home buyers were reduced to suckers begging to be bilked out of their money.

His analysis is summed up as follows:

I realize that borrowers who signed the notes can never be fully let off the hook; no one knows what went on in the room at each closing—although the reporting of the last several years certainly yielded plenty of examples of loans made to stroke victims, the retarded, the elderly, the illiterate, and people who don’t speak English. A fine piece in April of this year by The Indypendent, a New York alternative paper, for instance, describes how an eighty-six-year-old Brooklyn man diagnosed with dementia decided it was a good idea to refinance his 5.95 percent, thirty-year, fixed-rate loan with an option ARM, an instrument that BusinessWeek described as “the riskiest and most complicated home loan product ever created.”

But more broadly, it pays to remember that the borrower is the amateur in this equation, someone who might execute a mortgage twice in a lifetime. A lender will do it a hundred times before lunch.

So, that’s what we know: the lending industry used marketing deception—including boiler-room tactics—on a mass scale against a class of financially vulnerable borrowers (which subprime borrowers are, by definition) and other middle-class financial amateurs already laboring with stagnating incomes and rising costs for health care, education, and, of course, housing.

Conservation Challenges Seen in Gorilla Killings

Mark Jenkins’ July 2008 National Geographic article, “Who Murdered the Mountain Gorillas?,” offers a heartbreaking look at the challenges of conserving endangered species. Corruption, greed and extreme poverty intersect in the Democratic Republic of the Congo’s Virunga National Park, with dire consequences for the area’s mountain gorillas.

Planning for a Post-Bush Future

Mother Jones‘ September/October issue, “Exit Strategy: How to Fix a Post-Bush Nation,” offers a comprehensive breakdown of Bush-era bungling. Exploring topics ranging from executive power to domestic priorities, the magazine examines what went wrong (at no small length) and offers a primer on how the next President can recover from Bush administration misconduct and incompetence.

A few stories stood out as particularly relevant:

Jack Hitt’s “Pursuit of Habeas” outlines the origins of habeus corpus and details why the Bush detainment policy was counterproductive as well as illegal.

James K. Gailbraith’s “How to Burn the Speculators” shows how increasing deregulation of the financial industry, stretching back to Reagan, is tied to today’s financial meltdown. (McCain economic advisor Phil Gramm plays a leading role, but the blame is widely spread.)

Finally, “Bush’s Reign of Error: A Timeline,” provides a quick-hit summary of the 43rd President’s many lowlights. Looking back, the scope of his malfeasance is pretty breathtaking. Among other things, I’d forgotten that Henry Kissinger was initially selected to head the 9/11 commission.

U.S. Attitudes Toward Torture

There have been many distressing political developments over the past seven years, but the one I find most upsetting is the acceptance of torture as a tool of the U.S. government. The Atlantic blogger Andrew Sullivan has an alarming post on the subject today. Evaluating the results of a World Public Opinion survey on torture, he writes:

A new survey of global public opinion [PDF] reveals the appalling truth. Americans are now among the people on earth most supportive of government’s torturing prisoners. The United States is in the same public opinion ballpark as some of the most disgusting regimes on the planet:

Support for the unequivocal position was highest in Spain (82%), Great Britain (82%) and France (82%), followed by Mexico (73%), China (66%), the Palestinian territories (66%), Poland (62%), Indonesia (61%), and the Ukraine (59%).   In five countries either modest majorities or pluralities support a ban on all torture:  Azerbaijan (54%), Egypt (54%), the United States (53%), Russia (49%), and Iran (43%).  South Koreans are divided.

So America’s peers in the fight against torture, in terms of public opinion are Azerbaijan, Egypt, Russia, and Iran. This is what America now is: a country with the moral values of countries that routinely torture and abuse prisoners, like Egypt and Iran. Even the Chinese, living in a neo-fascist market state, oppose torture in all circumstances by 66 percent, compared to Americans where only 53 percent do! More horrifying: a higher percentage of Americans – 13 percent – believe that torture should generally be allowed than in any other country save China, Turkey and Nigeria. And in the last two years, as the American president celebrates and authorizes the torture of people who have not been allowed a fair trail, support for torturing terror suspects has increased from 36 percent to 44 percent.

The only other countries where support for torturing terror suspects has grown are India, Nigeria, Turkey, South Korea and Egypt. In all other developed countries, support for an absolute ban on torture has actually risen in the past two years. America is now leading the way in legitimizing and celebrating torture as a legitimate tool for governments.