Tuesday, February 3, 2009

New article from Alan Benjamin, Exec. Board member of the San Francisco Labor Council...

Here is a great article from our friend Alan Benjamin attacking the use of TARP funds...

No Wall Street Bailout! Nationalize the Banks!

By ALAN BENJAMIN

Finally someone in the mainstream media has the guts to tell it like it is.

Writing in The New York Times (Feb. 3), Paul Krugman notes that "all of Obama's tough talk is just for show." Krugman was referring to Obama's strong denunciations, in his weekly address, of Wall Street CEO bonuses and his call for tougher restrictions on banks receiving government bailout aid.

Why just for show? Krugman writes:

"When I read recent remarks on financial policy by top Obama administration officials, I feel as if I've entered a time warp -- as if it's still 2005, Alan Greenspan is still the Maestro, and bankers are still heroes of capitalism.

"'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,' says Secretary Treasury Timothy Geithner -- as he prepares to put taxpayers on the hook for that system's immense losses.

"Meanwhile, a Washington Post report based on administration sources says that Geithner and Lawrence Summers, President Obama's top economic adviser, 'thinks governments make poor bank managers' -- as opposed, presumably, to the private-sector geniuses who managed to lose more than a trillion dollars in the space of a few years.

"And this prejudice in favor of private control, even when the government is putting up all the money, seems to be warping the administration's response to the financial crisis."

Indeed. The bankers are sitting pretty. They know the government is going to keep bailing them out, and they know the Obama scolding is for PR purposes only. They're in control. Their bad debts will be covered, the government -- and, ultimately, the taxpayers -- will incur all the risk, and when things get better, they can crank up their speculative orgy once again. This is what Krugman calls "lemon socialism."

Krugman goes on to conclude: "If the taxpayers are footing the bill for rescuing the banks, why shouldn't they get ownership?"

Bankers' Bailed Out, But No Recovery

Nationally syndicated columnist Robert Scheer hit the nail on the head when he explained in his Jan. 14, 2009, column why working people and the Congress should oppose releasing the second $350 billion disbursement from the Troubled Assets Relief Program, or TARP, to these financial institutions. Scheer writes, in part:

"Why rush to throw another $350 billion of taxpayer money at the Wall Street bandits and their political cronies who created the biggest financial mess since the Great Depression? And why should we taxpayers be expected to double our debt exposure when the 10 still-secret bailout contracts made in the first round are being kept from the public?" (San Francisco Chronicle, Jan. 14, 2009)

Those $350 billion are needed urgently to bail out our colleges, hospitals, schools, social services, and communities.

But the bankers are not reinvesting their money and providing credits to the economy. With companies going bankrupt left and right, they don't want to take on the risk. They prefer to sit on their money, waiting for better times ahead. They say so themselves.

An article titled, "U.S. Banks Keep Hold of Bailout Cash," (New York Times, Jan. 19) quotes the bankers who have received the first tier of the bailout money: "An overwhelming majority of the banks saw the bailout program as a no-strings attached windfall that could be used to pay down debt, acquire other businesses or invest for the future. ...

"'With that capital in hand, not only do we feel we can ride out the recession,' said Walter Pressey, president of Boston Private Wealth Management, 'but we also feel that we'll be in a position to take advantage of opportunities that present themselves, once this recession is sorted out.'"

The New York Times article continues:

"None of the bankers who appeared before recent investor conferences offered specific details of their intentions [in relation to the new TARP disbursement], but recurring themes emerged in their presentations. Two of the priorities cited most often were hanging on to the money as insurance against a prolonged recession and using it for mergers.

"'We see TARP as an insurance policy,' said John Hope, chairman of Whitney National Bank. 'That when all this stuff is finally over, not matter how bad it gets, we're going to be one of the remaining banks'."

The banks are being handed $700 billion -- money which should be spent to prevent all layoffs and to create millions of new jobs -- but their only concern is their bottom line, their profits, so that they "can ride out the recession." Working people don't have the ability to ride it out. They will lose their jobs, their homes, their families, their dignity. Many, in fact, have already taken their own lives.

Main Street Gets the Shaft

Wall Street is being given everything they want -- and now they want even more. Speaker of the House Nancy Pelosi and National Economic Council Director Lawrence Summers announced on Jan. 25 that the Wall Street bailout may not be enough and that Congress may have to cough up more money to "stabilize the financial system." (Financial Times, Jan. 26)
Main Street is being shafted while the bankers keep coming back to the trough for more funds to protect their bottom lines. This is obscene!
Obama -- if he wishes to heed the mandate for real change given to him by the voters on Nov. 4 -- should put an immediate halt to the disbursement of the second half of the $350 billion Wall Street bailout. The bankers and speculators are parasites. They are not needed.
The government should, in fact, take the next necessary step for an economic recovery by nationalizing the banks -- and not just giving taxpayers "equity" in the banks, as Nancy Pelosi suggests. After all, the government already has controlling interests in many of these banks -- but all decision-making remains in the hands of the people who got us into the mess we're in today.
This raises a related question: Shouldn't the government confiscate the initial $350 billion in bailout funds to redirect these funds toward productive investment -- which the bankers refuse to do?

A report adopted by the San Francisco Labor Council (AFL-CIO) on Jan. 12, 2009, points in this direction. It states, in part:

"We must make a two-fold demand to Congress: (1) track all tax dollars given out, to whom and for what, and (2) recapture by whatever means what was not used properly. Wall Street and Main Street cannot both be bailed out at the same time, because Wall Street is about profiting from speculation, and the bailout is funding the speculation."

Wall Street has refused to disclose how the first installment of TARP funding was spent. The 10 secret deals are to remain ... secret. Now the task is to "recapture by whatever means" what was not used properly -- which, from all accounts, is the lion's share of the bailout fund.

Nationalize the Banks! Reclaim Funds for Workers' Recovery Plan!

Why should working people be asked to sit back and regret that the $700 billion TARP bailout fund -- money which we need desperately to save our jobs and communities -- should be out of our reach and lost forever?

No. Most of this bankers' rainy day fund is sitting in their coffers, as they themselves attest; no need to go the Cayman Islands to retrieve it. Isn't it time to turn the tables and break the bankers' strike? Isn't it time to nationalize the banks and redirect funds for a genuine economy recovery that puts the interests of working people first!

Shouldn't Obama and the new Congress also stop the $275 billion tax credits to the rich. Shouldn't they be slashing billions of dollars of funding for war and empire in the Middle East and redirecting them toward meeting human needs? Shouldn't they should tax the rich by rolling back corporate income taxes to their 1981 levels; retroactively taxing Windfall Revenue on the oil-energy industry, on executive compensation and on corporate foreign retained earnings; and repatriating an estimated $2 trillion from 27 offshore tax havens?

More than enough money exists to bail out Main Street. Working people should not be made to bear the brunt of this crisis -- a crisis that was created by the Wall Street financiers and the politicians in their pay.

Isn't this what that the entire U.S. labor movement should be demanding in no uncertain terms of the new administration and of all members of Congress?

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Alan Benjamin is co-editor of Unity & Independence

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