In March, the U.S. government shoved billions of taxpayer dollars into already bulging Wall Street pockets. At least one trillion dollars that could have been used for Social Security and Medicare went instead to investment banks that had gambled in the market and lost.
This theft has been long in the making.
In 1999, the Clinton administration voided laws passed during the Great Depression that kept investment banks separate from commercial banks. This allowed the market players to get their hands on everybody’s loans and savings. In 2005, Congress passed the “Bankruptcy Abuse Prevention and Consumer Protection Act” to make it much harder for people to get out of debt. The sharks sharpened their teeth for the feeding frenzy.
While TV ads pushed subprime mortgage loans for little down to folks with poor credit, the Bank of America financed the biggest offerer of these loans, Countrywide. After two years, Countrywide doubled its mortgage interest rate, ballooned the amount of monthly payments, and seized the houses of people it set up for a fall — a disproportionate number of them Black and Hispanic.
Washington Mutual stole a different way. The bank forced the mortgage company it uses to deliberately inflate home prices. This earned higher profits for the bank, but left homeowners owing more than their houses are worth.
With bankers propagandizing that “property always increases in value,” purchasers believed that their houses would produce equity they could borrow on to pay bills. Since nearly half of all households spend more than they earn, this seemed a godsend. Instead, it was a deal with the devil: 80,000 families a month are being forced from their homes.
Meanwhile, the government is using tax income to buy up the unpayable debt the financial institutions are responsible for creating — bailing out the swindlers with the money of the swindled!
The AFL-CIO union federation has drafted emergency laws to stop foreclosures and evictions in some states. Good — but a national moratorium is needed. And, with prices for all necessities sky-high, labor and community groups should also fight for a rollback of rent costs and universal rent control.
In February, England rescued the giant Northern Rock bank by temporarily nationalizing it, with compensation to the shareholders. An excellent model, but with improvements — dropping the payoff and making the public ownership permanent.
This is what needs to happen in the U.S. The private sector has shown itself incapable of meeting people’s most basic needs. So let’s make banks public institutions run by unionized public workers!
Bail out the banks? You gotta be kidding! Better to put the CEOs in prison and turn over their wealth to the people they made homeless.
