[R-G] [BillTottenWeblog] Another Bail Out for the Financial Elites

[Bill Totten]

Washington DC Socialists Save Crashing Capitalists

by Ralph Nader

www.counterpunch.org (July 17 2008)


Here they go again! Financial capitalism is crashing. So the lights are
on late in Washington's Federal Reserve, SEC and Treasury Department
trying to figure out how socialism (your tax dollars and credits) can
once again bail out these big time gamblers with our money.

Every cycle of casino capitalism that heads for, or goes over, the
bankruptcy cliffs gets larger and larger. This year's collapse towers
over the bailout of the Savings and Loan banks in the 1980s.

This unfolding cycle of the Washington to Wall Street gravy train is not
based on a huge spike in interest rates that tanked so many thrift
institutions nearly twenty years ago. It is based on unbridled greed by
the bosses of these big commercial banks, investment banks, brokerage
giants and those two goliaths - Fannie Mae and Freddie Mac.

"Unbridled" because the financial institutions got themselves
unregulated during the reign of Bill Clinton and his Treasury Secretary
Robert Rubin. Rubin skipped out of town to become a wildly overpaid
official with Citigroup - the leading lobbyist for his disastrous, so
called Financial Services Modernization Act of 1999.

Fannie and Freddie have been deeply unregulated for decades which
allowed their capital ratios to be lower - far lower - than even
investment banks like Morgan Stanley. With that long-time implicit
guarantee by the federal government, these two secondary marketers for
home mortgages became more and more reckless so as to raise the
corporate profits that their top executives need to skyrocket their
personal compensation packages!

In 1991, lawyer Tom Stanton warned about the risks and non-regulation of
Fannie and Freddie in his prophetic book - A State of Risk (Harper
Business).

A decade ago, our banking specialists warned about the Federal Deposit
Insurance Corporation (FDIC) under assessing its member banks thus
leaving its reserves at the risk of being perilously low when needed.
Today, these reserves are very much needed and perilously low.

Combined with the limitless greed, unbridled corporate power can wreak
havoc with our entire economy. As it is doing now. The domino effect is
underway.

So the Bush boys and the Congressional leaders, so to speak, are busy
reassuring the investors that they will in some way make things stable.
This time, however, they seem to be offering too little too late and the
investors aren't buying.

The stocks of the banks keep plunging down anywhere from seventy to
ninety percent from their last year's high.

The nation's largest savings bank - Washington Mutual - closed at under
$4.00 per share down from over $40 last year.

Again and again, year after year, the CEOs and the patsy federal agency
heads have lied to the people about the financial status of these
corporations. There is no credibility left and therefore no confidence.
Over three trillion dollars is sitting in disbelief on the sidelines.
Trillions of dollars have been looted or lost in the meantime, draining
worker pension funds, mutual funds and the savings of small investors.

None of this had to happen. Regulation against conflicts of interest and
hyper risk taking could have stopped it, including preventing the
housing mortgage crisis. Empowering investor-owners could have headed it
off. But Washington-based right wing corporate funded think tanks and
the banking lobbies battered down the regulatory guards and the federal
cops.

So now only the American taxpayers and their creditworthiness inside a
deficit-ridden government and a debt-loaded Federal Reserve stand in the
way of a far bigger financial collapse than the stock market crash of
1929. Will it be done smartly this time around?

Reckless, self-enriching capitalists get on your knees and thank the
rescuing Washington socialists, for without them, you would surely be in
chains.

_____

Ralph Nader is running for president as an independent.

http://www.counterpunch.org/nader07172008.html


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