[R-G] [BillTottenWeblog] Congressional Backbone Needed

[Bill Totten]

by Ralph Nader

Posted by nimda in In the Public Interest

www.nader.org (September 24 2008)


Congress needs to show some backbone before the federal government pours
more money on the financial bonfire started by the arsonists on Wall Street.

1. Congress should hold a series of hearings and invite broad public
comment on any proposed bailout. Congress is supposed to be a co-equal
branch of our federal government. It needs to stop the stampede to give
Bush a $700 billion check. Public hearings should be held to determine
what alternatives might exist to the four-page proposal advanced by
Treasury Secretary Henry M Paulson.

2. Whatever is ultimately done, the bailout plan should not be insulated
from judicial review. Remember there is a third co-equal branch of
government - the judiciary. The judiciary does not need to review each
buy-and-sell decision by the Treasury Department, but there should be
some boundaries established to the Treasury Department's discretion, and
judicial review is needed to ensure that unbridled discretion is not abused.

3. Sunlight is a good disinfectant. The bailout that is ultimately
approved must provide for full and timely disclosure of all bailout
details. This will discourage conflicts of interest and limit the
potential of sweetheart deals.

4. Firms that accept government bailout monies must agree to disclose
their transactions and be more honest in their accounting. They should
agree to end off-the-books accounting maneuvers, for example.

5. Taxpayers must be protected by having a stake in any recovery. The
bailout plan should provide opportunities for taxpayers to recoup funds
that are made available to problem financial institutions or to benefit
from the financial institutions' rising stock price and increased
profitability after being bailed out.

6. The current so-called "regulators" cannot be trusted. The U.S.
Government Accountability Office (GAO), "the investigative arm of
Congress" and "the congressional watchdog", must regularly review the
bailout. We cannot trust the financial "regulators", who allowed the
slide into financial disaster, to manage the bailout without outside
monitoring.

7. It is time to put the federal cop back on the financial services
beat. Strong financial regulations and independent regulators are
necessary to rebuild trust in our financial institutions and to prevent
further squandering of our tax dollars. The Justice Department and the
SEC also need to scrutinize the expanding mess with an eye to uncovering
corporate crime and misdeeds. Major news outlets are reporting that the
FBI is investigating American International Group, Fannie Mae, Freddie
Mac, and Lehman Brothers.

8. Cap executive compensation and stop giving the Wall Street gamblers
golden parachutes. The CEOs who have created the financial disaster
should not be allowed to leave with millions in hand when so many
pensioners and small shareholders are seeing their investments
evaporate. The taxpayers are bailing out Wall Street so that the
financial system continues to function, not to further enrich the CEOs
and executives who created this mess.

9. Congress should pass the Financial Consumers' Information and
Representation Act, to permit citizens to form a federally-chartered
nonprofit membership organization to strengthen consumer representation
in government proceedings that concern the financial services industry.
As the savings and loan disasters of the 1980s and the Wall Street
debacles of the last few years have demonstrated, there is an overriding
need for consumers and taxpayers to have the organized means to enhance
their influence on financial issues.

10. The repeal of the Glass-Steagall Act, separating traditional banks
from investment banks, helped pave the way for the current disaster. It
is time to re-regulate the financial sector. The current crisis is also
leading to even further conglomeration and concentration in the
financial sector. We must revive and apply antitrust principles, so that
banking consumers can benefit from competition and taxpayers are less
vulnerable to too-big-to-fail institutions, merging with each other to
further concentration.

11. Congress should impose a securities and derivatives speculation tax.
A tax on financial trading would slow down the churning of stocks and
financial instruments, and could raise substantial monies to pay for the
bailout.

12. Regulators should impose greater margin requirements, making
speculators use more of their own money and diminishing reckless casino
capitalism.

Ask your representative a few questions:

* What should be done to limit banking institutions from investing in
high-risk activities?

* What should be done to ensure banks are meeting proper capital
standards given the financial quicksand that has spread as a result of
the former Senator Phil Gramm's deregulation efforts?

* And, What is being done to protect small investors?

P.S. Shareholders also have some work to do. They should have listened
when Warren Buffett called securities derivatives a "time bomb" and
"financial weapons of mass destruction". The Wall Street crooks and
unscrupulous speculators use and draining of "other people's money" out
of pension funds and mutual funds should motivate painfully passive
shareholders to organize to gain greater authority to control the
companies they own. Where is the shareholder uprising?

http://www.nader.org/index.php?/archives/2062-Congressional-Backbone-Needed.html


TO POST A COMMENT, OR TO READ COMMENTS POSTED BY OTHERS, please click
on the word "comment" highlighted at the end of the version of this
essay posted at http://billtotten.blogspot.com/