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Sunday, September 21, 2008

Robert Reich's Wise Advice on the Current Crisis

Former Labor Secretary (under Clinton) Robert Reich has posted 3 excellent posts on his blog providing key perspective and suggestions for responding to the current crisis:
We tell poor nations they have to make their financial markets transparent before capital will flow to them. Now it's our turn. Lacking adequate regulation or oversight, our financial markets have become a snare and a delusion. Government only has two choices now: Either continue to bail them out, or regulate them in order to keep them honest. I vote for the latter.
Especially valuable right now--as our Congressional leaders rush like a flock of lemmings to embrace in fear whatever the Republican administration hands them, in a new application of the Shock Doctrine to our entire nation--are Reich's recommendations for the basic principles that should be incorporated into the coming Congressional "Bailout of All Bailout" Bills:
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...

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...

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?
If Congress is truly interested in being responsible to their primary obligations to the American people, instead of doing (as usual) whatever is quickest and easiest so they can get out of Washington according to schedule for their long election vacation, they will avoid passing any Blank Check Mega-Bailout Bill that does not incorporate Reich's key principles.

Indeed, if the Republican administration balks at a bill that adds these provisions, then the Democratic Congress should be committed to keeping Congress in session as long as it takes-- right up to the election, if necessary--to keep this most important of all issues front and center before all the American people for discussion as people consider who they will be voting for in this election.

In this "once-in-a-century" crisis (according to Greenspan), the future of the nation and the world depends on the details of the Mega-Bailout Bill that Congress hands to the American people and the world in the coming days. So we all should not only hope but call our Congresspeople and demand that this time our Congressional representatives put the destiny of the nation and world in front of its own petty interest in getting out of Washington as quickly as possible for another long vacation, while the world's financial system collapses around us.

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