The motto of deregulation that has been the undertone of the financial industry for the past 30 years has been proven a) not to work and b) a mirage.
Financial institutions are facing serious trouble. Bad assets are slowly crumbling the powerhouses on Wall Street. People are losing money on the stock market and the foreclosure rate is scary.
Clearly "deregulation" has failed. The government however, has jumped in. Proving that deregulation was not so much in use for the benefit of the country but more for the benefit of big business, news flash right? Big business will continue to have the benefit of the doubt, even after failing miserably.
Treasury Secretary Henry Paulson and Chairman of the Federal Reserve Ben Bernanke in conjunction with the Bush administration have proposed a $700 billion dollar bailout. The proposition was for the government to buy the bad assets that are plaguing Wall Street.
Being the money huungry force that Wall Street is, lobbyists for the financial industry are already trying to find ways to cover all forms of troubled investments, not just bad morgages, according to the NY Times.
Something must be done.
Simply bailing out the financial industry is like giving them a carte blanc to start all over again carefree, make ridiculous sums of money and when they screw up, the good ol' boys in Washington will bail them out.
Congress said that to pass the bill suggested by the administration, it must meet three requirements: limit executive compensation, reduce foreclosures (help average Americans) and make the comptroller general and Government Accountability Office monitor future procedings.
This is a noble idea, but it has a couple flaws.
First, something has to be done and we all know the George Bush is arrogant enough to veto a bill if he doesn't get want he wants. Tacking on special requirements will slow the process, forcing Congress to remain stagnate like it has been since Democrats took over. If the Democrats want to help people, they should really take small steps toward a larger reform. One bill cannot save the market, make regulation policies and save people from foreclosure.
The second problem, and most alarming, is how will the government pay for their newly acquired $700 billion in bad assets?
Taxes.
Probably not taxes on financial institutions considering the majority of tax revenue comes from the "average American," and certainly not from those who can afford to pay more taxes if John McCain is elected. The burden of the $700 billion will fall squarely on the middle and working class of society.
What happened to lesson we all learned in elementary school about being responsible for our own actions?
Thanks Washington, glad to see your doing your job and protecting the interests of the American people.
-The Colonel
Review: The Americans, Episode 4
11 years ago
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