Beyond the Bailout: Clean Up Wall Street

By David Korten | Website

Reprinted from  "Sustainable Happiness," the Winter 2009 YES! Magazine
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The first item of business is to get the immediate
crisis under control. Wall Street institutions have long claimed their
trading activities create wealth, provide the funds that keep business
moving, increase economic efficiency, and stabilize markets. The
financial meltdown pulled away the curtain to reveal a corrupt system
that runs on speculation, the stripping of corporate assets, predatory
lending, and asset bubbles like the real estate and dot-com “booms.”

the people involved produce anything of value, it is purely incidental
to their primary quest for speculative gains, which placed the entire
global economy at risk and led to extortionate demands for taxpayer
bailouts when their bets went bad. For these labors, the 50
highest-paid private investment fund managers in 2007 averaged $588
million in compensation—19,000 times as much as average worker pay.

We must hold Wall Street accountable, recover
some of our losses from those responsible, and preclude a repetition of
the credit collapse. The recommendations of the Institute for Policy
Studies (IPS), a Washington, D.C., think tank, are a good place to
start. In “A Sensible Plan for Recovery,”
IPS calls on Congress to make Wall Street pay for both the bailout and
a true economic stimulus package. The plan recommends a securities
transactions tax, a minimum corporate income tax, recovery of bonuses
paid to Wall Street CEOs responsible for the crisis, an end to
corporate tax havens, and an end to tax loopholes for CEO pay. IPS also
calls for extensive federal regulation to limit speculation and assert
real oversight over financial markets. 

Implementing these recommendations will be an
excellent start on limiting speculation, restoring a progressive tax
system to achieve a more equitable distribution of economic power, and
putting the more predatory Wall Street firms out of business.

steps will be needed to break up concentrations of corporate power,
beginning with Wall Street, and to hold the remaining banks accountable
to the public interest. Treasury Secretary Henry Paulson’s decision to
buy a government equity stake in troubled banks is a positive step that
may open the way to a deeper restructuring of the financial system.

federal government should immediately reinstate the provisions of the
Glass-Steagall Act prohibiting the merger of commercial and investment
banks, and force the breakup of financial conglomerates and any other
Wall Street institutions that are too big to fail. As Senator Bernie
Sanders has observed, “If a company is too big to fail, it is too big
to exist.”