Beyond the Bailout: Clean Up Wall Street |
Tuesday Dec 09 2008
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.”
If 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.
Additional 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.
The 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.”
Written by eldering at The Great Turning
Tagged with: economic_stimulus_package glass_steagall wall_street
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