Hawkins Urges Congress to Adopt Different Financial Reform Package That Uses Public Banks to Restore Credit and Protect Homeowners
Howie Hawkins for Congress
25th District, New York
www.howiehawkins.org
Media Release
For Immediate Release: Tues September 30, 2008
For More Information: Howie Hawkins, 315-425-1019, hhawkins@igc.org
Howie Hawkins, the Green Populist candidate for Congress in the 25th District, responded to the House vote today in rejecting the bailout package by urging Congressional leaders to support a different fiscal relief package that "rebuilds Main Street, rather than gives massive corporate welfare to Wall Street."
Hawkins was the only candidate for Congress in the 25th District who urged a no vote on the bailout bill before Congress on Monday.
Hawkins said that a different financial reform package was urgently needed. "Make no mistake, the financial crisis is real. The big banks are undercapitalized and overleveraged. They are hoarding their cash and not making even conservative loans to businesses, consumers, or each other. The credit markets are frozen. Foreign investors who have covered the growing US trade and budget deficits for years are now hesitating to throw good money after bad in a US economy in crisis," said Hawkins
The bill Congress rejected Monday was no solution to this problem, Hawkins said. "Nothing in the $700 billion giveaway to the big bank ensured they would use the cash to start lending again. Nothing in it stopped them from putting the cash into hard assets, gold, and foreign currencies to improve their short-term bottom line and pump up share prices, all so the insiders could dump their shares at a higher price before the next financial crisis," Hawkins said.
"The big bankers are on strike, demanding a taxpayer bailout of their bad investments or they take the whole economy down with them. Congress was right to resist this stick up. Now Congress should take a radically different approach. The market has failed and government now needs to step in as the banker of last resort to provide credit to businesses, farmers, consumers, and state and local governments through a public banking system," said Hawkins.
"The public banks should be prudent, conservative, and boring, not like the risk junkies on Wall Street who always sought to strike it rich quick by gambling with other people’s money. They can make responsible loans at a reasonable charge to get credit flowing again. They can help homeowners restructure their mortgages so they are affordable. They can enable democratic control over our money systems," said Hawkins.
"Congress needs to start from scratch, this time putting the needs of the public ahead of the needs of the rich. For once many members of Congress had to listen to the voters since they are facing election in a little more than a month," said Hawkins in explaining the House vote. "The public is tired of larger and larger handouts to the wealthy while the rest of us get deeper in debt and often lose our jobs, pensions, and homes. Average Americans know that paying off bad debt by borrowing even more money just gets you deeper into debt, it doesn’t solve the underlying problem. We need an open and deliberative process in restructuring our financial system, not just handing over a blank check to Bush and Wall Street."
Hawkins said that the public was turned off by Wall Street’s greed. "Wall Street financiers were pigs at the trough, tripping over themselves to gobble up huge fees re-selling all the bad debts. This was a re-employment plan for the crooks that got us into the crisis to begin with. They had no shame about trying to stuff as many goodies for themselves as they could into the deal," added Hawkins.
The NY Times recently reported that "even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it. Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages. At the same time, investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees. Nobody wants to be left out of Treasury's proposal to buy up bad assets of financial institutions."
A recent article by the Campaign for America’s future noted that "the amount of brazen corruption and conflicts of interest swirling around this deal is odious, even by Washington's standards." Some of the conflicts they cited include:
Warren Buffett is simultaneously advising Obama to support the deal, while he himself is invested $5 billion in Goldman Sachs, the company that stands to make the most off the deal.
McCain's campaign is run by lobbyists from the companies that stand to make a killing off a government bailout.
The New York Times reports that the person advising Paulson and Bernanke on the AIG bailout was the CEO of Goldman Sachs – a company with a $20 billion stake in AIG.
The Obama campaign's top spokesman pushing this deal is none other than Roger Altman, who Bloomberg News reports is simultaneously "advising a group of investors who are trying to prevent their shares from being diluted in the U.S. takeover of American International Group Inc." – that is, who have a direct financial interest in the current iteration of the bailout.
Hawkins has laid out a detailed response to the financial crisis over the last two months.
Hawkins said the first priority should be to address the foreclosure emergency, noting that 3 to 4 million homes face foreclosure in the next year and 10 million homes over the next few years. Hawkins called for a moratorium on foreclosures coupled with the creation of a public housing bank, similar to the Home Ownership Loan Corporation (1933-1951). Hawkins also called for a public development bank, similar to the Reconstruction Finance Corporation (1932-1953), to take the lead in helping to rebuild the country’s economy, helping it to move back to one based on creating goods and services rather than financial speculation on inflated asset bubbles.
"We need to build a sustainable 21st century infrastructure based on renewable energy and resources. We need to rebuild and retool our manufacturing base around green technologies, build solar-powered railways to displace fossil-fueled roadways, and retrofit our buildings for energy efficiency and renewable energy," Hawkins said.
Hawkins said the Congress should nationalize the Federal Reserve System so that our central banking functions are democratically controlled. Financial regulation of the financial industry needs to be re-instituted. Among the regulatory reforms needed: trade all securities and commodities on regulated exchanges, require higher margin requirements for traders, restore the ban on interstate commercial banking, restore caps on interest rates. Hawkins also is calling to restore Glass-Steagall Act separation of consumer-oriented commercial banks and speculative investment banks.
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