Joined: Mon Jan 24, 2005 9:11 am
Location: western New York
On Tuesday, Rep. Pete DeFazio (D-OR) and other members of the Progressive Caucus introduced the "No Bailouts Plan" as an alternative to Paulson's Plunder. DeFazio's bill:
Stabilizes the financial markets without writing a blank check to the big banks and CEOs who got us into this mess.
Limits future losses by banks without asking taxpayers to pick up the tab. By suspending the application of fair value accounting standards by financial institutions, the bill will limit bank's artificial write-downs on the value of their mortgage-related and other securities.
Protects against predatory financial behavior by enacting permanent regulations against short-selling. By requiring the SEC permanently to block short-selling and restore the "up-tick rule" that blocks short-selling in a down market, the bill will protect against predatory financial behavior that harms investor confidence and hurts the ability of banks and other companies to raise needed capital.
Loans capital to banks that need it, with taxpayers making money on interest when the banks pay off the loans. By creating a Net Worth Certificate Program to allow the FDIC to lend short term capital to failing banks with the promise of repayment with interest, the bill replicates a successful program that worked to stabilize banks from 1982 to 1993. Banks that participate in the program must submit to strict oversight of their executives' compensation.
Restores consumer and small business confidence in banks. By requiring the FDIC to raise its insurance limit on costumers' deposits from $100,000 to $250,000, the bill assures consumers and small businesses their money is safe and helps eliminate runs on banks that threaten the stability of the financial markets.
Ian Welsh writes: There are currently two bills being worked on in the House as alternatives to the Paulson-Obama bill. The first is the DeFazio bill, which is intended to fix the banking system by providing, not a bailout, but insolvency relief. The second is being put together by Rep. David Scott and Rep. Doggett, with the aid of economist James K. Galbraith, and is intended to help ordinary people by creating a modern version of the Home Owner's Loan Corporation (HOLC) to take over mortgages and keep people in their homes with reasonable serviceable mortgages.
Also working to turn these bills into something that helps all Americans are Rep. Elijah Cummings and Rep. Lloyd Doggett.
Each bill by itself is incomplete, together with some work they could make a good, complete, humane solution to financial and economic meltdown which is also acceptable to enough Republicans to pass.
In my opinion, the Paulson bill won't solve the problem, but will only push it back 6 months or so, at great cost to ordinary taxpayers. If the Paulson bill isn't defeated we're going to be back here again, a lot poorer, trying to do this right.
What I would ask is that if you are opposed to the Paulson bill, you pick up the phone and tell your Rep that you are still opposed and it's still a bad idea. And while you're on the call please ask them to join with Doggett, Scott, DeFazio, Cummings and Edwards in crafting the House's own bill as an alternative.
More information at the link.
Libertarianism Makes You Stupid