Whoa! The Wall Street bailout bill was so nasty that even Congress gagged.
Still, the White House, congressional leaders and banking lobbyists are likely to twist enough arms and add enough artificial sweeteners to make Congress choke it down. But this doesn’t obscure the fact that the bailout is a disgusting glob of corporate welfare.
A sign of just how bad it is came from the incredible last-minute effort to disguise it as a populist proposal. “The rescue we’re negotiating,” declared President Bush in a Saturday radio broadcast, “is not aimed at Wall Street; it is aimed at your street.” Surely he had to strain to suppress a guffaw when he let that one loose.
In fact, even before last week’s vote, the administration’s rescue was having a decidedly anti-populist impact that both Washington and Wall Street don’t want you to notice: the elimination of banking competition. In the past several days, with no input from the public, there’s been a drastic reduction in banking choices for consumers and borrowers — and more shrinkage is coming as Treasury Secretary Henry Paulson unilaterally rolls out his scheme.
Poof! — Wachovia, the nation’s fourth-largest bank, disappeared, forced by federal regulators into the maw of Citigroup. Washington Mutual was pushed into JPMorgan Chase. Merrill Lynch was consumed by Bank of America. The three behemoths doing the swallowing now dominate nationwide, wielding unrivaled power to set fees and interest rates on our credit cards, mortgages, checking accounts, local business loans and every other banking product.
Rather than using the assets of failing banks to establish new competitors, the corporate mindset of Paulson — who came to his job straight from the Wall Street powerhouse of Goldman Sachs — is to consolidate America’s banking power into ever fewer, ever bigger hands. His ally is fear, which the White House has been feverishly pumping out.
“This sucker could go down,” Bush shrieked in a meeting with congressional leaders. Don’t question us, is the message — even as they rush to impose monopolistic banking power on “your street.”
Particularly pathetic has been the performance of Democratic leaders in Congress. Yes, they did take an awful bill and make it somewhat less awful. But is that the best they have to offer? I mean, you can put earrings on a hog, but it doesn’t hide the ugliness.
Take the Democrats’ signature reform: limiting the pay that CEOs of bailed-out banks can grab. Good idea! But the actual language of the bill provides a super-sized loophole, allowing executives who already have an obscenely high pay package and a golden parachute to keep every dime. The “restriction” is limited to new contracts for CEOs, and even then it affects only the few banks that the government will actually take over.
Worse, though, is the shameful failure of either party to stand up for homeowners. Wall Street gets real cash, while the rest of us are given vague promises that credit might loosen up someday and that some banks might voluntarily renegotiate the home loans that are crushing so many families.
Congress could have made one change that would keep families in their homes, halt the downward slide of housing prices and cost taxpayers nothing. What is it? Simply allow bankruptcy judges to reduce the mortgage payments of distressed families (currently, every kind of loan can be adjusted in bankruptcy court — except the mortgage on your home).
This alternative was proposed, but the same bankers who were standing in line for their bailout howled in protest. Republicans joined the howling, and astonishingly, Democratic leaders meekly capitulated, surrendering an effective reform that would have put them on the side of ordinary folks.
In last week’s effort to ram the bailout bill into law, one House leader cried, “There are no other choices — no other alternatives.” What he meant is that there are not alternatives that come with Wall Street’s seal of approval — your street be damned.
Jim Hightower is a national radio commentator, writer, public speaker and author of Swim Against The Current: Even A Dead Fish Can Go With The Flow. Click here for more information, or click here to contact him.