The Bank Was Saved, the People Ruined

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Many Americans homes are facing foreclosures.At the end of the day, thousands of Americans are losing their home to foreclosures, and many are engulfed in debt. The CEOs of Fortune 500 companies will likely walk away with millions, thanks to the bailout. Normal 0 false false false MicrosoftInternetExplorer4

st1\:*{behavior:url(#ieooui) } /* Style Definitions */ table.MsoNormalTable {mso-style-name:”Table Normal”; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:””; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:”Times New Roman”; mso-fareast-font-family:”Times New Roman”; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} Many Americans homes are facing foreclosures.The financial system could face a meltdown of 1929 proportions this week unless Congress moves forward with the 700-billion-dollar bailout. The failure of Wall Street is the icing on the cake of eight years of failed economic policies of George Bush. The real loser will be the middle class, not the CEOs of the banks likely to walk away with millions of dollars if the bailout deal is secured.

The next time someone tells you that “free market” is still the way to go about it, kindly ask them if they still believe in Santa Clause.  The Republican virtue of deregulation and virtually no government oversight led us into this mess. Subprime lending has been the reason behind the downfall of Bear Stearns, and just a few days ago, the largest bank failure in the history of the US: Washington Mutual. Subprime lending is the practice of lending to borrowers who do not qualify for market interest rates because of various risk factors, such as income, a small down payment made, inadequate credit history, and employment status. As of June 2008, there were three million subprime mortgages in the United States.

The economic landscape of Wall Street has in the past few weeks taken a great change. We witnessed   Lehman Brothers file for bankruptcy and Merrill Lynch being sold to Bank of America.  The US government also took over mortgage finance giants Fannie Mac and Freddie Mac and bailed out the insurer American International Group for 85 billion dollars.

The world markets are also watching reluctantly as this badly written movie unfolds in the US. Trading has tamed in Europe since the fall of Washington Mutual, as investors waited for developments in the US. Several banks based in the United Kingdom are refusing to lend to other banks as the crisis in the US continues.

In classic capitalist fashion, the free market proponents will use socialism to cure the ills of capitalism. Treasury Secretary Henry Paulson’s $700 billion proposal to rescue Wall Street will probably go down in history as the largest power grab in the history of the United States’ economy. What exactly is Paulson proposing? In his eerily similar tone to that of the Patriotic Act, Paulson stated in the original proposal: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” It goes on to say: “Any funds expended for actions authorized by this Act, including the payment of administrative expenses, shall be deemed appropriated at the time of such expenditure.”

The proposed bailout is giving the Treasury Department our taxpayer money with no oversight or transparency. Have we learned nothing from the catastrophe deregulation has caused in the financial sector? Adding insult to injury, there is nothing in the proposed bailout that would prevent a repeat of the Wall Street crisis we are witnessing right now. For instance, the bill does not address the credit-default swap market which, as Warren Buffet told us years ago, would and did cause this financial crisis.

At the end of the day, thousands of Americans are losing their home to foreclosures, and many are engulfed in debt. The CEOs of Fortune 500 companies will likely walk away with millions, thanks to the bailout. The bailout is expected to cost every American at least 5000 dollars, and the months ahead promise to be turbulent for millions of middle class citizens.  After all, the bank was saved; only the people were ruined.

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