Here's How to Fix the Mess on Wall Street
- **The best overall plan I've heard yet...
The richest 400 Americans -- that's right, just four hundred people --
own MORE than the bottom 150 million Americans combined. 400 rich
Americans have got more stashed away than half the entire country! Their
combined net worth is $1.6 trillion. During the eight years of the Bush
Administration, their wealth has increased by nearly $700 billion -- the
same amount that they are now demanding we give to them for the
"bailout." Why don't they just spend the money they made under Bush to
bail themselves out? They'd still have nearly a trillion dollars left
over to spread amongst themselves!
Of course, they are not going to do that -- at least not voluntarily.
George W. Bush was handed a $127 billion surplus when Bill Clinton left
office. Because that money was OUR money and not his, he did what the
rich prefer to do -- spend it and never look back. Now we have a $9.5
trillion debt. Why on earth would we even think of giving these robber
barons any more of our money?
I would like to propose my own bailout plan. My suggestions, listed
below, are predicated on the singular and simple belief that the rich
must pull themselves up by their own platinum bootstraps. Sorry,
fellows, but you drilled it into our heads one too many times: There...
is... no... free... lunch. And thank you for encouraging us to hate
people on welfare! So, there will be no handouts from us to you. The
Senate, tonight, is going to try to rush their version of a "bailout"
bill to a vote. They must be stopped. We did it on Monday with the
House, and we can do it again today with the Senate.
It is clear, though, that we cannot simply keep protesting without
proposing exactly what it is we think Congress should do. So, after
consulting with a number of people smarter than Phil Gramm, here is my
proposal...It has 10 simple, straightforward points. They are:
1. APPOINT A SPECIAL PROSECUTOR TO CRIMINALLY INDICT ANYONE ON WALL
STREET WHO KNOWINGLY CONTRIBUTED TO THIS COLLAPSE. Before any new money
is expended, Congress must commit, by resolution, to criminally
prosecute anyone who had anything to do with the attempted sacking of
our economy. This means that anyone who committed insider trading,
securities fraud or any action that helped bring about this collapse
must go to jail. This Congress must call for a Special Prosecutor who
will vigorously go after everyone who created the mess, and anyone else
who attempts to scam the public in the future.
2. THE RICH MUST PAY FOR THEIR OWN BAILOUT. They may have to live in
5 houses instead of 7. They may have to drive 9 cars instead of 13. The
chef for their mini-terriers may have to be reassigned. But there is no
way in hell, after forcing family incomes to go down more than $2,000
dollars during the Bush years, that working people and the middle class
are going to fork over one dime to underwrite the next yacht purchase.
If they truly need the $700 billion they say they need, well, here is an
easy way they can raise it:
a) Every couple who makes over a million dollars a year and every single
taxpayer who makes over $500,000 a year will pay a 10% surcharge tax for
five years. (It's the Senator Sanders plan. He's like Colonel Sanders,
only he's out to fry the right chickens.) That means the rich will still
be paying less income tax than when Carter was president. This will
raise a total of $300 billion.
b) Like nearly every other democracy, charge a 0.25% tax on every stock
transaction. This will raise more than $200 billion in a year.
c) Because every stockholder is a patriotic American, stockholders will
forgo receiving a dividend check for one quarter and instead this money
will go the treasury to help pay for the bailout.
d) 25% of major U.S. corporations currently pay NO federal income tax.
Federal corporate tax revenues currently amount to 1.7% of the GDP
compared to 5% in the 1950s. If we raise the corporate income tax back
to the level of the 1950s, that gives us an extra $500 billion.
All of this combined should be enough to end the calamity. The rich will
get to keep their mansions and their servants, and our United States
government ("COUNTRY FIRST!") will have a little leftover to repair some
roads, bridges and schools.
3. BAIL OUT THE PEOPLE LOSING THEIR HOMES, NOT THE PEOPLE WHO WILL
BUILD AN EIGHTH HOME. There are 1.3 million homes in foreclosure right
now. That is what is at the heart of this problem. So instead of giving
the money to the banks as a gift, pay down each of these mortgages by
$100,000. Force the banks to renegotiate the mortgage so the homeowner
can pay on its current value. To insure that this help does no go to
speculators and those who have tried to make money by flipping houses,
this bailout is only for people's primary residence. And in return for
the $100K paydown on the existing mortgage, the government gets to share
in the holding of the mortgage so that it can get some of its money
back. Thus, the total initial cost of fixing the mortgage crisis at its
roots (instead of with the greedy lenders) is $150 billion, not $700
And let's set the record straight. People who have defaulted on their
mortgages are not "bad risks." They are our fellow Americans, and all
they wanted was what we all want and most of us still get: a home to
call their own. But during the Bush years, millions of them lost the
decent paying jobs they had. Six million fell into poverty. Seven
million lost their health insurance. And every one of them saw their
real wages go down by $2,000. Those who dare to look down on these
Americans who got hit with one bad break after another should be
ashamed. We are a better, stronger, safer and happier society when all
of our citizens can afford to live in a home that they own.
4. IF YOUR BANK OR COMPANY GETS ANY OF OUR MONEY IN A "BAILOUT," THEN
WE OWN YOU. Sorry, that's how it's done. If the bank gives me money so I
can buy a house, the bank "owns" that house until I pay it all back --
with interest. Same deal for Wall Street. Whatever money you need to
stay afloat, if our government considers you a safe risk -- and
necessary for the good of the country -- then you can get a loan, but we
will own you. If you default, we will sell you. This is how the Swedish
government did it and it worked.
5. ALL REGULATIONS MUST BE RESTORED. THE REAGAN REVOLUTION IS DEAD.
This catastrophe happened because we let the fox have the keys to the
henhouse. In 1999, Phil Gramm authored a bill to remove all the
regulations that governed Wall Street and our banking system. The bill
passed and Clinton signed it. Here's what Sen. Phil Gramm, McCain's
chief economic advisor, said at the bill signing:
"In the 1930s ... it was believed that government was the answer. It
was believed that stability and growth came from government overriding
the functioning of free markets.
"We are here today to repeal [that] because we have learned that
government is not the answer. We have learned that freedom and
competition are the answers. We have learned that we promote economic
growth and we promote stability by having competition and freedom.
"I am proud to be here because this is an important bill; it is a
deregulatory bill. I believe that that is the wave of the future, and I
am awfully proud to have been a part of making it a reality."
This bill must be repealed. Bill Clinton can help by leading the effort
for the repeal of the Gramm bill and the reinstating of even tougher
regulations regarding our financial institutions. And when they're done
with that, they can restore the regulations for the airlines, the
inspection of our food, the oil industry, OSHA, and every other entity
that affects our daily lives. All oversight provisions for any "bailout"
must have enforcement monies attached to them and criminal penalties for
6. IF IT'S TOO BIG TO FAIL, THEN THAT MEANS IT'S TOO BIG TO EXIST.
Allowing the creation of these mega-mergers and not enforcing the
monopoly and anti-trust laws has allowed a number of financial
institutions and corporations to become so large, the very thought of
their collapse means an even bigger collapse across the entire economy.
No one or two companies should have this kind of power. The so-called
"economic Pearl Harbor" can't happen when you have hundreds -- thousands
-- of institutions where people have their money. When you have a dozen
auto companies, if one goes belly-up, we don't face a national disaster.
If you have three separately-owned daily newspapers in your town, then
one media company can't call all the shots (I know... What am I
thinking?! Who reads a paper anymore? Sure glad all those mergers and
buyouts left us with a strong and free press!). Laws must be enacted to
prevent companies from being so large and dominant that with one
slingshot to the eye, the giant falls and dies. And no institution
should be allowed to set up money schemes that no one can understand. If
you can't explain it in two sentences, you shouldn't be taking anyone's
7. NO EXECUTIVE SHOULD BE PAID MORE THAN 40 TIMES THEIR AVERAGE
EMPLOYEE, AND NO EXECUTIVE SHOULD RECEIVE ANY KIND OF "PARACHUTE" OTHER
THAN THE VERY GENEROUS SALARY HE OR SHE MADE WHILE WORKING FOR THE
COMPANY. In 1980, the average American CEO made 45 times what their
employees made. By 2003, they were making 254 times what their workers
made. After 8 years of Bush, they now make over 400 times what their
average employee makes. How this can happen at publicly held companies
is beyond reason. In Britain, the average CEO makes 28 times what their
average employee makes. In Japan, it's only 17 times! The last I heard,
the CEO of Toyota was living the high life in Tokyo. How does he do it
on so little money? Seriously, this is an outrage. We have created the
mess we're in by letting the people at the top become bloated beyond
belief with millions of dollars. This has to stop. Not only should no
executive who receives help out of this mess profit from it, but any
executive who was in charge of running his company into the ground
should be fired before the company receives any help.
8. STRENGTHEN THE FDIC AND MAKE IT A MODEL FOR PROTECTING NOT ONLY
PEOPLE'S SAVINGS, BUT ALSO THEIR PENSIONS AND THEIR HOMES. Obama was
correct yesterday to propose expanding FDIC protection of people's
savings in their banks to $250,000. But this same sort of government
insurance must be given to our nation's pension funds. People should
never have to worry about whether or not the money they've put away for
their old age will be there. This will mean strict government oversight
of companies who manage their employees' funds -- or perhaps it means
that the companies will have to turn over those funds and their
management to the government. People's private retirement funds must
also be protected, but perhaps it's time to consider not having one's
retirement invested in the casino known as the stock market. Our
government should have a solemn duty to guarantee that no one who grows
old in this country has to worry about ending up destitute.
9. EVERYBODY NEEDS TO TAKE A DEEP BREATH, CALM DOWN, AND NOT LET FEAR
RULE THE DAY. Turn off the TV! We are not in the Second Great
Depression. The sky is not falling. Pundits and politicians are lying to
us so fast and furious it's hard not to be affected by all the fear
mongering. Even I, yesterday, wrote to you and repeated what I heard on
the news, that the Dow had the biggest one day drop in its history.
Well, that's true in terms of points, but its 7% drop came nowhere close
to Black Monday in 1987 when the stock market in one day lost 23% of its
value. In the '80s, 3,000 banks closed, but America didn't go out of
business. These institutions have always had their ups and downs and
eventually it works out. It has to, because the rich do not like their
wealth being disrupted! They have a vested interest in calming things
down and getting back into the Jacuzzi.
As crazy as things are right now, tens of thousands of people got a car
loan this week. Thousands went to the bank and got a mortgage to buy a
home. Students just back to college found banks more than happy to put
them into hock for the next 15 years with a student loan. Life has gone
on. Not a single person has lost any of their money if it's in a bank or
a treasury note or a CD. And the most amazing thing is that the American
public hasn't bought the scare campaign. The citizens didn't blink, and
instead told Congress to take that bailout and shove it. THAT was
impressive. Why didn't the population succumb to the fright-filled
warnings from their president and his cronies? Well, you can only say
'Saddam has da bomb' so many times before the people realize you're a
lying sack of shite. After eight long years, the nation is worn out and
simply can't take it any longer.
10. CREATE A NATIONAL BANK, A "PEOPLE'S BANK." If we really are
itching to print up a trillion dollars, instead of giving it to a few
rich people, why don't we give it to ourselves? Now that we own Freddie
and Fannie, why not set up a people's bank? One that can provide
low-interest loans for all sorts of people who want to own a home, start
a small business, go to school, come up with the cure for cancer or
create the next great invention. And now that we own AIG, the country's
largest insurance company, let's take the next step and provide health
insurance for everyone. Medicare for all. It will save us so much money
in the long run. And we won't be 12th on the life expectancy list. We'll
be able to have a longer life, enjoying our government-protected
pension, and living to see the day when the corporate criminals who
caused so much misery are let out of prison so that we can help
reacclimate them to civilian life -- a life with one nice home and a
gas-free car that was invented with help from the People's Bank.
*By Michael Moore