Washington Week: Student Voices (O)

Column: Bailout reveals government service to rich
By Matthew Peterson
The Vanguard, U. South Alabama
October 13, 2008

When an average person acts irresponsibly with their money and ends up in financial trouble, we hear from Washington about the power of the free market and people "pulling themselves up by their boot straps," but how differently they talk when it is their well-off donors on Wall Street who are in trouble. Instead of sticking to their free market values and respect for hard work, they proudly put "country first" by approving over $700 billion to aid the suffering Wall Street giants.

This "emergency bailout" has worked to save those suffering souls like Lehman CEO Richard S. Fuld, who was just awarded a compensation package of $40 million. In fact, the Financial Times reports that major executives of the seven largest national banks have received over $95 billion in compensation over the past three years, despite those banks' loss of over $500 billion in the same period. This is the sort of behavior which requires an immediate sacrifice from all American people.

But the irresponsibility goes deeper. Lehman Brothers, for example, had over $700 billion in total assets, compared to only $23 billion in real capital, an action nothing short of reckless. Again, think what these same politicians would be saying if it were an average middle-class person who was acting this irresponsibly.

Yet another cause of the crisis lies in these companies' predatory practices. They issued loans that the home lenders could not pay after the initial "teasing" period, in which the rates are low, designed to lure those same people in who cannot afford to pay them. Essentially, their parasitic program backfired and now the exact same people who the program was intended to exploit now have to pay for its failure: the taxpayers.Furthermore, the two major parties seek to manipulate the atmosphere of emergency to further help their wealthy donors on Wall Street.

In the guise of helping the distressed homeowners, the Democrats, supposedly the party of the "little man," have added to the bailout bill over $150 billion in tax breaks to corporate interests and raised the limit of bank accounts insured by FDIC from $100,000 to $250,000, a move obviously aimed at the wealthy speculators. Additionally, the new bill allows the FDIC unlimited credit from the U.S. Treasury, meaning that taxpayer money will be used to cover the failed deposits of these banks.

But all of this should come as no surprise. With a former CEO of Goldman Sachs, a large investment bank, as Secretary of the Treasury and a huge amount of corporate money in the pockets of the legislators who pass the bills, it doesn't take much to see where their interests lie. In fact, Rahm Emanuel, a Democrat who pushed fiercely for the passage of the bailout plan, has received over $1.6 million from banks and securities firms, now the beneficiaries of the government's largesse.

Likewise, House Financial Services Chairman Barney Frank, who, again, is heavily in favor of the bailout, has received over $1 million from these same concerns. Indeed, according to http://www.MAPlight.org, House members voting "yes" on the bailout bill received 54 percent more money from banks and securities firms than those voting "no."

Indeed, in another manifestation of just how little fundamental difference there is between the two "major" candidates, both favor the bailout package, and both just happen to have received millions of dollars from these commercial banks, Obama with almost $2 million and McCain with just under $1.5 million, according to http://www.MAPlight.org. When it comes to politicians, these powerful companies know they get what they pay for, and that is exactly why the plutocracy will continue to profit both from exploiting the people of this country directly and indirectly through tax breaks and outright gifts.

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