Corporate Power Causes Collapse of US Financial System
WILPF U.S. Section responds to corporate greed and urges members to sign Senator Sanders’ petition concerning the proposed financial bailout (see end of document for link)
The recent collapse of our financial system comes from too much corporate power in government. These days, to win federal office and stay there requires incredible spending on election campaigns. As campaign finance is the official's lifeblood, a most persuasive way to official favor is the campaign contribution, the bigger the better. In that contest for official favor, the flush corporation is more likely to win than the average citizen. The courts have helped to make this so by ruling that corporations are persons with the same freedom of speech as real persons, and that any restriction on money spent would be tantamount to a restriction on speech. That is why Washington campaign coffers are full of corporate money, and why corporate lobbyists find it so easy to influence legislation. Follow the money.
Our collapse would have come as no surprise to readers of Kevin Philips, Robert Kuttner or William Greider. In "Everything for Sale" (1997) Kuttner predicted that Congress would overhaul the financial-services industry, and noted the dangers of excessive deregulation. For example, the repeal of the New-Deal era Glass-Steagall Act would let banks become more speculative and tempt them to securitize their worst assets. It was the commercial banks' blending of their business with investment banking that led to the crash of 1929.
Nevertheless, in the 1990s President Clinton and the Republican Congress repealed Glass-Steagall, and the mega-banks ran wild. Even before that, Congress' repeal of other restraints doomed the savings and loan industry, and thereby eliminated a major bank competitor. Believe it or not, the same legislation made usury legal.
Greider reviewed this history in a recent issue of The Nation (August 18/25, 2008), and sounded the alarm: "The nation, meanwhile, is flirting with historic catastrophe. Nobody yet knows how bad it is, but the peril is vastly larger than previous episodes, like the savings and loan bailout of the late 1980s."
As his darkest fears would materialize in less than a month, his recommendations ring even truer today. Washington should divert war funds to the rebuilding of our infrastructure; we should nationalize Fannie Mae and other such enterprises, restore them as non-profits and make their investors eat their losses; we should dismantle the firms that are "too big to fail," restore the boundaries between commercial banking and investment banking, and set severe conditions for emergency lending from the government: supervised receivership, strict lending rules to prevent recidivism, severe penalties for greedy shareholders and executives; and we should restore the federal law against usury.
We intend to press all of these recommendations upon our Congressmen in their response to the present financial crisis. We would also urge them upon the presidential candidates. The Republican love affair with Wall Street is already well known. Keep in mind that Senator Obama too has received heavy campaign financing from the same quarter, $10.3 million from such firms as Goldman Sachs, J.P. Morgan, Citigroup and UBS. His economic advisers include Citigroup's Robert Rubin. The healthcare lobby too has showered Obama with campaign money ($7.2 million) and advisers. (The Nation, September 1/8, 2008.)
WILPF members are urged to signed Senator Bernie Sanders petition to Secretary Paulson regarding the financial crisis.
The economic health of our nation depends as much on the ensuring all Americans have decent paying jobs as it does on Wall Street. We must also ensure that middle and working class families do not bear the brunt of this bailout.
--from the Corporations v. Democracy Committee, Jim and Tomi Allison