The case for nationalizing the banks
Hi, I'm Bruce. I'm your banker. I'm a bureaucrat,
believe it or not. Uncle sam writes my paycheck!
What does that mean? Oh, that all our profits
at day's end, go to schools, roads, loans for you!
Also, the bank pres earns 50k a year...that's all!
Less than four months after Congress passed the Bush administration
Troubled Asset Relief Program (TARP), authorizing the Treasury
Department to spend $700 billion in taxpayer money to bail out the
banks, the same banks that received the government handouts are
reporting massive losses and the incoming Obama administration is
preparing to funnel hundreds of billions in additional funds to Wall
Street. Literally, that is the definition of insanity. If it doesn't work the
first time, do it again, identically.
In the interim, the financial crisis has deepened and precipitated a
global recession that is acknowledged to be the worst since the Great
Depression of the 1930s. Millions more workers, told last fall by Bush
and Obama that the government bailout, supposedly designed to benefit
Main Street and not Wall Street, would avert a financial
meltdown and mass unemployment, have lost their jobs, their homes and
their life savings. Meanwhile, the bankers have refused to use their
windfalls to lend to businesses and consumers and have instead either
hoarded the government cash or used it to buy up smaller firms.
None of the CEOs and speculators whose corrupt and reckless policies
brought their own institutions and the global economy to ruin, while
they rewarded themselves with seven- and eight-figure compensation
packages, and none of the government regulators who colluded in the
plundering of the economy have been called to account. The bankers, with
the complicity of the government, flatly refuse to reveal what they have
done with the money they received from the Treasury.
The vote by the US Senate on Thursday, after intensive lobbying by the
Obama transition team, to release the second $350 billion installment of
the $700 billion slush fund sets the stage for an even more massive
bailout. In a taste of things to come, the day after the Senate vote,
the Treasury agreed to hand over another $20 billion to Bank of America
as part of a new rescue package that will have the government absorb up
to $118 billion of the banks losses. Economists and Federal Reserve
officials are openly saying that TARP will have to be followed by many
more such bailout funds.
All of this adds up to a colossal fraud perpetrated on the American
people”who overwhelmingly oppose the bailouts” for the sole purpose
of protecting the interests of the financial aristocracy. There is not
now, and there never was, a considered, worked-out plan to solve the
financial crisis and avert a social catastrophe.
When Treasury Secretary Henry Paulson, the former CEO of Goldman Sachs,
and Federal Reserve Chairman Ben Bernanke called an emergency meeting of
congressional leaders in mid-September to demand that they sign off on
their proposal to authorize the use of $700 billion in public funds to
rescue the banks, the document they presented was less than three pages
Just three weeks after Congress passed the TARP legislation, Paulson
announced that the plan he and Bernanke had put forward as the solution
to the crisis was being scrapped. Instead of using the money to buy
â€śtroubledâ€ť subprime and other asset-backed securities from the
banks, he decided to simply hand the banks billions in cash, with
virtually no strings attached.
Suddenly a political and media establishment that had for decades
lambasted the notion of throwing money at social problems and
opposed any government intervention into the market spoke with one voice
of the need for massive government action to place the resources of the
people in the hands of the Wall Street elite. When it came to protecting
the wealth of the bankers and big shareholders, the operative phrase was
The reality of class relations in America is being mercilessly exposed.
The cost of the multi-trillion-dollar handout to Wall Street is to be
borne by the working class. Obama cites the vast rise in budget deficits
and government debt as a result of the bailouts as justification for
sweeping cuts in social programs”including Social Security, Medicare
and Medicaid”upon which tens of millions of workers and retirees
The new wave of bank bailouts will do no more to solve the crisis than
the last one. None of the measures being devised can seriously address
the deepening economic catastrophe because they leave untouched the
basic interests of the ruling class, which are rooted in its private
ownership and control of the financial system.
For the same reason none of the financial wizards on Wall Street, in
academia or in government can give a coherent explanation of the crisis.
As defenders of the capitalist system, they dare not acknowledge that
the global financial meltdown is an expression of the breakdown of the
capitalist system itself.
The current crisis is the inevitable outcome of two inter-related
processes: The protracted decline of American capitalism and a crisis of
profitability in basic production that is rooted in fundamental
contradictions of the capitalist system. Behind the colossal growth of
financial parasitism and outright criminality is the attempt by the
American ruling elite to overcome the mounting contradictions of its
system by shifting investment from manufacturing to ever more exotic
forms of financial speculation. Particularly over the past three decades
the financial power brokers, supported by the government, have
dismantled much of the industrial base of the United States to seek
higher rates of profit from various forms of financial manipulation. The
creation of wealth for the ruling class has been largely separated from
the creation of real value in the production process.
Now the countless trillions of paper values are collapsing, leaving in
their wake an economic and social disaster. To even begin to offset
these losses the ruling class must intensify its exploitation of the
working class, spreading unemployment, poverty and social misery.
No progressive economic plan to solve the crisis can be developed apart
from taking the major banks and financial institutions out of private
hands. They must be nationalized and transformed into public utilities
under the democratic control of the working population. The vast
financial resources that the banks control must be used to provide
decent education, housing, health care, retirement benefits and
well-paying jobs for all.
This should be carried out without compensation to their former owners,
while securing the deposits and savings of working people and small
The books of the major banks, financial firms, insurance companies and
hedge funds must be opened to public examination to lay bare their
illegal and socially destructive activities.
There must be a public accounting of the fraud and corruption that have
fueled the crisis, and those responsible must be held accountable,
including by means of criminal prosecution.
The billions of dollars in social wealth diverted into the private
accounts of speculators and bankers must be recovered, to be used for
the expansion of social programs that benefit the masses.
This is not merely, or even primarily, a technical task. It is a
political and revolutionary one. The power of the financial aristocracy
must be broken. As with the ancien rgime before the French Revolution,
the continued sway of the American financial elite stands as an absolute
obstacle to any socially progressive and rational economic policy. The
financial elite adamantly opposes any measures that impinge on its
wealth and prerogatives, regardless of the cost to society at large.
Indeed, it is plotting every day, in league with its bribed agents in
the Democratic and Republican parties, to exploit the crisis of its own
making to monopolize an even greater share of the national wealth.
The prerequisite for the nationalization of the banks and their
subordination to the needs of society is an independent political
movement of the working class on the basis of socialist policies. It is
a question of state power. No capitalist government can or will carry
out this task. What is required is a political and revolutionary
struggle to establish a workers government.
by Barry Grey
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