The irresponsible, and even fraudulent, behavior of bankers and the financial regulators we trusted to monitor them have left the rest of us in deep trouble with no good financial options. Major banks, including Citibank, Bank of America and others, are on the verge of bankruptcy, if not already insolvent, despite the commitment already made on behalf of U.S. taxpayers to spend or guarantee billions of dollars to rescue them. Meanwhile, the economic vortex is dragging the rest of us down.
Something must be done to restructure the financial sector as part of the government’s recovery program, and the Obama team will soon be announcing a new financial rescue plan. But the widely discussed “good bank, bad bank” option that Treasury Secretary Timothy Geithner, Federal Reserve Chair Ben Bernanke and White House economic adviser Lawrence Summers might be dishing up next week is among the worst of a bad lot.
The “good bank, bad bank” idea (“bad bank” for short) is to use U.S. taxpayers’ money to buy the toxic assets bankers created, put them in a nationalized “bad bank” and leave the bankers with the good assets to deploy as they wish, meanwhile, having to endure only a mild reprimand and quite modest face-saving restrictions on their pay and dividend payments. The bank managers, owners and creditors will be at least partially rescued, while “we the people” will be left holding the garbage, hoping someday to sell it to the financial scavengers for dimes (or pennies) on the dollar. As Paul Krugman, Dean Baker and others have pointed out, the plan socializes the costs of bankers’ outrageous behavior, while privatizing the benefits, letting many of the bankers off the hook at our expense.
To me, that kind of looting of taxpayers’ money is typical of Republican economic policy. Bipartisanship makes no sense when one side wants to rob you blind. (To be bipartisan would be to let the crooks rob you half-blind, I suppose.)
How can we get President Obama to realize the Republican elite have no intention of cooperating with him in the interests of the country and the world? Republican Party leaders have demonstrated repeatedly throughout the history of America that they have one main purpose: to enrich the plutocrats at the expense of us peasants. Yet the new President trustingly puts his political fate – and the welfare of his country – in the hands of these looters. Who will speak truth to power?