A couple weeks ago I wrote an article arguing that some form of bank nationalization was the only legitimate option for the Treasury Department to deal with the mortgage debt mess that is still dragging down Wall Street. Here’s an excerpt:
“At this point, I’m not so sure that private investors can be counted on to set the price for the simple reason that these assets will never regain their pre-crisis value, unless of course another bubble arises which we obviously don’t want to encourage. If the present value of future returns of the toxic assets is greater than the current market value then more buyers would be entering the market and more institutions would be selling. The fact that this isn’t happening shows that these mortgage-backed securities are as worthless as a pair of Bermuda shorts in the Artic.”
In a recent poll by BusinessWeek, 41% of respondents favored nationalizing some banks and leaving the rest alone. I would tend to agree with that approach, starting with AIG and Citigroup. To nationalize or not to nationalize? What should Geithner do? Please provide your comments.
As banks around the world gobble each other up in a disaster of mammoth proportions, there is an opportunity for institutions to truly clean house and examine their financing of projects that degrade human and environmental rights. [click to continue...]
Over the past few weeks, we’ve heard President Bush, Treasury Secretary Henry Paulson and various lawmakers declare that the root cause of the current financial crisis stems from illiquid assets related to mortgage-backed securities. But what does this really mean? And how can this “radioactive waste” be purged from the balance sheets of financial institutions holding these toxic securities.
John Sweeney, President of the AFL-CIO, responded to the original version of the bailout by describing it as “dangerous and ill-conceived.” Critics of the original proposal emphasize that the final plan must include limitations on executive pay and improved governance of public companies, taxpayer equity in distressed companies, independent Congressional oversight and a stimulus package designed to create more jobs.
Will the final $700 billion bailout plan resolve the fundamental cause of the crisis? What should the future relationship be between lawmakers in Washington DC and bankers on Wall Street? And how will the crisis impact the Presidential election? Dan Pedrotty, Director of the AFL-CIO’s Office of Investment, joins us to answer these questions and more.
Several weeks ago, I posted an article entitled “Corporate Contributions vs. Human Rights.” In that post, I made the argument that corporate influence over the political process in America infringed on our human rights. In this post, I want to revisit this discussion as the crisis in the financial markets makes this argument even more poignant.
