Bailout

“ Soon to join the bailout parade is the nation's insurance industry, which is lobbying the Congress to have the federal government pick up the tab for future losses like those stemming from the attack on the World Trade Center. ”

“ As I indicated a moment ago, the Fed said this bailout was necessary in order to prevent the world economy from going over a cliff. But 3 years after the start of the recession, millions of Americans remain unemployed and have lost their homes, their life savings, and their ability to send their kids to college. Meanwhile, huge banks and large corporations have returned to making incredible profits and paying their executives recordbreaking compensation packages, as if the financial crisis they started never occurred. ”

“ Q Well, we’ve seen some crazy examples -- I mean, when the auto executives arrived in Washington for those hearings in Congress in those private jets, these bonuses. The American people might worry that the bailout, you know, could be off course, because if the money is going to people who simply are out of touch, it’s not a confidence builder. ”

“ People-concerns have been missing in all the bailouts. When the airline companies walked off with $15 billion plus in bailout money, the thousands of laid-off employees—airline attendants, maintenance crews, baggage handlers and ticket counter employees—received not a dime. ”

“ People wrote to their Senators and called their Senators. That is called democracy. After the TARP bailout took place, all of the loans were put up on the Web site. Transparency—the American people knew who got the money. But the actions of the Fed were done behind closed doors, and, in my view—it is an issue we are studying right now—I think there were significant conflicts of interest. I think we had people sitting there at the New York Fed who were beneficiaries of this bailout, and that is an issue we need to explore. ”

“ It’s these loopholes that allowed executives to take risks that not only endangered their companies, but also our entire economy. And we’re going to put in place new rules so that big banks and financial institutions will pay for the bad decisions they make – not taxpayers. Simply put, this means no more taxpayer bailouts. Never again will taxpayers be on the hook because a financial company is deemed “too big to fail.” ”

“ In doing so, he made the cynical and deceptive assertion that reform would somehow enable future bailouts – when he knows that it would do just the opposite. Every day we don’t act, the same system that led to bailouts remains in place – with the exact same loopholes and the exact same liabilities. And if we don’t change what led to the crisis, we’ll doom ourselves to repeat it. ”

“ For example—this galls me and galls many of the people in this country—the horrendous recession we are in right now, where millions and millions of people have lost their jobs, their savings, their homes, this recession was caused by the greed and recklessness and illegal behavior on Wall Street. These guys, through their greed, created the most severe economic recession since the Great Depression. The American people bailed them out. Now, 2 years after the bailout, they are giving themselves more compensation than they ever have. ”

“ Five years ago, after the worst financial crisis in decades, we passed historic Wall Street reform to end the era of bailouts and too big to fail. As part that reform, we created an independent Consumer Financial Protection Bureau with one mission: to protect American consumers from some of the worst practices of the financial industry. ”

“ As the direct result of this kind of financial legerdemain, which converted the debt-paying medium of the country into an interest-bearing debt, the wages of labor and the prices of products steadily declined, business enterprises were wound up in bankruptcy at the rate of more than one thousand per month and millions of workmen were forced into idleness and thronged the highways in all parts of the country, demoralized, degraded and becoming a sure menace to civilization. ”

“ Our national industries, by an impoverishing policy, were themselves prostrated, and the streams of revenue flowed in such feeble currents that the treasury itself was well nigh empty. The money of the people was the wretched notes of 2,000 uncontrolled and irresponsible state bank corporations, which were filling the country with a circulation that poisoned rather than sustained the life of business. ”

“ Business establishments, manufactories, mercantile houses, unable to get the money for meeting their obligations, will by the hundreds succumb to their embarrassments and tumble down like a row of bricks. Others will cautiously restrict their operations to the narrowest possible limit, and wage-earners by the thousands will lose their employment and be turned into the street.
No class of society will be spared the destructive consequences. Every frightened creditor, pressed by his own creditors, and apprehensive of a growing loss by every day's delay, will eagerly pounce upon his debtors. ”

“ At other times, particularly at the quarterly payment of the dividends, an absolute rule which laid down that the bankers' balances were never to be lent, would be productive of great inconvenience. A large sum is just then paid from the Government balance to the bankers' balances, and if you permitted the Bank to lend it while it was still in the hands of the Government, but forbad them to lend it when it came into the hands of the bankers, a great tilt upwards in the value of money would be the consequence, for a most important amount of it would suddenly have become ineffective. ”

“ A great part of the current coin in the kingdom was locked up in the houses or banks of a few stockjobbers and speculators.
But the scarcity of gold and silver was felt, people's eyes were opened, and the bubble burst, but not until half of the national debt had been paid off by this swindling transaction.
The nation was furious. A panic spread among all classes; the bank had no money with which to redeem its notes; the shares fell almost to nothing; and universal bankruptcy took place. Those who, a few days before, fancied themselves rich, now found themselves poor. ”

“ It will be necessary at that time, to look carefully at the condition both of the bank and of the union. To ascertain, if the public debt shall, in the mean time, be paid off, what effect that will produce? What will be our then financial condition? what that of local banks, the state of our commerce, foreign and domestic, as well as the concerns of our currency generally? I am, therefore, not now prepared to say, whether the charter ought, or ought not, to be renewed on the expiration of its present term. The bank may become insolvent, and may hereafter forfeit all pretensions to a renewal. ”

“ We have looked on quietly and seen the sufferings to which this people are reduced by the rapacity of the usurers, until we can no longer hold our peace; and if it be in our power, we intend that wealth and not industry shall yet be made to pay what it should have been made to pay at first; that it shall return to the government the bonds which the toiling masses have redeemed by the rivers of blood that they have shed, and that the government shall return the $2,000,000,000 of interest that it has already filched from industry for interest on this most unjust debt. ”

“ Still, we have no cause to apprehend a depression comparable to that of the former period, or even to anticipate a deficiency which will intrench upon the ability to apply the annual $10 millions to the reduction of the debt. It is well for us, however, to be admonished of the necessity of abiding by the maxims of the most vigilant economy, and of resorting to all honorable and useful expedients for pursuing with steady and inflexible perseverance the total discharge of the debt. ”

“ The development created by our system of canals had opened markets for our produce. The public national debt had been paid. The pet banks chartered after the destruction of the Bank of the United States started upon a wild scheme of inflation. A craze to purchase public land created an overflowing revenue. All causes combining created a deceptive prosperity that could end only in one way. ”

“ If there are any who still think that the surplus should have been kept out of circulation by hoarding it in the Treasury, or deposited in favored banks without interest while the Government continued to pay to these very banks interest upon the bonds deposited as security for the deposits, or who think that the extended pension legislation was a public robbery, or that the duties upon sugar should have been maintained, I am content to leave the argument where it now rests while we wait to see whether these criticisms will take the form of legislation. ”

“ The imprudent expansion of bank credits, which was the natural result of the command of the revenues of the State, furnished the resources for unbounded license in every species of adventure, seduced industry from its regular and salutary occupations by the hope of abundance without labor, and deranged the social state by tempting all trades and professions into the vortex of speculation on remote contingencies. ”

“ The poorest of all treasuries is the one with a surplus that it never uses; the mission of a minister of finance is to fling gold out of the windows. It will come back to him through the cellars; and you, you want to hoard it! The thing to do is to increase the offices and all government employments, instead of reducing them! So far from lessening the public debt, you ought to increase the creditors. If the Bourbons want to reign in peace, let them seek creditors in the towns and villages, and place their loans there; above all, they ought not to let foreigners draw interest away from France ”

“ To call in this loan, at the rate of eight millions a year, in addition to the interest on the whole, and to take away, at the same time, that circulation which constitutes so great a portion of the medium of payment throughout that whole region, is an operation, which, however wisely conducted, cannot but inflict a blow on the community of tremendous force and frightful consequences. The thing cannot be done without distress, bankruptcy, and ruin, to many. ”

“ In the face of this enormous debt are we to conclude, with certain authors of repute, that when the payment of the interest on the public debt absorbs more than 40 per cent. of a nation’s revenue, that nation is in the most serious situation, not far removed from bankruptcy? ”

“ No reduction is made in wages; the wage earner is simply denied the opportunity to earn a living. Interest must continue, else bankruptcy ensues. Dividends may be, and frequently are, cut or passed. Earnings for a considerable proportion of the employees stop absolutely. In other industries, such as textile manufacturing and coal mining, instead of dismissing employees, the establishment is worked two or three, or perhaps four days a week during bad times. The interest on the bonds is, of course, paid. Dividends on the stock may be passed or paid out of surplus. ”

“ At certain intervals the national government, States, cities, and hundreds of industrial enterprises distribute earnings and accrued interest to those entitled to the same. The vast sums of money drawn out of thousands of banks and banking institutions represent millions of dollars of canceled debts. Within a few days after these distributions take place, at least nine tenths of this money finds its way back into the strong boxes that parted with it. One tenth of the money is, perhaps, held in the pockets of the people, to be gradually disbursed for current needs until the next pay arrives. ”

“ All or almost all our mercantile wealth was safe at home, our resources entire, and our finances sufficient to carry us through during the first year of the contest. Our property is now all afloat; England relieved by our relaxations might stand two years of privations with ease; we have wasted our resources without any national utility; and, our Treasury being exhausted, we must begin our plan of resistance with considerable and therefore unpopular loans. All these considerations are, however, for Congress; and at this moment the first question is, what ought the Executive to do? ”

“ While these thousands of millions are being lost annually, from the suppression of money, and consequently of industry, and while three fourths of the laborers of the country are either standing idle, or, for the want of capital, are producing only a mere fraction of what they might produce, a two-pence-ha'-penny Secretary of the Treasury can find no better employment for his faculties, than in trying, first, to reduce the rate of interest on the public debt one per [Pg 56] cent.—thereby saving twenty millions a year, or fifty cents for each person, on an average! ”

“ Precious friends of the people those are who, under pretense of protecting the debtor against the creditor, rob the laborers of hundreds of millions of their hard-earned savings and despoil even those who have suffered for their country.
But is not a large portion of the middle class, small business men and farmers, in debt, and would they not be relieved by an expansion and depreciation of the currency? No doubt there are many of that class burdened with liabilities, although the number of mortgaged farms is much smaller than generally supposed. ”

“ There is no other security now for the repayment of loans, public or private, than the known capacity of working men to produce a surplus over and above their own consumption. If they could not, or did not, do this, there would be no interest for fundholders, mortgagees, or money-lenders of any sort. Indeed, there is no other source than the said surplus for the payment of rents, taxes, dividends, premiums on insurance policies, and the interest of upwards of two thousand millions of private debts. ”

“ Clearly, there’s reason to worry. Back in 2000, before they almost ruined the economy and had to be bailed out, the five biggest banks on Wall Street held 25 percent of the nation's banking assets. Now they hold more than 45 percent.
Their huge size fuels further growth because they’ll be bailed out if they get into trouble again.
This hidden federal guarantee against failure is estimated be worth over $80 billion a year to the big banks. In effect, it's a subsidy from the rest of us to the bankers.
And they'll almost certainly get into trouble again if nothing dramatic is done to stop them. ”