Michael Moore's critique of the bailout recently mailed around the intertubes includes this list of problems:
1. The bailout bill had NO enforcement provisions for the so-called oversight group that was going to monitor Wall Street's spending of the $700 billion;
2. It had NO penalties, fines or imprisonment for any executive who might steal any of the people's money;
3. It did NOTHING to force banks and lenders to rewrite people's mortgages to avoid foreclosures -- this bill would not have stopped ONE foreclosure!;
4. It had NO teeth anywhere in the entire piece of legislation, using words like "suggested" when referring to the government being paid back for the bailout;
So, we have a day off. What should congress do tomorrow?
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Ok, another batch of questions have come in, all variants on
the same theme.
The question is, if mortgages are at the root of the current economic disaster, how can it possibly result in close to a trillion dollars worth of losses?
It definitely seems strange, on two different levels. On an…
A few things off the top of my head that should make it both more effective and more palatable:
1. Beef up the definitions of compensation for the purposes of limiting it at institutions needing to be bailed out.
2. Include the compensation of more than just executives. Withhold compensation over a certain amount for everyone at these institutions until it can be determined whether each individual played a part in creating the mess. If so, the withheld amount is forfeit for that individual.
3. Void any ratings triggers on corporate debt held by these institutions to keep the trouble from spreading to other industries as the economy declines.
4. Freeze foreclosures on individual mortgages held by these companies. Require renegotiation at a rate favorable to the borrower. Require that payment in arrears between the time interest rates went up and the renegotiation be cleared from credit bureau records.
5. Explicitly hold out the right (which already exists) to enact more punitive legislation at a later date. Start drafting that legislation as the first part comes to a vote.
6. Appoint an oversight panel with more than just advisory powers. Distributing the money does not have to happen nearly as quickly as approving it does.
7. Sharply raise the rates of capital gains taxes on short-term speculation.
What should congress do tomorrow?
Collective hara-kiri. Pelosi first.