Will Anger at AIG and Geithner's New Bank Plan Help Unions?
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Embattled Treasury Secretary Timothy Geithner's latest poorly-received plan involves bailing out failing banks in ways that enrich the same sort of hedge fund managers and Wall Street high-rollers who helped bring about the current mess. The plan, scheduled to be announced this Monday morning, aims, in part, to plead with private investors to buy up banks' "toxic" assets -- while saddling taxpayers with most of the risk if the assorted shaky investment vehicles turn out to be worthless or unsellable.
The mounting populist rage against Geithner and the failed bank bailouts, along with the obscene bonuses to AIG executives, helped fuel protests last week by union supporters and progressives to promote the message: "Take Back the Economy". What's particularly outrageous, union supporters contend, has been the willingness of government officials to pay huge bonuses and payouts to Wall Street firms and banking executives, but demand sharp sacrifices in wages and benefits by autoworkers -- both with the supposed aim of helping an economic recovery.
The aim of the new union-backed populist uprising is to fight back against the same corporate interests that helped wreck the economy -- and are now working overtime to block the recovery by scheming against raised living standards for workers, activists say. How do corporate lobbyists and their GOP allies allegedly seek to do this? By opposing the pro-union Employee Free Choice Act (or offering "compromise" proposals to essentially gut the bill), and fighting against affordable health care for all.
(Big Business continues to spew fear-mongering lies about the pro-union bill -- although even The Wall Street Journal finally admitted the bill wouldn't take away the secret ballot -- while progressives are fighting back with grass-roots campaigns and some new advertising. But they've also got an important weapon the anti-union opposition can't match: the truth about the bill's provisions and its economic impact, as summarized recently by the Center For American Progress Action Fund's overview report, "Employee Free Choice Act 101.")
Yet even as there's continuing rage against anti-union bankers and Wall Street executives, and their convoluted scams to fleece the public, the ongoing scandal has never been more clearly -- or angrily -- presented than in an important new Rolling Stone article. This darkly humorous, profane article, "The Big Takeover," by Matt Taibbi not only explains what went wrong and how we're continuing to be looted, but makes you want to do something about it -- although there isn't yet a well-organized, focused progressive campaign to fight for wide-ranging banking reform that, yes, involves additional federal spending but actually helps the economy and struggling Americans get back on their feet.
The article comes as a revelation even if you've followed such series as The New York Times' "The Reckoning" and know the broad outlines of the meltdown story: how greedy investors and Wall Street firms built a financial empire of sand based on nearly worthless mortgage-backed securities and then exploited the $700 billion in bank bailouts. It also includes fresh behind-the-scenes reporting on key wrongheaded decisions by federal regulators that freed financial institutions to take literally insane risks with investors' and depositors' funds, and he explains the little-known trillions of dollars in guarantees already being doled out by the Federal Reserve to banks in addition to the TARP and other mishandled bailout programs. His barbed, sometimes vulgar, comments are backed up with solid reporting and the most accessible, even entertaining, writing on the financial crisis to date:
It's over -- we're officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline -- a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history -- some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).