The Financial Crisis Responsibility Fee: A Possible First Step

On November 6, 2009 we made a post detailing how almost all citizens feel completely betrayed by both government and private institutions. They see that the government is acting for special interests, not the public good as required by the constitution. To restore our nation we stated that:

The citizens require a strong program that will absolutely guarantee that the psychology and ethics that led to the betrayal is completely disgraced and placed outside the American system forever. It is critical that those in the entities who were responsible for the meltdown are publically identified and punished. There must be significant retribution with large sums recovered for the people who innocently suffered. The public consequences to those that caused the situation must be adequate to prevent any thoughts of ever returning to similar behavior.

The banks however have been operating under the assumption that their only obligation toward the citizens suffering from the economic meltdown they caused is to repay the TARP funds at some point. They expected no further consequences for the misery they have caused the nation. They are reporting large profits and intend to reward themselves with record bonuses-while the rest of the nation suffers.

The announcement by the administration of its intention to impose a Financial Crisis Responsibility Fee* on banks with over 50 billion dollars in assets is the first credible indication that the necessary consequences may be coming. It could mean that the cozy financial sector/government relationship is starting to unravel under the relentless anger of the US citizens. Of course the 90 billion dollars expected to be recovered in 10 years is minuscule compared to the damage done to the nation. But at least it initiates a principle of collecting consequential damages that should deter future similar behavior. Watching how congressmen react to this bill will be a real marker for those who must be replaced.

As currently described the bill will only apply to banks with over fifty billion in assets and will be structured so that there will be a strong incentive to pay the fee from the planned excessive bonus pool. This will protect the smaller banks and prevent the large banks from simply passing the fee through to its customers. It is indeed meant to have the large banks who acted against the public good suffer additional consequences.

The drumbeat of the bank lobbyists against the bill is already underway. There will be a very aggressive effort to have it either killed or weakened with loopholes. Hopefully this will not end as a Republican versus Democrat issue. We must follow the life cycle closely and be sure that our congressman and senators understand that regardless of their party affiliation you expect them to act in the public good. Follow their statements and votes very closely. Its will be a good warm-up for the many battles we have yet to fight.

Citizens Need Proof that the Cozy Big Finance /Government Relationship is Over

It has been 16 months since we posted on the silliness of the media continually placing high net worth New Yorkers in front of cameras to be asked if they thought the country was in a recession. We pointed out that if they had talked to a reasonable distribution of small businessmen around the country it would have been obvious we were in a very painful one.

Since that time not only have the lost jobs and personal financial nightmares increased but we now realize the magnitude of betrayal we have suffered from the financial sector, the government, and our elected officials.

We have the sick feeling of being completely hoodwinked by both our private and public institutions. Most people now realize that in the dealings of these entities there was no concern for the United States or its citizens. The common good was simply not a consideration. This realization has triggered a great wave of discouragement toward the entire American system. This feeling is independent of the politics of the citizen. The vast majority of Republicans, Democrats, Libertarians, and Independents feel that the entire system is owned by the special interests and Washington insiders through their control of the Government.

Go to almost any gathering of what used to be the middle class and you will find that there is universal anger and even hatred toward the following entities:

· The financial institutions that wasted trillions that could have been used productively for our country
· The banks that won’t risk lending to small businesses but want to pay high bonuses to executives.
· The elected government that passed laws that protected these disastrous actions.
· The lobbyists and special interests that influenced and really bought the elected government
· The lying financial rating agencies

The disheartened American is sick of blowhard politicians seeking to gain by the situation. The citizens desperately need to see real evidence that the country will at some time be run for the common good. The strength of these feeling is not fully understood in the Washington and New York power centers. If not fixed the country will face major changes.

The citizens require a strong program that will absolutely guarantee that the psychology and ethics that led to the betrayal is completely disgraced and placed outside the American system forever. It is critical that those in the entities who were responsible for the meltdown are publically identified and punished. There must be significant retribution with large sums recovered for the people who innocently suffered. The public consequences to those that caused the situation must be adequate to prevent any thoughts of ever returning to similar behavior.

If the public were to see these events embedded into prompt institutional action it would demonstrate that the cozy relationship between the perpetuators and congress has ended and patriotic faith in the system might return.

Can this be done with the current elected government on whose watch many of the events occurred?

Both the House and Senate are circulating draft bills that are supposed to re-regulate the financial sectors so that the disasters will not be repeated. If normal history is repeated, however,they will be passed after usual lobbying oftains built in loopholes

In May of 2009 Congress formed the Financial Crisis Inquiry Commission (FCIC). It was given broad authority to determine exactly what happened to create the disaster(s) and to identify any incidents of law breaking they discovery. It has subpoena power. There is even a direction to compare salaries in the financial sector to those of equal responsibility in other sectors. Six members were appointed by Democrats and four by Republicans. The commission is to submit a final report to Congress in December 2010-safely after the 2010 elections.

The commission had its first public appearance on September 17. The introduction of members and their introductory remarks are described here. As would be expected, they are almost entirely insiders. Congress prided itself on the ground rule that only private citizens could be members-no one connected with the government would be on the commission. It turns out that although none have current government positions almost all have had deep earlier government connections. The commission is largely split between former Clinton and Bush appointees, with one former senator. There is no representation from the damaged citizens.

Reasonable results will take a lot of citizen intervention.