Thursday, February 19, 2009

Tell Congress and Secretary of Treasury Timothy Geithner:



Treasury Secretary Geithner has announced his plan to fix Wall Street. It is time to tell Congress you want strict regulation of Wall Street.

Call your Senators and Representative today. Click here to get their phone numbers. Tell them you want strict regulation of Wall Street. Tell them

  • Just pumping more taxpayer dollars into this system will not fix it.
  • Any financial institution getting taxpayer dollars should first stop issuing credit default swaps; collateralized debt obligations; and securitization of risky mortgages, credit card loans and car loans. All of these are unregulated and contribute to the casino economy.
  • Nor should these financial institutions be allowed to do business with hedge funds and other unregulated investor consortia.
Also call Rep. Barney Frank, Chair of the House Financial Services Committee (202-225-5931) with this message.

And call the Department of Treasury press office, too, at 202-622-2960. It’s the only number at Treasury we could find.

Here is more background to read before you call.

When Secretary Geithner introduced the Financial Stability Plan on February 10, with the broad outlines of how the administration plans to fix Wall Street, he said not one word about his intention to reign in the casino economy, including the totally unregulated $60 TRILLION in "credit default swaps."

Geithner noted: “Investors and banks took risks they did not understand” ... as if they were innocent bystanders to the culture of greed.

He does go on to admit failure in the system.

“There were systematic failures in the checks and balances in the system, by Boards of Directors, by credit rating agencies, and by government regulators. Our financial system operated with large gaps in meaningful oversight, and without sufficient constraints to limit risk. Even institutions that were overseen by our complicated, overlapping system of multiple regulators put themselves in a position of extreme vulnerability.

“These failures helped lay the foundation for the worst economic crisis in generations. “

But then he says “We believe our policies must be designed to mobilize and leverage private capital...”

It is the over-leveraging of private capital that got us into this fix. Mortgage defaults are just the tip of the iceberg and don’t begin to explain the global financial collapse. Funny money was created by
  • bundling high risk mortgages into AAA investments, a form of “securitization”
  • insuring risky investments with no collateral to back up the risk, known as credit default swaps
  • allowing investors to borrow money in order to gamble on whether a stock, a currency, or the stock market itself will go up or down at some future time.
No wonder this house of cards collapsed!

Be clear, the issue of executive compensation, which is all over the press, is a diversion from the root of the problem. These executives have overseen the financial institutions responsible for creating the casino economy. Docking their pay does not begin to compensate for the damage they have done.

No More Casino Economy!

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