On balance, it may be a good thing that Paulson’s $700 billion TARP plan was voted down. Prospects of a rich pot of tax dollars to bail out bad mortgages may actually have slowed banks’ necessary process of de-leveraging.
New proposals that can and should now be implemented immediately include:
- Raise the FDIC’s guaranty of all insured banks’ depositors from $100,000 (now inadequate due to past inflation) to $500,000 for each individual account and $1 million for each corporate account – while beefing up the FDIC’s fund by $200 billion.
- Making all regulated money market funds permanently insured beyond the $50 billion guarantee enacted through the Emergency Stabilization Fund.
- Support the SEC and the FASB’s new guidance rules allowing “significant judgment” on “fair value” modification of the “mark to market” rules, while providing greater transparency.
- Strengthen SEC oversight of credit derivatives, swaps, etc. and create a well-regulated, transparent clearinghouse and market for all such derivatives.
- Bring back the uptick rule and regulate short-selling. Prosecute naked shorting and other such criminal activities.
All these proposals, coming from many experts from across the political and ideological spectrum can be implemented without congressional legislation.
Longer-term, Congress can, for a start:
- Re-create an updated Home Owners Loan Corporation (HOLC) from the 1930s.
- Re-instate the very small tax on stock transactions of .25% as in the Securities Turnover Excise Tax enacted in 1914 and repealed in 1966. Many other countries in Europe and Asia levy such a tax, which curbs speculation and would bring in the USA some $150 billion per year.
- Pass the extension of Production Tax Credits for renewable energy and add $150 billion to develop solar, wind, geothermal and upgrade our electric grid.
- Invest in restoring and maintaining US infrastructure.
- Re-instate federal revenue sharing with states.
- Extend unemployment insurance to laid off employees!
Shiller, Robert J. The Subprime Solution, Princeton University Press, 2008.
Sirota, David, author of The Uprising. Campaign for America’s Future, http://www.ourfuture.org/print/29360.
Hazel Henderson is author of Ethical Markets: Growing the Green Economy (2007). is president of Ethical Markets Media LLC, USA, and co-creator of the Calvert Henderson Quality of Life Indicators regularly updated at www.calvert-henderson.com.