The case for nationalizing the banks

[Joanne98]

Less than four months after Congress passed the Bush administration’s Troubled Asset Relief Program (TARP), authorizing the Treasury Department to spend $700 billion in taxpayer money to bail out the banks, the same banks that received the government handouts are reporting massive losses and the incoming Obama administration is preparing to funnel hundreds of billions in additional funds to Wall Street.

In the interim, the financial crisis has deepened and precipitated a global recession that is acknowledged to be the worst since the Great Depression of the 1930s. Millions more workers, told last fall by Bush and Obama that the government bailout, supposedly designed to benefit “Main Street” and not “Wall Street,” would avert a financial meltdown and mass unemployment, have lost their jobs, their homes and their life savings. Meanwhile, the bankers have refused to use their windfalls to lend to businesses and consumers and have instead either hoarded the government cash or used it to buy up smaller firms.

None of the CEOs and speculators whose corrupt and reckless policies brought their own institutions and the global economy to ruin, while they rewarded themselves with seven- and eight-figure compensation packages, and none of the government regulators who colluded in the plundering of the economy have been called to account. The bankers, with the complicity of the government, flatly refuse to reveal what they have done with the money they received from the Treasury.

The vote by the US Senate on Thursday, after intensive lobbying by the Obama transition team, to release the second $350 billion installment of the $700 billion slush fund sets the stage for an even more massive bailout. In a taste of things to come, the day after the Senate vote, the Treasury agreed to hand over another $20 billion to Bank of America as part of a new rescue package that will have the government absorb up to $118 billion of the bank’s losses. Economists and Federal Reserve officials are openly saying that TARP will have to be followed by many more such bailout funds.

All of this adds up to a colossal fraud perpetrated on the American people—who overwhelmingly oppose the bailouts—for the sole purpose of protecting the interests of the financial aristocracy. There is not now, and there never was, a considered, worked-out plan to solve the financial crisis and avert a social catastrophe.

http://www.wsws.org/articles/2009/jan2009/pers-j19.shtml