Alternatives to H.R. 3997 Emergency Economic Stabilization Act

Posted on October 1, 2008


From Dennis Kucinich
We MUST do something to protect millions of Americans whose homes, bank deposits, investments, and pensions are at risk in a financial system that has become seriously corrupted. We are told that we must stabilize markets in order for the people to be protected. I think we need to protect peoples’ homes, bank deposits, investments, and pensions, to order to stabilize the market.

The $700 billion bailout would have added to our existing unbearable load of national debt, trade deficits, and the cost of paying for the war. It would have been a disaster for the American public and the government for decades and maybe even centuries to come.

Please read Kucinich’s Main Street Recovery Plan


Dennis Explains How the System Currently Works

—From letter sent out Tuesday, September 30
Come from the Bottom Up not the Top Down

This is a perfect time to open a broader discussion about our financial system, especially our monetary system. Such a discussion is like searching for a needle in a haystack, and then, upon finding it, discussing its qualities at great length. Let me briefly describe the haystack instead.

Here is a very quick explanation of the $700 billion bailout within the context of the mechanics of our monetary and banking system:

The taxpayers loan money to the banks. But the taxpayers do not have the money. So we have to borrow it from the banks to give it back to the banks. But the banks do not have the money to loan to the government. So they create it into existence (through a mechanism called fractional reserve) and then loan it to us, at interest, so we can then give it back to them.

This is the system. This is the standard mechanism used to expand the money supply on a daily basis not a special one designed only for the “$700 billion” transaction. People will explain this to you in many different ways, but this is what it comes down to.

The banks needed Congress’ approval. Of course in this topsy turvy world, it is the banks which set the terms of the money they are borrowing from the taxpayers. And what do we get for this transaction? Long term debt enslavement of our country. We get to pay back to the banks trillions of dollars ($700 billion with compounded interest) and the banks give us their bad debt which they cull from everywhere in the world.

Under the failed $700 billion bailout plan, Wall Street’s profits are Wall Street’s profits and Wall Street’s losses are the taxpayers’ losses. Profits are capitalized. Losses are socialized.

Dennis Kucinich on Rachel Maddow Show
September 30, 2008


From Ron Paul


“The beneficiaries of the corrupt monetary system of the last three decades are now desperately looking for victims to stick with the bill after they have reaped decades of profit and privilege,” Paul argued on the House floor.

FROM September 30, 2008


Democratics Propose “No Bailouts Act”

The part of the legislation pretty much anyone would understand immediately is an increase in the size of bank deposits that are federally insured, from $250,000 from $100,000.

The bill would also mandate a new program meant to buttress eligible banks by allowing them to receive “net worth certificates” from the FDIC. Those certificates wuld count towards the banks’ capital requirements, a form of borrowing that would increase their liquidity, the money they’d have on hand. The idea was used during the 1980s to recapitalize lending institutions to great effect.

There’d be other technical changes. The bill would change how banks and other financial companies account for their mortgage-backed securities, permitting them to value them not at what they could fetch in the market, which right now is nothing, but at a higher amount based on the “economic value” they could later receive.

It would also make changes to the practice of selling stocks short, that is borrowing a stock whose price you think is going to drop, selling it, then buying it back at the lower price to give back to the owner, while pocketing the profits.

*See web page at the top of this for more information.

Here are the basic points: NO BAILOUTS ACT

Bringing Accounting, Increased Liquidity, Oversight and Upholding Taxpayer Security

1) Require the Securities and Exchange Commission (SEC) to require an economic value standard to measure the capital of financial institutions.

2) Require the Securities and Exchange Commission to restricting naked short sells permanently

3) Require the Securities and Exchange Commission to restore the up-tick rule permanently.

3) Require the Securities and Exchange Commission to restore the up-tick rule permanently.

4) “Net Worth Certificate Program”

5) Increase the FDIC Insurance limit from $100,000 to $250,000.