After the bailout: Our work has just begun
On October 3, Congress passed and President Bush signed into law a hotly-debated bill on our nation’s economic crisis. The Emergency Economic Stabilization Act of 2008 authorizes the Treasury Department to buy $700 billion of the failed assets of financial institutions. The bill was portrayed as “must-pass” legislation to avert a widespread financial disaster.
Our voices were heard
The American Friends Service Committee (AFSC) played a role in creating a space for grassroots voices to be heard and to influence the final bill. Although we did not achieve all we wanted, we helped people turn anger into action through phone calls, rallies, and vigils. AFSC sponsored a toll-free number to Congress that generated more than 6,000 calls in a few days. Public opposition led the House of Representatives to reject an early version of the bill.
While deeply flawed, the final bill does include a few positive provisions. For example, it increases mental-health insurance coverage for some workers and extends, for one year, a child tax credit that will help 13 million low-income families pay their bills.
Fear-filled tactics closed space for meaningful alternatives
Indeed the financial crisis is deep and wide. It risks a financial system collapse that not only threatens Wall Street but also employers’ ability to obtain credit to meet payroll and create new jobs, as well as workers’ ability to protect their retirement savings.
We at AFSC are concerned about the fear-filled tactics used to ensure hasty passage of the bill. This pressure closed the political space for alternatives that might have been more effective, just, and economical.
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Bankruptcy judges have not been given the authority to restructure mortgages and help people at risk of foreclosure keep their homes.
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There are no provisions to restore proper oversight and regulation of financial institutions.
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Mechanisms do not exist to ensure that the bailout will be carried out in a way that is fair, transparent, and free of conflicts of interest.
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There are no adequate limits to excessive executive pay.
The measure passed also does not include an economic recovery package that creates new jobs, extends unemployment benefits, and helps states and localities weather the storm – key elements in any effort to end this crisis.
In a September 29 commentary, AFSC suggested that four principles rooted in Quaker values should guide our response to the crisis: social responsibility, human rights, the common good, and a seat at the table for tax payers. The Act falls short on these dimensions in several ways:
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We’ve lost an opportunity to hold businesses to socially responsible standards. How? By failing to hold Wall Street firms accountable for their role in the crisis and allowing some individuals in decision-making roles in those firms to walk away with tens or hundreds of millions of dollars in compensation.
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The bailout adds $700 billion to a federal deficit already burdened by the $720 million a day cost of the Iraq war. We fear that the Act may be used to justify cuts in federal programs that benefit the common good and support the human right to food, shelter, and an adequate standard of living.
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A public role in economic policies has been severely diminished because (1) the Act allows firms that will benefit from the bailout to have a direct role in how it is implemented, and (2) it gives the unelected Treasury secretary final authority over a newly created oversight board.
This financial crisis is being felt worldwide, especially among developing countries. There is a growing consensus in the developing world that deregulating the financial sector is destabilizing economies. So if there is a silver lining to this crisis, it’s that communities in the U.S. may now recognize the connections between our struggle for meaningful reform and a global movement for change.
Next steps
Our work has just begun. Join AFSC as we urge lawmakers to ensure that the Act is carried out as fairly as possible. Here are actions you can take:
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Educate yourself and others by visiting and sharing our resources. Invite friends to your home to listen to this great one-hour NPR program and discuss the September 29 commentary by AFSC General Secretary Mary Ellen McNish.
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Sign up for our action alerts. You’ll learn about opportunities to take specific and timely steps to urge better economic outcomes for your community.
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Use AFSC’s bird-dog resources to ask bailout questions of your representatives and candidates for Congress in town-hall meetings and other local events.
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Use this online list of myths and facts to respond to those blaming the crisis on the Community Reinvestment Act and low-income homeowners.
Together, we can make the best out of this very difficult situation. Thank you.