COC

Economic Hemorrhage vs. Bailout Band-aid

Center of Concern | Tue, Sep 30, 2008

By Stephanie Heishman
I’m having a difficult time deciding how I feel about the “bailout package.” I thought about what I would have done yesterday if I were a member of Congress. I decided I probably wouldn’t have voted for the bailout package either. To me it seems like a band-aid made for a paper cut that is trying to fit over a gaping wound that is a hundred times the size of a paper cut. Maybe this band-aid is the wrong shape and size. Maybe it's not even a band-aid that we need.
This morning I stood in line at my Wachovia bank listening to background chatter about the disapproved bailout package and Citigroup’s purchase of the very institution I was about to deposit money into.

As I calculated and debited in my mind my monthly expenses (rent, student loans, bills, etc.) the man next to me said to the teller “I need to withdraw $200,000 to move into an FDIC-insured Bank of America account.” He joked saying “you know, I’ve got to move some money around quick before it gets any worse.” Wow, I thought, I wish I had that kind of money to just “move around.” And, next I thought, hmm…maybe he would want to give some of those thousands to the Center of Concern. He was off to Bank of America before I could ask.

My younger brother who works in finance called me yesterday. I asked him what he thought about all the market upheaval. His one word answer was: greed. Greed, sis. That’s what happens when greed takes over. I agreed with him. He was optimistic though, saying that even after the 1929 crash, the economy rebounded. We tend to differ on many political issues, so I let him keep his positive outlook and moved on to discuss football.

But I’m having a difficult time deciding how I feel about the “bailout package” in general. In fact, I even thought about what I would have done yesterday if I were a member of Congress. I decided I probably wouldn’t have voted for the bailout package either. To me it seems like a band-aid made for a paper cut that is trying to fit over a gaping wound that is ten times the size of a paper cut. Maybe this band-aid is the wrong shape and size.  Maybe it's not even a band-aid that we need.

Yesterday, the major challenge seemed to be on the Republican side, where many members argued the bill went against their free-market ideology and would allow Treasury to effectively nationalize some at-risk financial institutions. "There will always be time and pretext enough for people to compromise their principles and put forward poor public policy that may in the short run be popular, but in the long run will be detrimental to long-term interests of the American people," said Rep. Thaddeus McCotter, R-Mich.

Well, personally, Mr. McCotter, I think there is a fine line between government control and bailing out corporate mongers whose self interests finally caught up with them. To me it’s a crime, so why should we “bail them out?” It’s not just about free markets—which to my knowledge aren’t really too free anyway.

Treasury Secretary Henry M. Paulson Jr., who drafted the original bailout plan, said he was “very disappointed” by the House vote. He said, “Markets around the world are under stress” and he warned that ordinary Americans would feel the crunch as car loans and other consumer credit dries up. Well, Mr. Paulson, I’ve been feeling the “economic crunch” for a while now.

But I do agree --our elected officials need to do something!

We elect them for a reason after all. With their job comes a considerable amount of power. They need to do something with that power, because as minutes go by, the dow continues to drop and this crisis affects more and more of our global brothers and sisters.

This “crunch” Paulson speaks of has already begun. As much as I wish to move $200,000 from bank to bank, I know I can’t. And I know so many people around the world can’t either. That’s why I think Congress needs to do something to protect those of us who don’t have money to just “move” around. I do find it very unfortunate however, that our economic protection is now a reactive step, rather than proactive that will bail out the very people who are easily walking away with millions in their pockets as the rest of us continue to worry about our rent, mortgages, putting gas in the car, and paying our bills.

Posted by Stephanie Heishman, Director of Development