For nearly three weeks now, a growing group of mostly young people have been camped out in lower Manhattan to protest the corrupting impact that Wall Street is having on our democracy.
What started out as a loosely organized public display of anger over the economy has garnered increasing media attention and support from people across the United States. So many people in America are suffering through what increasingly feels like a permanent state of economic stagnation. And rather than see their elected leaders stand up against powerful interests on Wall Street – interests that are keeping millions of Americans stuck in debt and holding back recovery – they watch their representatives continue to protect the interests of the banks that got us into the mess in the first place.
It’s no wonder that what is happening in New York is being compared to youth-led democracy movements that swept across the Middle East this past year.
As a faith-based network of community organizations who work directly with families at-risk of losing their homes, PICO has been fighting for three years to stop banks from mass foreclosing on millions of Americans. We have seen up-close the moral consequences of a financial system that has lost its way, whose purpose and values have been so twisted that it finds profit in people’s pain and suffering, rather than serving the needs of families and businesses. And we’ve watched the United States Treasury, federal bank regulators and many in Congress repeatedly side with big banks over the interests of homeowners and small-business people.
Through the New Bottom Line campaign, an unprecedented alliance of grassroots organizations in 20 states, we’ve organized tens of thousands of homeowners and ordinary people. We’re calling for new economic policies that hold Wall Street accountable, starting with immediate relief for underwater homeowners. We’ve pressed the nation’s attorneys general to use their full power to investigate mortgage and foreclosure fraud and deliver real relief to families.
The protestors on Wall Street – and now in many other cities as well – are helping expose the pain that so many young people (and others) feel about their shrinking economic opportunities. They are putting that pain where it belongs — directly on the doorstep of the financial industry. They are joining a long line of struggling homeowners, unemployed and underemployed people, clergy and community leaders who have been standing up and making their voices heard over the last three years.
Now we need to make sure that anger and outrage translate into action. The ultimate question is not just “Who is to blame?” but also “What should those responsible for the problem do to fix what they broke?”
Here are three things that the federal government and the state attorneys general can do today to make the nation’s biggest banks provide real relief to American families and restart the economy:
1. Require the big banks to reduce the $700 billion in underwater mortgage debt that is hanging like a noose around the neck of the economy. This would put $71 billion a year back into the pocket of ordinary Americans, which in turn could create one million jobs a year. To support this policy, federal bank regulators could change accounting rules to allow banks to write-down any losses over a number of years rather than all in one shot.
2. Tax excessive cash reserves that the banks are sitting on in order to get money back into the economy and create jobs. As Dr. Robert Pollin of the University of Massachusetts-Amherst has argued, banks are sitting on approximately $1.6 trillion in cash, up from less than $50 billion before the crisis. Meanwhile, small businesses overwhelmingly report that banks will not give them even small loans to expand and hire new people. The federal government should tax excessive cash reserves over a reasonable amount in order to get this money back out into the economy in the form of job-generating investments. The federal government could stand with Main Street on this issue by expanding its small business loan guarantee program.
3. Finally, the federal government should institute a tax on financial market transactions. This could raise significant revenue to create jobs and prevent the shredding of the social safety net at a time when struggling families need it the most. It would also limit the sort of reckless speculation that threw our economy in the ditch in the first place.
These are realistic steps that the federal government can require the banks to take. They would help stop the foreclosure crisis, create millions of jobs, and begin to put the economy on a true path to recovery. It’s time for this type of aggressive action to put what feels like a never-ending crisis firmly behind us.
(Tim Lilienthal leads PICO’s work with the New Bottom Line campaign, a coalition of faith-based, community and labor organizing groups.)