I used this title six years ago when I posted a blog for SHELTERFORCE’s ROOFLINES on March 22, 2009. It was in response to The Chicago Sun-Times’ March 20, 2009 Acronym Test, “What Should AIG Really Stand For?” My answer, stealing Al Gore’s playbook, was the title of that and this blog posting. It merits revisiting. I noted then:
The media and Congress have become inconveniently (or perhaps too conveniently) distracted from the root causes of our economic crisis — “too much speculation with borrowed money; too little transparency and disclosure; and too many insider conflicts of interest.”
I identified those three self-feeding abuses from Robert Kuttner’s book, Obama’s Challenge, as what must be remedied if we were to rebuild a secure financial market. When Kuttner gave his keynote address six years ago at the National Community Reinvestment Coalition’s annual conference on March 13, 2009, those of us in the audience could not have imagined the headlines about American International Group (AIG) that would unfold in the days ahead.
The New York Times published an article on March 15, 2009, by Edmund L. Andrews and Peter Baker, headlined: Bonus Money at Troubled A.I.G. Draws Heavy Criticism. The opening paragraph captured the rampant greed:
Obama administration officials and Republicans alike were nearly universal in condemning the $165 million in bonuses that the American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, is to pay executives in the business unit that brought the company to the brink of collapse last year.
The solution then, and unfortunately not yet resolved, is about regulating speculation gone wild and about investing in and for communities. To use the title of another Kuttner book, it’s about stopping The Squandering of America.
My career in community development started over 40 years ago with Gale Cincotta in a Catholic school hall at St. Sylvester’s. A keynote speech that spring afternoon in 1974 was given by journalist Brian Boyer, who had just authored, Cities Destroyed for Cash. Brian had documented how the federal government itself had become the predatory lender that fueled redlining and the withdrawal of private capital from America’s communities.
It bears remembering that those scandals and resulting fast-foreclosures sparked the national demand for full disclosure that led to Congress passing the Home Mortgage Disclosure Act and the Community Reinvestment Act (CRA) in the ‘70s, under the leadership of Senate Banking Committee Chairman William Proxmire and his committee’s chief investigator, Bob Kuttner.
Today our communities are still hemorrhaging from an economy destroyed by greed. As Kuttner noted in his analysis of speculation that today still remains unregulated, “[r]e-regulating capitalism on a global scale is a systemic challenge on a par with solving global warming. And the two challenges are directly connected.”
As Naomi Klein has most recently reminded us, “Real solutions to the climate crisis are also our best hope of building a much more stable and equitable economic system.”
This week the Federal Reserve announced that it was no longer going to be “patient” about raising interest rates. Yet Fed Chair Janet Yellen seemed to remain concerned about timing when she was quoted, “Just because we removed the word ‘patient’ from the statement doesn’t mean we’re going to be impatient.”
As the Fed schedules that inevitable rise in interest rates later this year, they should consider a Community Credit Policy to assure lower interest rates for loans targeted to owner-occupied homes and multi-family properties providing affordable housing for low- and moderate-income families. Reserve requirements could be lowered for financial institutions making “reinvestment loans.” They could be allowed to borrow from the Fed at special low rates and long terms provided that the full amount of these funds were used for “reinvestment loans.”
The unemployment numbers may be improved but there are still many left out of the job market. Our communities are becoming increasingly impatient for their “recovery.” That’s an inconvenient truth we must still resolve six years later.
I did a Google search to find a song related to greed for this week’s playlist addition. I assume Bill is the regulator that is failing to regulate Joe’s speculation and Hank’s bank.
Now, I gave money to Joe,
Cause Bill said he knows,
He’ll pay me back in time,
And Bill’s getting paid to know,
If anyone’s lying.
Now, Bill said give it to Hank,
Cause Hank owns a bank,
And he can make it grow,
Now, ain’t those amazing folks,
That Bill is lucky to know?
Money, The Lovin’ Spoonful
Lyrics by John Sebastian