Wednesday, October 01, 2008

Polls show those opposed to bail-out bill mostly haven't been told it's for money the banks will have to pay back - and think it's the blank cheque Bush and Paulson wanted before the Democrats refused it

Polls show that the reason congress voted against the bail-out bill on Monday was that many Americans haven’t been told that it’s not the blank cheque to the banks originally proposed by Bush and US Treasury Secretary Henry Paulson. Obama and other Democratic Congressional leaders rejected that proposal and got agreement with Republican congressional leaders on making the money not a grant but a series of loans, to eventually be repaid in full plus interest once the banks started making a profit again. The bill congress voted on was for this loan with conditions including congressional oversight of the programme, a ban on excessive pay and bonuses for bank executives, federal powers to prevent banks unfairly foreclosing on peoples’ mortgages and a plan to recoup any potential losses from taxation on financial sector firms (1).

A Rasmussen poll taken just before congress voted showed that 33% of Americans back the bail-out and 32% oppose it . It also found that two-thirds of people who knew the bill is for a loan that the banks have to repay two-thirds support it, while two-thirds of people who didn’t knew the money will be repaid oppose it (2). (A poll after the vote showed opinion still evenly split(2a).)

The modified bill isn't allowing bankers or the wealthy to blackmail anyone or get off with massive irresponsibility. It's making them pay back everything with interest, accept regulation, limit executive pay and protect people with mortgages.

Not going ahead with this conditional loan bill risks another Great Depression. The free market extremist economists of 1929 told governments not to intervene and to let the market fix itself after the 1929 Crash. The Great Depression was the result - and it affected many millions of ordinary people and caused unemployment, poverty, hunger and loss of homes for them (3, 4, 5).

So why risk that in order to punish the bankers when, by supporting the bill Obama got a deal with Bush on, ordinary Americans could avoid that risk and get their money back plus interest in the long term?

(1) = Guardian 29 Sep 2008, ‘Theme is reform, not rescue, as Paulson plan goes through shredder’,

(2) = Rasmussen Reports 29 Sep 2008, ‘Opposition to Bailout Plan Falls Dramatically’,

(2a) = Rasmussen Reports 30 Sep 2008, ‘Voters Divided On Whether Wall Street Should Clean Up its Own Mess’,

(3) = Galbraith, J.K (1987) ‘A History of Economics’ , Penguin , London & NY, 1991, Chapters 15-17

(4) = Galbraith, J.K (1954) ‘The Great Crash 1929’, Penguin, London & NY, 1992

(5) = Galbraith, J.K. (1975) , ‘Money : Whence it came from, where it went’, Penguin, London and NY

No comments: