Nader’s 10-point plan to resolve financial crisis

Independent Presidential candidate Ralph Nader has released a 10-point plan of economic reforms he believes will help “cool off the financial markets meltdown.” After providing background on the Nader’s history on the subject (he predicted as far back as 2000 that Fannie Mae and Freddie Mac would fall into financial ruin and seek a bailout), the formal press release outlines the program:

Immediate Changes Required for Any Bailout
– No bailouts without conditions and reciprocity in the form of stock warrants
– No more lobbying for any company that is bailed out
– No golden parachutes and get out of jail free cards for guilty executives
– No bailouts without public hearings

Changes to Housing Market
– Reduce the moral hazard in U.S. mortgage markets by introducing covered bonds for the majority of mortgage products as they do in Western Europe. That gives institutions that finance mortgages an incentive to be prudent, because they cannot just unload them and wipe their hands clean of the liability, but are instead on the hook if the homeowner defaults.
– Maintain neighborhood stability and housing security by passing a law with a sunset clause allowing below median-value homeowners facing foreclosure the right to rent-to-own their homes at fair market value rates.
– Avoid future housing bubbles by removing implicit government guarantees for new mortgages that exceed thresholds of greater than 15-20 times the annual fair market rent value of the home.

Structural Changes to Financial Markets
– Make the Federal Reserve a Cabinet Position, so it is accountable to Congress, as well as making sure all Federal Reserve Bank presidents are appointed by the President and answerable to congress.
– Reduce conflicts of interest by taking away power for auditor and rating agency selection from companies and placing it in the hands of the SEC to be administered on random assignment.
– Implement a securities speculation tax, starting with derivatives to deter casino-style capitalism.

38 thoughts on “Nader’s 10-point plan to resolve financial crisis

  1. songster7

    Ralph is actually on the right track here, given how far outside of “market forces” the banks, lending cos et alia (not to mention their “sugar daddy” at the Fed?) have been operating for … how long?

    It’s tempting to call this “socialism” or nationalizing the banks … and thus condemn it. However, given how far away from a “free market” the longstanding “corporate welfare” (where, unlike in the other version, there are no limits on profits, only bailouts of failure) schemes operate, it MAY be worth considering an actual intervention in this “addict” situation.

    Steve, not a huge fan of “capitalism” … yet a lifelong libertarian nevertheless.

  2. Tim Matthews

    At least he has a plan that takes regulatory action, which will reign in the, “Free market economy”, which got us here in the first place. That is what happens when we think, “voluntary measures” are sufficient.

  3. G.E.

    What free market? Are you being sarcastic, Tim?

    “No bailouts without conditions and reciprocity in the form of stock warrants”

    Errr… How about just no bailouts?

    “No more lobbying for any company that is bailed out”

    Stupid. If there are no more bailouts then there cannot be any lobbying by companies that are bailed out. Regardless, “lobbying” is free speech.

    Bah.. I could go through all ten points. They are stupid. How can someone live as long as Nader and still be such an idiot? Is he TRYING to lose my vote and the votes of Ron Paul supporters he was courting just last week?

  4. Fred Church Ortiz Post author

    Nader does seem to acknowledge that current policies are corporate welfare wrapped in free market rhetoric earlier in the release, but that helps me very little in light of his plan. Nader has been and forever shall be a Regulation man.

  5. powerob

    G.E.

    Nader’s plan will help solidify our economy. I don’t think you are taking into consideration the value of the dollar and the ensuing hyperinflation should these banking institutions be allowed fail all out.

    AIG is the insurer of bank loans. If they can’t pay to insure the foreclosure fallout of the banks, there will be no more loaning of money by banks who will be out of money to do so. Also, as you can see today in Asia, they are panicking and doing a mass sell-off on us because of their lack of trust in our financial institutions.

    While I’d like to rid them of being our benefactors as well as everyone else outside our borders as much as possible, telling them “go “f” yourself isn’t the way to do that. They will call in their loans, crap out the dollar’s value then the very next global move will be to trade all oil in the Euro instead of the dollar. Then you can guarantee that our country will be 1929 all over again and maybe even worse.

    It’s all good and easy to play the all or nothing advocate, but apply some thought of repercussions into that process and see what happens.

  6. G.E.

    No, really… I want an explanation how bank failures would cause “inflation.” This is like saying pouring water on an inferno causes fire.

  7. Trent Hill

    In other news—I will be attending Nader’s rally tonight at LSU. Id like to ask if if he’ll committ to going to a debate with Bob Barr, Chuck Baldwin, and Cynthia McKinney.

  8. Nexus

    I’m not an economist by any stretch, but it seems to me that letting FANNIE, FREDDIE, and AIG fail would make credit much harder to get and cause deflation, not inflation. Wouldn’t conjuring up $85 billion out of thin air to prop up AIG bring about higher inflation?

    And Tim, manipulating the money supply and credit as the FED does isn’t “free market”. It’s the opposite.

  9. Deran

    I’m torn on economic collapse. On one hand, I don’t like the misery it brings to working and poor people, on the other hand, the failure of the two corporate parties to deal with an economic depression will grow interest in socialism, and its derivatives.

    I think the Fed should be abolished in favor of a new central national bank, 3rd bank of the United States, as it were.

    Nader is very much in line with Nouriel Roubini’s analysis.

    And, let’s look at Nader this way; he is a long time known factor, he has never waffled or flipped flopped on anything. I don’t think, other than perhaps McKinney, there is anyone on the ballot for president with a longer history sticking to his guns and stalwartly opposing militarism and corporate welfare. He may faor social intervervention, but he is always fovoring expanding the role of citizens in making decisions.

    So, while he is not an anti-statist, Nader is absolutely committed to making whatever government there is, more open to citizen control and veto, and transparent so that citizens can know what is going on, and also thus making it difficult for corporations to control the government.

    My points being; Nader has a life time record of being who he says he is, and while he is not a libertarian (capitalist or socialist), he is all about horizontalizing/distributing power as much as possible. He’s much more abt distributiing power, than distributing wealth even, because Nader believes that if a society maximizes democracy, that society has more opportunities for individuals, and a generally more level playing field.

  10. G.E.

    I’m not an economist by any stretch, but it seems to me that letting FANNIE, FREDDIE, and AIG fail would make credit much harder to get and cause deflation, not inflation. Wouldn’t conjuring up $85 billion out of thin air to prop up AIG bring about higher inflation?

    You’re right, you’re not an economist. Because if you were, you’d be a moron like every other non-Austrian economist, and too blind to see the obvious facts you’ve pointed out above! 🙂

  11. rdupuy

    Nader’s plan highlights how he is not a Libertarian, and is contrary to everything Ron Paul believes claims to beleive in.

    But he went on that stage, with Ron Paul, calculating that it didn’t matter, that Ron Paul’s votes were simply disaffected voters that want to lodge their protest in some way.

    Some of them are, he wasn’t wrong.

  12. G.E.

    Deran – The poor and working class have been getting hosed all along. The difference is that the kleptocratic class is going to feel the pinch here.

    Your instincts on the Fed are right. Your support for a Nationalist bank is dead wrong.

    Why not allow people to form their own community banks, etc.? This seems more in line with the libertarian socialism you say you espouse.

  13. G.E.

    By the way, Deran, if you really are a libertarian socialist — a left-wing anarchist — then we are on the same side. A national bank is obviously a create of the state and not an anarchist institution.

  14. Deran

    I’m not opposed to creating community banks, credit unions, cooperative banks, etc. All good. I think if I took the time, I bet I could find Nader supporting community banks. It’s unfortunate that he did not highlight. These would also need to be regulated in the sense they would need to be secure in capitalization, auditability (transparency), etc.

    Off Topic:

    G.E., I really hate to do this, but I read a great book recently, that speaks to your hyposthesis that the New Deal was not unlike fascism, etc. “Three New Deals” by Wolfgang Schivelbusch. Schivelbusch makes some good arguments, and documentation, that in the early days especially, there was a lot of sympathy with Italian fascism/corporatism among certain US intellectuals involved in developing the early New Deal policies; especially the National Reconstruction Administration. The idea being that they prefered policies that propped up capitalism, as compared to outright socialist expropriation. It’s a fasccinating book. Again, I hate to butress your ahistorical use of the terms fascism and socialism, but this book has some things that made me have a deeper understanading of the origins of early New Deal policies. I still think FDR was our greatest president.

  15. Deran

    I mention Schivelbusch’s book in part because you, G.E., mentioend and recognized CounterPunch as being a worthwhile source of info and opinions, which I appreciated. Schivelbusch is more interested in the social history of the New Deal, rather than a strictly economics analysis.

  16. Tim Matthews

    The “Free Market”, I refer to is the unregulated function of the financial institutions that we are seeing fail. The attempt to exploit this system for monetary gain is the product of what the financial community refers to as, “Free Market”. This is my understanding of the term.

  17. Deran

    I’m a libertarian socialist, but not a maximalist (any longer). I’m willing to se policies that improve peoples lives in the short term, and educate toward building a libertarian socislist conscioubness in more people. I’m even willing to help bulod the Peace and freedom party antionally, as it is a mutlitendency party, that would allow me in, as well as social democrats, Trots, etc.

  18. Mike Gillis

    FDR is an interesting figure to me. One that I can both praise and condemn.

    As a social democrat, I love the New Deal programs and a strong social safety net… however…

    …he should have been tossed out of office for the internment camps.

    He’s probably my favorite president, but he should have been impeached and jailed.

  19. G.E.

    Tim – Absolutely absurd. You are aware of the existence of the Federal Reserve, right? Do you think that government central bank and its manipulation of interest rates and credit is part of the “free market”?

  20. Deran

    Yes, the prison camps. I agree, that was evil. I live in a part of Seattle that was called “nihonmachi” (“japantown”), before they were all rounded up and deported to Minadoka.

    But those were not the entirety of his presidency. And he was weak against segregationism/states rights so he could secure the Dixiecrat senators. But, still. Compared to the rest.

    As is often the case, I think Eleanor Roosevelt would have made a better president than Franklin. She was more committedly leftist. Alright, she didn’t support henry Wallace in ’48, but many people get caught up in the whole schtick abt having to support the Dems out of fear of the Repubs. Look what that got us; Truman. Among the worse presidents we’ve had.

  21. Mike Gillis

    Deran, I’m a fellow Washingtonian too.

    The Puyallup fairgrounds were once an internment camp too.

  22. Fred Church Ortiz Post author

    I think FDR’s non-support of Wallace in 44 had more to do with it than Eleanor’s in 48.

  23. Tim Matthews

    The preference for an unregulated financial state should not have happened. The ignorance of the actions within the financial regulatory institutions should have been monitored, and regulated, not manipulated. This is what happens in a culture prone to excess. The stipulations in Nader’s plan are appropriate

  24. Mike Gillis

    Wilson’s greatest hits include the Espionage and Sedition Acts that locked up people for free speech, the nation’s first federal segregation laws and authoring a history book that praised the Klan!

  25. Mike Gillis

    Oh yeah, and the bait and switch about keeping us out of World War I, and then jailing people for speaking out against it!

    Zing!

  26. Nexus

    “I think if I took the time, I bet I could find Nader supporting community banks.”

    Nader is a big fan of decentralization, so it wouldn’t surprise me to find him in favor of community banks. I don’t think he would be in favor of letting the market determine credit or interest rates.

    A community bank that didn’t use fractional reserve, gave loans dependent of the borrowers ability to repay, and allowed me to deposit gold and silver as legal currency would get my business over any ‘FDIC’ bank.

  27. Nexus

    “Oh yeah, and the bait and switch about keeping us out of World War I, and then jailing people for speaking out against it!”

    Over 116,000 Americans dead for no reason but Wilson wanting to be Caesar. If I believed in hell I’d say Wilson belongs there.

  28. G.E.

    One good thing about Wilson: He defeated the deranged neocon T.R. in 1912. If that monster would have been elected, what we’d have now would be much further along the road to 1984.

  29. G.E.

    Gillis, of course, skips over the greatest crimes of the Wilson administration: 1) The Fed, and 2) The income tax. Without these, there would have been no U.S. involvement in WWI, WWII, and no Cold War, no Vietnam, etc.

  30. powerob

    My apologize G.E. for taking so long to get back. When I was talking about inflation I left out that I would expect government to do its usual economic fix (should they let the business’ fail) of printing boatloads of money and dumping it into the system. Well… It didn’t take letting them fail apparently. Just saw a headline yesterday about the government and the Fed getting together to dump $50 billion into the system printed out of thin air.

    I was intending to imply (and didn’t do a good job) that if these financial behemoth’s are let fail, the government and the Fed would put that policy of dumping new fiat cash into the system into overdrive. It’s seems to be their answer to all monetary issues.

  31. Deran

    My three worse prezs are: Wilson, Bush 43, and Andrew Jackson. Not in that particular order.

    Mike Gillis: there’s a great book abt the internment of the Japanese-Americans/immigrants, that shows under the stadium seating converted into small cells!

    Yes, decentralization, that’s what iw as getting at abt Nader. he also favors creating, for instance, Citizen Utillity Boards to eversee privately and publically owned utillities. Nader’s all abt creating more democracy as a means of regulating the government and economy.

Leave a Reply

Your email address will not be published. Required fields are marked *