UE Convention Resolutions
Bail Out the People, Not the Banks
The total public funds spent by the U.S. Treasury and Federal Reserve to bail out the banks and other financial corporations that caused the financial crisis that blew up in 2008, is several trillion dollars, of which the $700 billion Trouble Asset Relief Program (TARP) approved by Congress in October 2008 is only one portion. The public was told that the bailout was needed to prevent a total financial meltdown and to save the jobs of millions of workers. But while bank profits and Wall Street stock prices are now recovering, working-class people continue to suffer from massive jobs losses, growing home foreclosures, and other consequences of the financial collapse. Workers' limited assets – our pensions, retirement savings accounts, and the value of our homes – have not been bailed out for their massive losses in this crash.
The origins of the latest crisis began early in this decade, after the stock market crash of 2000 that ended the technology bubble of the late '90s. Big investors latched onto housing and mortgages as their next get-richer-quick scheme. Politicians of both parties in recent years had removed the banking regulations wisely put in place during the 1930s to prevent a repeat of the 1929 crash. Influenced by the huge "bipartisan" campaign contributions of the financial industry, Democrats in Congress in 1999 went along with Republican efforts to repeal the Glass-Steagall Act of 1933, which had banned commercial banks from getting into the riskier activities of investment firms. President Clinton unwisely signed the repeal bill. Under the George W. Bush administration and the Federal Reserve chairmanship of Alan Greenspan, enforcement of any remaining rules became even more lenient.
With the rules gone, the banking and financial industries turned into a giant gambling casino in which the "chips" were the homes, mortgages and financial futures of millions of ordinary Americans. We know now that this industry was not only making home loans to people who couldn’t afford them. Bankers and mortgage brokers also deliberately tricked consumers whose credit and employment qualified them for fixed-rate mortgages, into instead taking "exploding" subprime loans. The City of Baltimore has sued major banks, saying their predatory lending was linked to racial discrimination.
New mortgages, the shaky and fraudulent along with the sound ones, were then sliced and diced and repackaged into mortgage-backed securities, sold and resold to speculators and investors around the globe. The many players in this game made unprecedented profits, and the frenzy to make even more whetted the bankers’ appetite to lend out still more mortgages. This cycle of greed and irresponsibility accelarated the pumping up of the bubble of home prices.
Financial bubbles always eventually burst – and in this case, when subprime adjustable mortgages adjusted upward, homeowners couldn’t make the higher payments, and delinquencies and foreclosures increased. This led to more vacant homes, which in turn drove down housing values. Soon many people found themselves "underwater," owing more than their home’s current value. (Today one in five homeowners is in this predicament.) Because the global financial operators had woven a complex web of debt, based on the U.S. mortgage bubble, through the world financial system, the bursting of the housing bubble in our country dragged down much of the global economy.
The government rescue of the banks didn't rescue the rest of us. The bailout was supposed to prevent the financial crisis from destroying jobs, but despite the $700 billion direct taxpayer bailout, banks are refusing to extend normal operating credit to many smaller employers – as UE members at Republic Windows and Quad City Die Casting learned. Foreclosures have continued to increase this year – up 15 percent over the disastrous figures for 2008 – now driven more by unemployment than by subprime loans. And although the Obama administration put $50 billion into a home loan modification program, banks are generally refusing to negotiate more reasonable mortgage terms with the homeowners whom they put in jeopardy, because they still find it more profitable to foreclose.
Close to seven million workers have lost their jobs over the last seven months. The underemployment rate, including workers who are too discouraged to look for a job, involuntarily part time, or marginally attached to their jobs, is 20 percent or higher in many regions of the country.
Perversely, banks have continued to tighten lending standards. The number of working families losing their homes to foreclosures continues to rise. Public services are suffering as well, as commercial lending dries up for this sector and tax revenues fall. Most states have budget shortfalls of several billion dollars. Along with many municipalities, they are demanding massive cuts in jobs, mental health, education, and other needed community services, which will only cause further unemployment and a deeper recession.
The right of everyone to a job or a guaranteed income was the cause to which Dr. Martin Luther King Jr. dedicated the last year of his life. He knew that concerted protest was needed – no one understood better than King that governments do not respond to those who suffer in silence.
The G-20 – the government financial officials of the Group of 20 largest economies in the world – is scheduled to hold a summit meeting on September 24-25 in Pittsburgh – the week following the UE Convention, and just a few blocks from UE's National Office. This meeting is to consider what to do about the biggest global economic crisis since the 1930s. The heads of governments, finance ministers and central bankers will address the concerns of bankers and corporate executives. But thousands of union members, other workers, environmentalists and social justice advocates will march in the streets of Pittsburgh, to demand that they hear the voices of the millions of people who have lost jobs and homes in this crisis, and who have been harmed by global economic policies that put profits above people.
THEREFORE, BE IT RESOLVED THAT THIS 71st UE CONVENTION:
- Calls on legislators to redirect bailout funding from banks and warmakers into meeting the needs of working people, including a massive jobs program;
- Demands criminal investigations, prosecutions and incarceration for the massive fraud and other crimes committed by bankers, mortgage brokers, speculators and other financial players while they were pumping up the housing bubble;
- Demands aggressive government action against the financial sector to ensure that our economy has the credit needed to preserve and restore employment, including permanent nationalization of banks that sabotage jobs and act as roadblocks to recovery. The capital of nationalized banks can then be redirected into positive and responsible development;
- Demands strong federal regulation of all private banks to prevent the kind of reckless speculation and predatory lending that caused the current crisis, and apply such regulations to all non-bank financial companies;
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Demands strict regulation of credit cards and other consumer credit, outlawing high interest rates and unreasonable fees, unilateral or hidden changes to contracts, requiring straightforward contracts that consumers can easily understand, and banning provisions in such agreements that deprive consumers of their right to sue lenders;
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Demands much stronger action from the federal government to stop foreclosures and reverse the fall of home values. People facing foreclosure must be allowed to stay in their homes, if necessary paying rent until conditions allow them to buy the homes. The government must force lenders to modify the terms of troubled mortgages, not only by setting more reasonable interest rates and payment terms, but by reducing the principle on "underwater" mortgages. No working person or family should be expected to pay off a $150,000 mortgage, for example, after the market value has fallen to $50,000 because of the destructive actions of the banking industry;
- Endorses the Sept. 25 Peoples' March on the G-20 organized by a Pittsburgh peace and justice coalition; the Sept. 23-25 Peoples' Voices educational events organized by UE, Jobs with Justice, Grassroots Global Justice and other groups; and the Sept. 20 March for Jobs sponsored by Bail Out the People Movement and many others, all taking place in Pittsburgh during the week of the G-20 protests, and urges locals to participate in these events;
- Supports mass actions for jobs and economic justice including the September 20 March for Jobs and supports the "Global Week of Solidarity with the Unemployed" from September 19 through September 26, and encourages locals to contribute towards and help organize a caravan of workers, employed and unemployed.