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Massachusetts Liberal

Observations on politics, the media and life in Massachusetts and beyond from the left side of the road.

Tuesday, September 23, 2008

The Pottery Barn Rule on Wall Street

You have to hand it to George W. Bush -- consistent and arrogant to the end.

The Man Who Wouldn't Leave continues to think he is relevant to the resolution of the financial crisis that his non-existent regulators helped turn into what is widely being referred to as the worst financial crisis since The Great Depression.

W. insists that Congress should buy his three-page solution -- turn all power and authority over to Treasury Secretary Henry Paulson -- and go back and tell the voters that all is well.

Meanwhile, the people who created the mess on Wall Street are already looking for ways to profit from the structure put into place to fix the disaster.

Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it. Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages. At the same time, investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees.

Talk about the fox guarding the hen house.

There are serious strings that need to come attached to any legislation that commits upwards of $700 billion of taxpayers money to fix the problems that came as a result of a lack of supervision.

Let's start with supervision -- regulations that tighten up an industry that thought it perfectly OK to lend money to people who had no financial base from which to repay that loan (sort of like the current situation, don't you think?)

The plan must provide relief to the folks who were sold these worthless pieces of paper who were thinking more about their profits than the likelihood of the would-be homeowner living happily ever after. We tightened bankruptcy rules to punish them -- let's loosen them.

And the Wall Street folks who earned upwards of seven and eight-figure salaries while fleecing the folks on Main Street need to be held responsible. At the very least, there needs to be caps on how much they can earn for engaging in Ponzi schemes.

Prosecution might not be a bad idea either, but that's for another day.

This nightmare stems directly from George Bush's "dream" of an "Ownership Society." It's time to start owning this mess. Let's impose Colin Powell's Pottery Barn Rule. You break it, you bought it -- and you clean it up.

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