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FOR IMMEDIATE RELEASE
CONTACT: Institute for Public Accuracy (IPA)
Sam Husseini, (202) 347-0020;
or David Zupan, (541) 484-9167
Priorities of the Financial System
WASHINGTON - October 14 -
NJOKI NJOROGE NJEHU
Co-coordinator of Africa Jubilee South, based in Nairobi, Kenya, Njehu said today: "Governments are bailing out the banks -- profit-making institutions -- hundreds of billions were found instantly for them. Meanwhile, the debt crisis has continued to devastate life around the world. The G8 has promised to act but has done precious little. Many of the indebted countries in Africa, Asia and Latin America are unable to provide clean water, health services and education, but are being compelled to pay back debts to Western institutions. So the hypocrisy and double standards in the global economy are again in evidence. The G8 don't want to see banks fail, but it's acceptable to see children die from preventable diseases because of poor infrastructure. It's a matter of what generates political will.
"Also, when you had the financial crisis in Argentina, or when you had the Asian financial crisis, bailing out the banks was one of the things that was forbidden, so it's very much a case of 'do as I say, not as I do' from the G8."
Ambrose is manager of the Africa program for the Bank Information Center.
Isenberg is chair of the economics department at the University of Redlands and co-editor of Seeking Shelter on the Pacific Rim: Financial Globalization, Social Change, and the Housing Market.
She said today: "From the beginning of the New Deal until 1980, the U.S. financial system was both functionally and prudentially regulated. Since 1980, the de-regulated U.S. financial system has been allowed to function under the motto: the market knows best. As we're now seeing, this market is really a multitude of financial businesses, and these businesses have been operating for their own self-interest. The unregulated financial market may know best how to serve its own interest, but it has no idea how to operate to produce a fair and equitable result for all who are affected by its actions. As we have now seen, the individualistic actions of mortgage brokers and investment banks produced incredible gains for them and incalculable risk and losses for the rest of us. The financial system cannot be allowed to continue to operate on this premise of 'the market knows best.'
"The bailout by the federal government offers us a real possibility to kick-start a re-regulation that will produce a financial sector that operates with the goal of 'citizens know best.' We need to create a financial sector that operates to meet the funding needs for affordable housing, that promotes green growth and sustainable economic development, and finances the reconstruction of our cities' deteriorating infrastructure; not one that creates the next great high fee, high risk financial asset. When the market is ruled by self-interest, unbounded profits and untethered executives' pay become the goal. Starting with the bailout and now our bank re-capitalization, we have the ability to produce a financial sector whose goal is to finance the development of a healthy sustainable economy."