For Immediate Release
Friends of the Earth Opposes Bush’s Trillion-Dollar Blank-Check Bailout
Government response to financial crisis must include fundamental structural reforms;
WASHINGTON - Friends of the Earth announced its
opposition to the Bush administration's proposed trillion-dollar bailout
of the financial system today, and called on elected officials to ensure that
any government action related to the financial crisis fixes deep structural
flaws in the financial system that have spawned not only the current financial
crisis but are also jeopardizing our planet's future.
Friends of the Earth President Brent Blackwelder had the
"This financial crisis has exposed
the right-wing's anti-regulation philosophy as an abject failure.
This hands-off approach to managing the economy has resulted in greedy
corporate titans getting rich on the backs of working people. This same
philosophy is causing irreparable harm to the planet. And now we face a
trillion-dollar taxpayer-funded bailout. Enough is enough.
"Friends of the
Earth opposes the Bush administration's proposed blank-check bailout for
these wealthy financiers. What is needed is truly fundamental reform, not
this no-strings-attached proposal.
The government must impose oversight and re-regulation on the financial
system. The days of the fox guarding the henhouse, with corporate
lobbyists writing the laws that regulate their industries, must end. And we must consider
environmental impacts to be economic impacts as we move forward. While
the risks posed to the economy by the current financial crisis are indeed dire,
we also face long-term risks posed by the climate crisis. These problems
are intertwined, and reforms of the financial system must take this into
"Reform must be conducted in a
just way that helps people on Main
Street more than it helps corporate fat cats on
Wall Street. Taxpayer funds taken from the treasury to prop up Wall
Street must be replaced so they can be used to fund other
"It's ironic that when many
countries run into financial trouble, the International Monetary Fund imposes
serious economic restructuring, but President Bush and Secretary
Paulson now see no need for restructuring at all. They're
wrong, and their proposal should be rejected."
This unprecedented bailout not only imposes a hefty
monetary cost on taxpayers and future generations, but it represents enormous
opportunity costs. In response, Friends of the Earth is calling on
Congress to consider the following specific reforms, which adhere to the
principles stated above:
package should be just.
institutions should bear the brunt of the losses from this crisis; taxpayer monies
should be used to only cover the bare minimum to keep our banking system
government should acquire an ownership stake in the institutions that are
Bailing out Wall Street banks
without making proportionate efforts to keep American families in their homes
is unfair. Friends of the Earth supports organizations such as the Center
for Responsible Lending, National Community Reinvestment Coalition and the
National Council on Civil Rights, who are advocating Chapter 13 judicial
modification relief to keep homeowners from losing their homes.
addition, failing to hold executives accountable for the disastrous
consequences of their actions is unconscionable; those who were responsible
should be persecuted to the full extent of the law. In the future, fines
and penalties for financial and corporate malfeasance must be increased, and
executive compensation must be reigned in at all companies that are being
Any bailout package must be tied to a restoration of regulation and supervision
of the financial services industry.
Decades of deregulation have
allowed this industry to "innovate" new financial products,
structures, and vehicles at an astonishing rate without monitoring and
supervision. Friends of the Earth supports the call from Center for
Economic and Policy Research to require tradable instruments, such as credit
default swaps, to be standardized and traded on exchanges, which would subject
them to regulation and transparency.
Now is the time to ensure proper
oversight over the financial services sector, and tighten up rules on
accounting and offshore tax havens which allow clever financial engineering to
hide real risks and liabilities. It is time to bring hedge funds under
supervision; and no hedge funds (which have refused to even register with the
SEC) should be bailed out.
Congress must also reinstate the
Glass-Stegall Act, which paved the way for massive overleveraging among
financial institutions, increased the risk of conflicts of interest, and put
consumers real savings at risk.
Any bailout package
should include measures to cool down
speculative hot money flows and asset bubbles.
The Fed should take on a new role
of proactively preventing asset bubbles, and take measures to cool down overheating
parts of the financial markets.
As Friends of the Earth has
proposed since 1995, a Tobin-style tax (for example, 0.25 percent tax on stock
trading, and 0.02 percent tax on options, futures, swaps, and currency trading)
should be introduced to curb excessive speculation and promote longer-term
investing that serves the real economy. Tobin-style tax revenue could be
used to help pay for the bailout and address critical social and environmental
Government-owned financial institutions have
the ability and responsibility to foster an environmentally sound future.
AIG, as it becomes a federally
controlled entity, should cease underwriting fossil fuel energy projects
and focus on facilitating a clean energy transformation. The same principle
should apply to other new federal entities that are created via this bail
out. The National Environmental Policy Act should apply to such
In the future, Fannie and Freddie
Mac should institute a policy to require an increasing percentage of the
mortgages they purchase to be "green" (location efficient, energy
efficient, and/or sustainably designed). It should phase out purchasing
mortgages for development in flood plains and coastal hazard zones.
Friends of the Earth (www.foe.org) is the U.S. voice of the world's largest grassroots environmental network, with member groups in 70 countries. Since 1969, Friends of the Earth has been at the forefront of high-profile efforts to create a more healthy, just world.