Fixing Wall Street Won't Fix Our Economy

By Sally Kohn, Movement Vision Lab. Posted September 19, 2008.

What's really at play here is persistent poverty and Wall Street
seeking to make a dime off the poor, while Washington looks the other
way.

Sure, the CEOs and hedge fund managers were greedy. There's no
question that wealth and the pursuit thereof led to the sub-prime
fiasco and the decline of Lehman Brothers, AIG, Merrill Lynch and
more. But what's really at play here is persistent poverty and Wall
Street seeking to make a dime off the poor, consequences be damned,
while Washington looks the other way.

The sub-prime crisis is the result of good people getting bad loans.
Loans that triple or quadruple in interest rates, riddled with small
print, are unbearable by most homeowners. But they are particularly
unsustainable for low-income families working two or three jobs to
make ends meet. Still, lenders scammed hardworking families with the
promise of owning homes they really couldn't afford. And then greedy
Wall Street managers, looking for a new way to squeeze a buck from an
already bursting-at-the-seams economy, bundled up these bad loans into
worse securities, sold them off, and tried to gain a profit as our
national economy lost its shirt.

We could have averted the current financial crisis by creating
affordable housing and good jobs, strengthening public education and
providing health care and child care for all families, to help
hardworking Americans thrive in the middle class instead of being
pushed into poverty. We could have averted this crisis if we really
cared about all families owning their own homes and created nationwide
programs including affordable loans. (Even subsidized loans in the
first place would have cost taxpayers less than what we're now
spending bailing out Wall Street.) We could have averted this crisis
if we put the needs of the majority of American families ahead of the
needs of a small minority of greedy investors.

Now, 8,000 American families a day face foreclosure. But instead of
prioritizing poor and even middle class families who are increasingly
struggling, our government is spending billions and billions to bail
out the Wall Street firms that created this crisis. Instead, we should
be spending our taxpayer money to help the families who were taken
advantage of in the "anything goes" unregulated financial system that
years of misguided never-really-did-trickle-down economic policy
created. These families need the government to help re-adjust their
mortgages and cover bridge payments to avoid foreclosure.

The fundamentals of our economy are not sound. Real wages for the
majority of American families have been declining while CEO salaries
are at an all-time high. Health care costs and college tuition are
crippling more and more families. The middle class is rapidly
disappearing, and more and more of us find ourselves struggling while
the gap between the rich and poor grows.

Instead of allowing Wall Street to profit off of poverty, we should
fix our economy once and for all, to work better for all of us. We
need universal health care, including a government-funded insurance
option, to help families get out from under mounting health care debt.
We need policies that reign in scam lending, from housing to the
credit card industry. We need a nationwide living wage and a massive
public jobs program, to address underemployment in our unstable
economy while helping build essential shared infrastructure like
public transportation and schools. We need new trade and immigration
policies that work for working people on both sides to the border. And
we need new corporate rules of the game that make big business
accountable to communities and workers, not just greedy investors.

Wall Street and conservative economists have insisted that, in our
laissez faire system, everyone is on their own. The poor were left on
their own, to fend for themselves against twisted economic structures
backed by the biggest institutions on Wall Street. Washington never
left Wall Street on its own, and as Wall Street's scam deflates,
Washington is coming to the rescue. But shoring up Wall Street won't
make our economy work. We need to ensure that a greedy few can't
exploit those who are struggling. Without poor people, this crisis
would have never happened. If we prioritize ending poverty, and
preventing more and more Americans from slipping into poverty, we can
be sure it won't happen again.

Sally Kohn is the director of the Movement Vision Project of the
Center for Community Change, which is interviewing hundreds of
activists across the country to determine the progressive vision for
the future of the United States.