A Christmas list to fix the financial meltdown

Someone asked me what I would do to address the current economic crisis. Well here are some of the gifts I would like to see under our national Christmas tree, gift wrapping optional.

Nationalize the banks
1. Re-initiate normal lending
2. Evaluate toxic assets and solvency
3. Recapitalize and re-privatize

Nationalize the Fed (it is currently working for the benefit of banks and not the wider economy)
1. Eliminate conflicts of interest

Nationalize the ratings agencies
1. Eliminate conflicts of interest (they are currently paid by those they provide ratings for)

Homeowners and the housing market
1. Offer a re-issue option on mortgages (all types on first residences) based on pre-bubble values (approx. 40% discount on face value) at fixed rates long term.
2. Foreclosure moratorium
3. Allow conversion to renting
4. Future mortgages must follow truth in lending requirements, verify applicants creditworthiness and information, and disclose all fees and costs in advance
5. Establish a warrant system for mortgage writers with proof of insurance and/or reserves

Derivatives
1. Must be registered with the CFTC to be legally enforceable and must trade on a federally regulated US exchange
2. Reserve requirements and limitations on leveraging

Collateral Debt Obligations (CDOs)
1. Limit slicing and dicing
2. Define ownership of the underlying asset

Credit Default Swaps (CDSs)
1. Nullify naked swaps
2. Amortize risk on equity backed types
3. Phase out and convert to regular insurance

Futures
1. Increase margin requirements
2. Ban non-commercial traders
3. Monitor for excessive speculation: High volume trade notifications and total exposure reporting by traders

Market Regulation
1. Re-imposition of Glass-Steagall
2. Limits on size of banking and insurance institutions: Any institution which is too big to fail is too big. Also anti-monopolistic and hopefully pro-competition
3. Re-institution of the uptick rule to prevent predatory shorting of a company’s stock
4. Sliding scale of fees on trades that increase with volume to decrease volatility and tamp down on plays by hedge funds which often account for 50% or more of trades on any given day
5. Limitations on direct executive compensation, limit bonuses, limit stock options and draw out any payouts
6. Require independent boards of directors
7. Make both CEOs and board members criminally liable for criminal activities of the company
8. Redefine and limit the meaning of corporations as legal individuals
9. Transparency, transparency, transparency

Consumer Credit
1. Re-imposition of anti-usury laws
2. Easing of personal bankruptcy laws
3. Limitation on credit card offerings

Tax policy (essentially soak the rich and corporations because beyond a certain level their excess capital is used to fuel destructive bubbles)
1. Rescind Bush tax cuts for the wealthy and re-institute high marginal tax rates
2. Take income caps off FICA (Social Security)
3. Treat capital gains as regular income for tax purposes
4. After current downturn is over, increase corporate taxation
5. Redirect tax cuts to lower and middle class Americans
6. Reward companies with tax breaks if they increase workers’ wages and living conditions, and if they become greener
7. Rescind tax subsidies for outsourcing

Other
1. Single payer universal healthcare
2. Reconsideration of “free” trade agreements which allow for free flow of goods, jobs and capital but do not take into account environmental pollution, poor quality control, and lack of workers’ rights and safety in target countries
3. Large multi-year stimulus for infrastructure, state deficits, alternative energy, conservation, education grants, food stamps, unemployment benefits, and green technologies (of which an auto bailout would part)
4. Savings in defense spending: Withdraw from Iraq, scale back in Afghanistan, and cut unneeded, goldplated weapons programs

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