All eyes on Wall Street – reframing the crisis

Written by Becky Tarbotton

Topics: Coal, Finance

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UPDATE:

Activists Scale Flagpole Behind Iconic Wall Street Bull, Raise 150-Square Foot American Flag with ‘Foreclosed?’ Stamped Over It

UPDATE 2: link to Flickr set

UPDATE 3: High-res photo.

In the past few weeks, our economic system has sustained some of the most dramatic shifts of the past 50 years. Comparisons have been made to the Asian economic crisis of the nineties, the dot-com bust of the early 21st century, and even the Great Depression. Our economic and financial system is in tatters, and all of us are wondering what will come of our savings, our homes, and our future.

The news has been focused on whether and what kind of a bailout package will be handed to the very financial institutions that got us into this mess. Understandably so: $700 billion is a large sum of money, and a significant contribution from taxpayers wallets, especially when compared to other possible uses of such a cash injection—Medicare, infrastructure or renewable energy, to name just a few.

However, with the unprecedented nationalization of Freddie and Fannie, Lehman Brothers filing the largest bankruptcy filing in U.S. history, and Goldman Sachs and Morgan Stanley voluntarily becoming bank holdings companies, the actions taken by the Federal Reserve are themselves an admission that the institutions that makeup the U.S. financial system are broken.

It is critical that we look beyond the bailout to the underlying cracks this crisis has exposed in our financial system. We cannot allow the bailout (whatever its conditions) to further subsidize the decades of risky financial behavior that is now mortgaging our homes and our planet.

We have an unprecedented opportunity to rebuild our economy and establish a financial system that operates within ecological limits. It’s time for Americans to demand structural solutions that put families before financiers and the planet before profits.

For the past eight years, RAN’s Global Finance Campaign has urged America’s leading financial institutions to take responsibility for the impacts of their investments and to recognize the financial and reputational risks inherent in directing vast sums of capital towards environmentally unsustainable and socially unjust projects—from rainforest destruction and oil extraction to the construction of coal-fired power plants.

Banks need to be held accountable for the impacts of their investments, whether they are subprime mortgages or new coal plants. In both cases, the impact of the financing deal is ‘externalized’ – that is, the effect on people and the environment is not considered when the loan or transaction is being approved. In the case of subprime mortgages, home foreclosures were not considered a ‘downside’ until they started happening at a rate that impacted the viability of the financial system itself. The same reasoning holds true in the financing of fossil fuel projects. The impacts of constructing coal-fired power plants on the climate and on communities have not been deemed key factors in determining whether or not to finance such projects.

There has never been a better time to hold banks accountable for the impacts of their investments and demand that they develop the necessary due diligence processes to ensure that we do not mortgage the Earth’s natural capital in the same way that we have mortgaged the futures of millions of Americans whose homes have been foreclosed on.

It is crucial to take this opportunity to shift the debate from one that dwells on the immediate need to staunch the bleeding from the subprime meltdown to one that is based on a vision for a socially just and ecologically sustainable financial system.

All eyes are on Wall Street—Now is the time.

16 Comments For This Post I'd Love to Hear Yours!

  1. F*CK WALL STREET says:

    I HEAR EVERY WORD YOU SAY, IS TIME FOR EVERY SINGLE PERSON IN THIS COUNTRY TO STEP UP.

    PS: GREAT THING WITH THE FLAG WITH THE FORCLOSED? ON THE MIDDLE. I WAS THERE WHEN IT HAPPEND

  2. Bert Joas says:

    You guys Rock. I saw what was going on and i was very much impressed. This effort by the financial bull was very organized and well executed. Rock on guys. Keep in touch.

  3. daniel says:

    nice work! can wait to see more pictures.

  4. bonny william says:

    I’ll be doing my best to keep going in the right direction for the ecosphere. What you did took a lot of balls, so congrats!

    I agree with you in what has happened in financial markets, and the externalization as you put it, of many of today’s problems as a root.

    Buckminster Fullers _manual for spaceship earth_ written a while back has some interesting points about economics, particularly the US economy. One being, that spending is obsolete (seriously read it for yourself), and the other that there is nothing that we cannot afford to do. What good is a bullion when your swimming for your life?

    Please email me with any further ideas. I’d never heard of your .org before but will keep a close eye out. We can discuss anything on the net, so why not have elaboration/discussion/plans for action\ on line ?

    cheers,
    billy

  5. famadeo says:

    I believe blame lies in Washington…see below and the date of the article.

    Fannie Mae Eases Credit To Aid Mortgage Lending

    By STEVEN A. HOLMES
    Published: September 30, 1999
    In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
    The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
    Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
    In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates — anywhere from three to four percentage points higher than conventional loans.
    ”Fannie Mae has expanded home ownership for millions of families in the 1990′s by reducing down payment requirements,” said Franklin D. Raines, Fannie Mae’s chairman and chief executive officer. ”Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.”
    Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
    In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980′s.
    ”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”
    Under Fannie Mae’s pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 — a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.
    Fannie Mae, the nation’s biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
    Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.
    Home ownership has, in fact, exploded among minorities during the economic boom of the 1990′s. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University’s Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.
    In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
    Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.
    In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.
    The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.

  6. famadeo says:

    Now understanding that Fannie/Freddie subsidize their buys with foreign money what you have here is the potential for the good ole US of A to be “mrtgaged” out to a country like China who holds the vast majority of the debt we are refusing to bail out. I do not like the fact that we are in this situation, but the alternative may be to start learning Mandarin.

  7. Peter S. says:

    Wow. Awesome work!

  8. Craig Fiels says:

    thanks for bringing attention to the Wall Street “bailout” also known as the biggest taxpayer ripoff!!! keep up the great work!

  9. Graham says:

    That’s some fine pole climbing skills there Chief.

    But we need to staunch the bleeding and then have the conversation. Seriously. We can have it like 10 seconds after, but you don’t do hip replacement surgery on a guy who’s throat is cut.

  10. I SAY NO ON THE BAILOUT, LET THEM DECLARE BANKRUPTSY LIKE WE HAVE TO. LETS SEE YOU WANT THE AMERICANS THAT WERE FORECLOSED ON OK, TO USE THE FEDERAL RESERVE MONEY TO BAILOUT THE COMPANIES THAT MISMANAGED THEIR MONEY, WHILE THE RICH IGNORE THEIR SOCIAL SECURITY TAXES LIKE THEY’VE BEEN DOING SINCE THE 30′S. SOUNDS LIKE TO ME YOUR FOR THE RICH ONLY. I SAY NO. NO BAILOUT

  11. CREDIT= WHAT A LAUGH. THE LAST COMPANY I WORKED FOR HAD US WEAR BADGES AND UP UNTIL 2000 WE HAD OUR SOCIAL SECURITY ON OUR BADGES THAT HAD TO BE WORN CHEST HIGH. LETS SAY SOMEONE WANTED TO MAKE SURE YOUR CREDIT WAS ALWAYS BAD, ALL THEY NEED TO DO WAS CALL A FEW COMPANIES AND GIVE OUT SOCIAL SECURITY NUMBERS AND THE CREDIT COMPANIES COUNT THAT AGAINST YOU, WHETHER YOU KNOW ABOUT IT OR NOT THIS IS HOW YOUR CREDIT SCORE IS MADE. I SAY THATS A FARCE. NOW IF THIS IS DELETED SO PEOPLE CAN BUILD THEIR CREDIT, I’D SAY THAT IS A STEP IS IN THE RIGHT DIRECTION.

  12. YOU WANT TO REFRAME AMERICANS, THEN BAILOUT THE AMERICANS THAT WERE FORECLOSED ON, NOT THE COMPANIES THAT MISMANAGED THEIR MONEY

  13. Chris says:

    I want to see some of them jump like in ’29. then we can bail them out.

  14. Absolutely LOVED what you guys did yesterday down on Greedball Street!! Sorry you had to be handcuffed and arrested, but it’s so GOOD to see people getting involved again. (I’m from the 60s generation, and you know what WE all did, from civil rights to that unspeakable war in Vietnam.) So, I applaud you and thank you for an enormous smile when I saw your sign! AAHAHAHAAHAAA!!! KEEP IT GOING (and if I can help in any way, feel free to call on me…I LOVE rebels!)

    Paula DeMarta Mastroianni

  15. anmole bhandari says:

    Guys this was an amazing try, I am not sure if you on news channel. If it would be news channel that would be great. I am not happy to hear that those guys got arrested. How would you keep up with so many people.

Trackbacks For This Post

  1. Rainforest Action Network Activists Foreclose on Wall Street with 150 Square Foot Banner « It’s Getting Hot In Here
  2. Grabbin' the Bull by the Flagpole

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