Middle Class Joe takes on Wall Street
Are you a member of the middle class? Some define the middle class as having an income between $20,000 and $100,000 annually, working a skilled job or having a middle management position. But Vice President Joe Biden has a more anecdotal definition of the “middle class.”
“The middle class is to be able to live in a decent home on a quiet street that is safe, in a neighborhood where you can let your kids walk out in the yard, be able to go to a school which will qualify them to go to college and be able to get to college without bankrupting them or you.”
He continues, “in the process you can take care of your mom, who just lost your dad, and make sure your kids, if you’re both working and they’re young, to have decent day care. And to retire, or have the hope of retiring, without fundamentally having to change your standard of living and not having to rely on your children to maintain your standard of living. The middle class measures their success if their children will have equal or better success than they did.”
But, Biden contends, the financial industry began to run Wall Street as a private casino, placing bets that the taxpayer now has to cover.
“Everyone would agree something needs to change on Wall Street. I doubt anybody thinks the status quo is acceptable. When one stretch of skyscrapers on one street in downtown Manhattan can effectively bring down the entire economy, around the world and put hard working Americans out of work, it is time to update the rules for the 21st century.”
Biden and Treasury Secretary Timothy Geithner spoke to students and the public at the University of Wisconsin-Milwaukee Tuesday about the Middle Class Task Force, Wall Street reform and how it will impact America’s middle class. They emphasized that practices by large banks and brokerage houses have to be regulated so there won’t be a repeat of the economic implosion of 2008.
Biden and Geithner want to put the American financial system “back on the level” with the public. They said the only way to rebuild the people’s trust in Wall Street is to regulate it so what has happened won’t happen again.
Biden and Geithner were introduced by Congresswoman Gwen Moore (D-Milwaukee) who put the issue into terms that were easy to understand. “Wall Street gambled with your money, your 401(k), the college accounts for your kids. And we all know what happened as a result. ” Moore said.
After decrying the myth of death panels in the Health Care bill, Moore added, “we do have death panels in this Wall Street bill. We are going to kill these huge failing banks. We’re going to kill them with death panels and require that the industry, not taxpayers, bail out and resolve these too-big-to-fail institutions and pay for their dissolution, as opposed to the taxpayers doing that.”
Biden has two reasons this should matter to the middle class, developed while looking at the problem as people in his hometown of Scranton, PA would. First, that recklessness and greed caused a crisis that affected everyone, hitting the middle class hardest since they lost available credit, jobs and retirement savings. Secondly, reform is needed, because in Biden’s opinion when the financial market functions correctly it will allocate capital to the most productive uses. Jobs are created “and that’s what creates the middle class,” he concluded.
“When it doesn’t function correctly, it has an immediate and long-term effect on the engine running our economy. So jobs are not created to raise a family on.”
Instead, Wall Street would have new regulations imposed on it that would protect consumers from predatory lenders and ballooning interest rates. Financial derivative investments would be heavily regulated but available for industries that depend on speculative investment, such as farming and energy. Banks would be required to have a higher ratio of capitalization for lending and the government would require that big banks be broken up in the case of failure and the costs to dissolve would be covered by a new fee placed on large banks.
Biden and Geithner pledged that the nation should never have to face the option of bailing out a bank with taxpayer money or watch the economy implode.
“President Obama and I know that the government can’t rebuild the economy; instead, private industry has to do that and financial reform will make that possible,” by loosening credit for small businesses and entrepeneurs, Biden said.
Both mentioned how the Senate has begun to debate whether to debate and how GOP senators have blocked debate for a variety of reasons. They encouraged the audience to contact their senators and ask them to act on financial reform.
“Financial reform is about protecting the financial security of all Americans,” Geithner said. “The old and the young, those working and those who have already worked a lifetime.”
Biden said he learned from the health care battle that financial reform will have to be debated.
“Someone once said that health care was a big … deal,” Biden joked, referring to an open mic problem he had at the bill’s signing. He described health care as extremely complicated and difficult to explain, which led to the demagoguery of positions.
He said that President Obama wasn’t deterred on health care and he won’t be deterred on financial reform, based on their weekly lunch conversations.
“He said, ‘Joe, if we concede there is nothing major we can do, then why did we run in the first place?’”