Mitt Romney, when he ran against Barack Obama for President of the United States in 2012, specifically stated, more than once, that had the major banks faced bankruptcy when he became President he would have allowed them to go into partial bankruptcy.
He would have had them to go into Chapter 7, wherein the courts would have declared their common stock worthless. That way the stock holders would have taken the loss but the banks would have continued to function. The banks, where they were retrievable, would have been able to release a new issue of stock which could have been sold to raise necessary funds. That way the banks could have continued to function and would not need funding or loans by the Federal Government.
Would it have worked? That’s an interesting question. We’ll never know the answer because it wasn’t tried. Had it been tried and failed then the entire financial system of the United States would have collapsed. Apparently President Barack Obama and Fed Chairman, Ben Bernanke, were not willing to take the chance that it might not work. Their method of reform was far safer.
In addition a number of banks like Countryside were allowed to go under. Their remaining assets were taken over by continuing financial institutions like the Bank of America.
Romney’s method of reform has been invariably tried out. In many instances it has worked, one relatively recent case was with General Motors which took loans from the Federal Government and also utilized Chapter 7. Their common stock was declared by the Court as having no value. They eventually sold a new issue of common stock and the company continued to function.
But there have been many cases wherein the public refused to buy the new issue of stock and that particular company has gone under. No one can totally predict the future. There is no way of absolutely knowing what will happen. A bad guess would have thrown the country into a long period of economic disaster. President Barack Obama and Fed Chairman, Ben Bernanke did not take the chance.
The results of Obama and Bernanke’s decision further slanted the distribution of the National Income in the direction of the well-to-do. If we consider what the next President, Donald J. Trump, has done with taxes we are seeing the bulk of the money go to the upper one percent of the population. They are in the process of having their taxes reduced while the remaining middle and lower classes will have their taxes gradually raised.
Interestingly the American public is currently in an historical situation not unlike France was in 1789 just before the French Revolution. Since there is a midterm election coming up the first Tuesday in November of 2018, ten months from now, we will be able to miss all the excitement the French had and vote out those individuals who would cause us unhappiness by extending the unfair situation. In fact we can begin the process of reversing the situation. This was historically done by Theodore Roosevelt after he became President at the beginning of the 20th Century. He had the Progressive Movement functioning on a Federal level.
Currently as we’ve seen from the few special elections, both statewide and nationally, the elections, even in strong Republican Districts like the state of Alabama, have gone to Democratic candidates.
In the 2016 Presidential Election the Republicans achieved a majority in the House of Representatives. They got 239 seats. The Democrats were able to get 193 seats. There were 3 vacancies. In the Senate the Republicans were able to get 52 of the 100 seats. The Democrats got 46 and the Independents got 2. They always voted with the Democrats. That gave the Republicans a majority of 2 seats in the Senate. They lost one of those seats when Jeff Sessions became Attorney General. A Democrat was elected in his place giving the Republicans a majority of one seat in the Senate.
Using that majority and voting strictly on a party basis the Republicans were able to pass their tax relief bill for the rich strictly on a party basis. Every Republican voted for the bill and every Democrat voted against it. The Republican President happily signed the tax lowering bill for the rich which, no doubt, saved him millions of dollars in a tax bill which was funded by deficit spending.
After the Midterm Election of November 2018 the probability is that the Senate will pass to a Democratic majority and the House of Representatives may also do so. A number of Republican House members are retiring. Particularly those in Districts that voted for Hillary Clinton in the 2016 Presidential Election. Will enough Democrats win to make up a majority in the House? There’s a good chance. But we’ll have to wait and see.
Prior to the 2018 Midterm Election the probability is that the Republicans will attempt to pay for the tax relief for the rich by gutting Medicare and attempting to privatize Social Security.
There is a lot of needed legislation. For example a needed functioning immigration policy is long past due. A realistic Dacca program is desperately needed for those who were brought to this country as small children. While they know no other country and are not citizens of the United States they are currently being used by the Republicans as a form of blackmail. There are also needs to upgrade the infrastructure, help states and regions like Puerto Rico recover from massive storms. This is to just name a few of the present needs. It does not count military operations or other needs. The United States is at war in the Middle East but Congress has taken no responsibility for this military action. The probability is that the current Congress will ignore these and other needs and spend its last year in office trying to fund its tax relief for the rich. It would seem that the Republicans are more interested in serving their own needs than those of the country to which they have taken an oath to serve.
If we take a close look at the images that emerge from Congress we come to a very disheartening conclusion. Our current Republican dominated Congress is paying back its major contributors for money they have given in recent political campaigns. The wealthy members of Congress are also reducing their own taxes. The large contributors are being encouraged to share their future reductions in taxes with their favorite political party. The whole thing smells like a room full of rotten fish. One can ask: What happened to honor and integrity, and an oath to the Constitution of the United States? Are we truly back to exploiting the poor for the benefit of the rich?
There is an interesting note of irony to all of this. Many of the well-to-do may be sadistic and enjoy seeing homeless in every major city living under bridges out in the weather, essentially doing without many of their needs. But by limiting the potential for increased productivity they, the rich, are also limiting their own potential for becoming richer.
The wealthy tend to store their excess funds leaving them dormant while with a reasonable or fairer distribution of funds to all classes of society the money tends to be spent over and over again producing a far greater Gross Domestic Product than would otherwise be made. With a more general distribution of the funds there is a far greater GDP and everyone does better, including the rich.
The country seems to be entering a new period of greed. The laws now passed by the Republicans in Congress and signed by the President are moving the country in the direction of Government of, by, and for the Rich. This can continue through 2018 but the next Congress will be better balanced. The Republican control will again be limited. In order for laws to be passed the government will have to have the cooperation of both political parties. We will either have cooperation or total inactivity between the two parties, with no laws being passed. If it’s the later Congress will not even be able to fund the Federal Government.
It would seem that even with a Republican President and a Republican majority in both Houses of Congress there are still problems getting bills through Congress. For example it would seem that some ultra conservative Congress members in both Houses of Congress are against funding the Federal Government. In order to get a bill passed the Republicans need Democratic help. But if the Democrats cooperate with the Republicans they want something in return. These trades take serious negotiating. They are not easy to do nor are necessarily always successful. There may be problems just funding the current government, even with a Republican majority.