It was hard to pick a winner in The Chicago Sun-Times’ March 20, 2009 Acronym Test, “What Should AIG Really Stand For?” I’m casting my vote for the title of this blog posting.
The outrage over AIG bonuses is certainly warranted and the outrageousness of AIG’s corporate decision merits public scrutiny. But the media and Congress have become inconveniently (or perhaps too conveniently) distracted from the root causes of our economic crisis — “too much speculation with borrowed money; too little transparency and disclosure; and too many insider conflicts of interest.”
These three self-feeding abuses are identified by Robert Kuttner in his latest book, Obama’s Challenge, as what must be remedied if we are to rebuild a secure financial market. As Kuttner gave his keynote address at the National Community Reinvestment Coalition’s annual conference on March 13, 2009, those of us in the audience could not have imagined the AIG script that was unfolding in the week ahead.
But a week later, it’s time to refocus our anger. It’s not just about the bonuses. Nor is the solution taxing bonuses at bailed-out firms. It’s about regulating speculation gone wild and it’s about investing in and for communities. To use the title of another Kuttner book, it’s about stopping The Squandering of America.
My career in community development started 35 years ago with Gale Cincotta in St. Sylvester’s Hall. A keynote speech that spring afternoon in 1974 was given by journalist Brian Boyer, who had just authored, Cities Destroyed for Cash. Brian had documented how the federal government itself had become the predatory lender that fueled redlining and the withdrawal of private capital from America’s communities.
Those scandals and resulting fast-foreclosures sparked the national demand for full disclosure that led to Congress passing the Home Mortgage Disclosure Act and the Community Reinvestment Act (CRA), under the leadership of Senate Banking Committee Chairman William Proxmire and his committee’s chief investigator, Bob Kuttner.
Our collective outrage today over an Economy Destroyed by Greed must generate a similar Congressional response not just grandstanding on the Hill. As Kuttner now notes, “[r]e-regulating capitalism on a global scale is a systemic challenge on a par with solving global warming. And the two challenges are directly connected.’
That’s an inconvenient truth we must still confront, if we truly want the economic recovery we so inconveniently need.