TREASURY SECRETARY FORUM--Ms. Foundation President Sara Gould Advises Geithner to Bail Out Responsibly

Posted November 24, 2008 by Linda Basch

Linda Basch: What three recommendations do you have for Timothy Geithner, our next Treasury Secretary?

Sara Gould: First, we must strongly urge that the next Secretary ensure that the $700 billion bailout and other actions designed to address the economic crisis prioritize getting relief to communities that need it most. It’s not enough to rely on support for large banks to trickle down to middle and low-income people who are disproportionately affected by the plummeting economy—particularly when the banks’ share of the bailout came with few regulations and the conditions it did come with are being defied (see Naomi Klein’s article in The Nation).  Instead, the next Treasury Secretary should require that financial institutions use the bailout money for lending to consumers—instead of to boost the value of its shares. In addition to accountability and comprehensive regulations that apply to bailed-out banks and beyond, s/he should insist upon transparency and reveal exactly where the money is going and how it is being used. It is especially critical that the bailout money be used to help people who are facing or already in foreclosure—the majority of whom are likely women and people of color, as they were most likely to receive sub-prime loans in the first place. One promising option is to support FDIC chairperson Sheila Bair’s proposal to use $25 billion of the bailout to provide mortgage relief to homeowners. Her proposal would offer incentives to loan servicers to restructure mortgages, making payments more affordable. Second, an economic stimulus should be passed quickly. It should include immediate relief such as the extension of unemployment benefits as well as programs like job creation and training that will ensure economic stability for low- and middle-income people over the long-term. Any economic stimulus package should be sure to address the urgent needs of those who have been most impacted by the crisis, especially low-income women, women of color and their families. Recent statistics show that women are losing jobs at twice the rate of men. Third, we must return to a system of progressive taxation in which people with high incomes and net worth provide a larger share of tax revenues. New revenue should go towards domestic stimulus programs such as job training and infrastructure rebuilding as well as for key social and economic supports that have been eroded over the last two decades.

LB: During the economic meltdown, women and people of color were largely absent from the decision-making table, both on the corporate and federal crisis intervention teams. How do we ensure that there is true diversity in developing a new direction for moving forward?

SG: This is an uphill climb, and we must prioritize and step up all of the work to advance women and people of color into top-tier decision-making positions in all sectors.  More women and people of color now serve in the second and third tiers of leadership; what will move them forward?  We must use the election of the first person of color to the presidency of the United States to illustrate again the importance of breaking through barriers and striving to make our decision-makers, in both public and private settings, reflect the nation’s diversity. We should also support initiatives like the “Diversity in Democracy Project” that focus on identifying a diverse range of candidates for high-level positions. As well, we should continue to build the power and leadership of low-income women, women of color and others who are disproportionately impacted by economic insecurity and create a better leadership and communication pipeline from the grassroots to state and federal levels to ensure that their voices are consistently heard at policymaking tables.

LB: What kinds of regulations or checks need to be in place to prevent another economic meltdown or crisis, and how might we ensure that effective reforms and safety measures are followed?

SG: First, it’s unconscionable that the money given out so far as part of the $700 billion bailout package isn’t being closely regulated, particularly after a severe lack of regulation played a huge hand in creating the economic crisis we’re now in. That money, and the rest that follows, should be subject to regulations and accountability standards that ensure it goes towards lending to consumers to boost the economic security of those who need it most—not for mergers, dividends, or bonuses and salaries of corporate execs. In general, all kinds of financial institutions, including banks, investment houses and hedge funds, must be subject to comprehensive regulations; they should all be playing by the same set of rules aimed at protecting borrowers and investors from the excesses of speculation and greed. Without a doubt, we should bring executive pay under control. Finally, we must develop a far better safety net to protect women, families and communities from economic crises large and small. Such a safety net must include benefits that are easy to access and do not carry stigma, include automatic triggers that come into play during times of economic downturn, and be inclusive of immigrants. Without this, women and their families will sink deeper into poverty and be far less likely to recover from overwhelming threats to their economic security, like those they face today.

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Third, we must return to a system of progressive taxation in which people with high incomes and net worth provide a larger share of tax revenues. New revenue should go towards domestic stimulus programs such as job training and infrastructure rebuilding as well as for key social and economic supports that have been eroded over the last two decades. ******* We currently live in an era of progressive taxation where the top 5% of wager earners pay more than 1/2 of all the income taxes, and they only have 1/3 of the income. That's already skewed. How about telling people to study hard in the free education system provided to them, and get a job?