May 14, 2013
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This story originally appeared at Truthdig.
Elizabeth
Warren does great email. One payoff of my pittance of a contribution to
her grass-roots funded campaign—I regret not contributing more—is that I
am regularly alerted by the new Massachusetts senator to the favoritism
of our Congress toward Wall Street.
That’s how I was reminded
this week that Congress is about to let the interest rate charged for
new student loans double to 6.8 percent at a time when the
too-big-to-fail banks that caused the Great Recession continue to be
bailed out at the rate of 0.75 percent. Yes, the banks pay less than 1
percent for money that we the taxpayers lend them. I know that such
statistics are thought to be boring, but as Warren explained, the rate
that students will have to pay “is nine times higher than the rate at
which the government loans money to the big banks.”
The student
loan interest rate that had been temporarily cut in half back in 2007
was once again set to double, but instead of pushing for the status quo
as Congress did last year, Warren has upped the ante with legislation
that would cut the student loan rate way down to the near zero that the
big banks enjoy. As Warren put it in her characteristically no bull
style:
“The federal government is profiting off loans to our young
people while giving a far better deal to the same Wall Street banks
that crashed our economy and destroyed millions of jobs. That’s why I’ve
introduced the Bank on Students Loan Fairness Act as my first bill in
the Senate: To allow students to borrow money at the same rate as the
biggest banks.
” … Why should the big banks get a nearly-free ride
while people trying to get an education pay nine times more?” Warren
asked. “It isn’t right.”
The justification of near zero rates of
interest for the banks is that they will make loans available that will
stoke the economy, but quite the opposite has happened. The banks have
been slow to make housing and business loans while feathering their own
nests with outsized executive bonuses and costly acquisitions of other
financial institutions. In contrast, student loans amounting to more
than $1 trillion exceed the total outstanding credit card debt in the
U.S. and represent a major contributor to consumer purchasing power.
Students
actually spend their loan money on surviving as consumers in a tight
economy, while learning skills needed for the economy of the future. On
the other hand, the already too-big-to-fail banks have used the
government’s free money to become even more obscenely powerful.
Then,
too, the federal government’s enormous subsidy to the banks extends far
beyond the provision of low-interest money. The so-called quantitative
easing program, now reaching into the trillions of dollars of government
subsidy, continues at the astounding rate of $85 billion in Federal
Reserve expenditures every month to take toxic assets off the books of
the banks and to otherwise float the very financial institutions that,
as Warren never tires of pointing out, caused the great meltdown of our
economy.
How astonishing to have a public servant who actually
cares to inform the public about the inner workings of the system of
crony capitalism that has wedded big government with big business. This
comes at the expense of the free market that corporate lobbyists delight
in invoking as an ideal while they subvert it as a reality.
Those
seeking to join Warren in taking a stand on behalf of students
attempting to survive in an economy that the bankers have come close to
destroying should get behind her bill. Unless Congress acts, student
loan rates will automatically double in less than two months.
They
should also heed Warren’s call to aid the campaign of Ed Markey to fill
the other Senate seat from Massachusetts made available by the
resignation of John Kerry to become secretary of state. As a long
serving member of the House, Markey distinguished himself by being a
leader in the battle against the radical deregulation of Wall Street.
Markey, as early as 1992 when he was chairman of the House subcommittee
on telecommunications and finance, sounded the alarm on the danger of
the unregulated derivatives in housing mortgages and other
collateralized debt obligations that ended up causing the Great
Recession.
It would be great if Massachusetts, the home of the
real tea party revolt, could now elect a second senator with a
powerfully informed record of serving the consumer interest. As Warren
put it, “Ed will fight for accountability on Wall Street—to end ‘Too Big
to Fail’ and ‘Too Big to Jail’ once and for all.” She could use
Markey’s help, and so could we.
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