News Release

Corporate Power: Is Regulation Enough?

EDWARD S. HERMAN
Herman is professor emeritus of finance at the Wharton School at the University of Pennsylvania. He said today: “Essentially, the Bush administration plan is Wall Street bailing itself out with taxpayers’ money, after Wall Street had failed to carry out its financial functions with efficiency and integrity, and with the bailout organized by one of its own (Paulson) who had resisted all reforms that might have prevented the crisis. This amounts to a hard-to-beat conflict-of-interest program. The victims of the financial crisis get nothing in this bailout, the taxpayers get no stake or payback in exchange for their $700 billion payout, and the difficulty in evaluating the purchased assets by a broken regulatory system makes it likely that the folks who are responsible for and have profited from this crisis may be able to squeeze a further windfall out of the buyout process.”

Herman’s books include Triumph of the Market and Corporate Control, Corporate Power.
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LEWIS PITTS
Pitts is a public interest lawyer in North Carolina and a member of the Program on Corporations, Law & Democracy. He said today: “It is striking that nearly $800 billion can be magically produced to bail out financial institutions when for years we’ve heard there isn’t enough money for universal health care, fully funded, quality public schools, to fully fund current promises of services to children such as foster care, special education or mental health treatment. The problem is far deeper than needing more regulation of corporations and the economy. The recent past tells us the bailouts will simply prop things up to allow a return to deregulated, profits-before-people policies that cause human misery for most people and huge wealth for a few. Look who the regulators will be: types like Ben Bernanke and Henry Paulson, who are true-believers in free market fundamentalism except when government bailout is needed to prop up key financial institutions. What this crisis moment should open up for debate is the need for real democratic decision-making and planning of the economy so the interests of the majority are served. This historic moment begs us to question the basic premise of capitalism that as John Maynard Keynes once said ‘is the extraordinary belief that the nastiest of men for the nastiest of motives will somehow work for the benefit of all.’

“One absurd premise of today’s capitalism is the notion of corporate personhood, the present legal concept that a corporation is a ‘person’ with constitutional rights that can be wielded against real human beings and defeat their democratically enacted laws designed to protect life and nature from corporate harm. Corporate regulation and government intervention in the market and economy are crucial. However, having Foxes, like Bernanke and Paulson, guarding the Henhouse will never provide the systemic, democratic changes needed. Now is the time we must re-think the notion of democracy, civil and economic, and whether we even have an approximation of government of the People, by the People, and for the People. These are the real homeland security issues.”

For more information, contact at the Institute for Public Accuracy:
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167