Who's to blame for Lehman Brothers bankruptcy?

The general consensus was "jail not bail" for Lehman Brothers CEO Richard Fuld, Jr., at a hearing by the House Committee on Oversight and Government Reform on the causes and effects of the Lehman Brothers bankruptcy. This view was held by the Committee, panel, and Code Pink protestors (who were eventually thrown out of the hearing). Congressman Jim Cooper (D-Tenn.) said, "Is this Wallstreet or a casino? Lehman did not find itself in this situation by accident. It as the unlucky draw of a consciously made gamble." Dr. Luigi Zingales of the University of Chicago pointed out that by bailing out these investment banks, we are giving them incentive to gamble at the cost of taxpayers down the line.

Nell Minow of the Corporate Library said that Fuld, "intentionally surrounded himself with people who are complicit. These were people who were getting side payments from the company. They had no incentive to provide any kind of independent oversight." Minow said that by doing so, Fuld created a false idea of the value of his company. These false ideas created high leverage rates, leaving little security in times of economic trouble, and eventually the downfall of Lehman Brothers. Minow proposed a general rule be mandated to pay executives based on the value of business rather than the volume of business. Peter Wallison of the American Enterprise Institute agreed that the only protection taxpayers have at this point is more government regulation.

Additionally, Congressman Dennis Kucinich (D-Ohio) said, "there is an apparent conflict of interest permitting Treasury Secretary Paulson, former CEO of Goldman Sachs, to be involved in these discussions on the survival of Lehman Brothers." The panel agreed it was clear that Goldman Sachs benefits from Lehman Brothers going under, due to the competitive market they're in. As long as Goldman Sachs' interest is in Paulson's pocket, Kucinich says, his role in the bailout goes "against the free market."

Gas rose $0.40 under Clinton, $2.60 under Bush

House Majority Leader Steny Hoyer (D- MD) focused on the rising price of gas in his weekly sit-down with reporters. He showed a series of charts that indicated the rise in the price of gas over the last 16 years. Under the Clinton administration, Hoyer said, the price of gasoline went from $1.06 to $1.46 in the course of Clinton's eight years. A separate chart demonstrated that under the Bush administration gas has gone from $1.46 to $4.06, which is the current national average. This is the House Democrat response to the campaign against the "Pelosi Premium" pointing out the price rise under Bush instead of under Democratic majority in Congress. All of Hoyer's data came from the Energy Information Administration at the Department of Energy.

Hoyer admitted that across Congress all the energy plans being offered are mostly designed at long term relief. He said that Democrats have done their part to reduce prices by passing anti-gouging legislation and working toward regulation of speculators, but that there are very few things that Congress can do to reduce prices in the short term. In response to the Republican measures that call for more drilling and more refining capacity, Hoyer pointed out statistics that suggested that drilling in ANWR would only lead to a 1.8 cent drop in gas prices by 2030.

Hoyer also mentioned Rep. Dennis Kucinich (D-OH) introducing articles of impeachment against President George Bush, taking up a total of four and a half hours of floor time. Hoyer said that he expect this to be referred to committing with out a second read-through, effectively tabling the bill.

Legislation would help save neighborhoods

The negative effect on neighborhoods caused by vacant homes, foreclosed due to subprime mortgages, was discussed at a joint hearing of the House Domestic Policy Subcommittee and the House Housing and Community Opportunity Subcommittee. Support was expressed for HR 5818, a bipartisan bill that gives $15 billion to communities that have been devastated by increased housing vacancy; a bill President Bush has said he will veto.

In his opening statement, Rep. Dennis Kucinich (D-Ohio) stated some of the effects vacant homes can have on a community including decreased property values, increases in crimes, a rise in the cost of law enforcement, and a loss of revenue from taxes. Kucinich expressed his desire to help the innocent victims of the subprime mortgage crisis, the neighbors of abandoned homes. Rep. Maxine Waters (D-Calif.), the sponsor of HR 5818, said that the bill plans to allocate money to areas with a large concentration of vacant homes.

Frank Alexander from the Emory University School of Law expressed his support for HR 5818 because, unlike a stimulus bill, HR 5818 supports neighborhoods instead of working against predatory loans. Todd Richardson from the U.S. Department of Housing and Urban Development encouraged the use of data from the United States Postal Service to determine areas which areas of a large amount of abandoned homes.. Kucinich urged that both committees further analyze the correlation between home vacancies and minority groups to determine if discriminatory lending practices have taken place after analyzing maps of metropolitan areas.

Foreclosure crisis is leaving neighborhoods in ruins

The Domestic Policy Subcommittee of the House Oversight and Government Reform Committee held a hearing on “Neighborhoods: The Blameless Victims of the Subprime Mortgage Crisis” to discuss the more widespread repercussions of foreclosures and vacant properties within concentrated areas, as opposed to effects on individual families and the economy.

Chairman Dennis Kucinich (D-Ohio) said that “when foreclosure leads to vacant and abandoned properties, surrounding neighborhoods and local municipalities suffer significant consequences.” Kucinich said these include falling neighborhood-wide property values, equity loss, decreased rental availability, lowered business rates for merchants, increased crime from arson and vandalism, increased building and demolition costs, increased legal expenses and reliance on governmental service programs, and loss of tax revenue. Kucinich called the neighborhoods “totally blameless” victims of the crisis who “had nothing to do with the transactions that resulted in the subprime mortgage meltdown.” He mentioned new pending legislation, the Neighborhood Stabilization Act of 2008, which would authorize $15 billion in grants and loans for local governments to spend on property acquisition, building rehabilitation and demolition. Kucinich said the bill faces a veto threat by President Bush, which he said he “just cannot understand.”

Rep. Diane Watson (D-Calif.) said that California foreclosures have surged by 327% from 2007 to 2008, which amounted to 517 foreclosures every day for three months. Witness Nancy Floreen of the Maryland Council said that Montgomery County experienced a 1,250% rise in foreclosures during the same year, from 68 in the first quarter of 2007 to 916 in the first quarter of 2008. Floreen expressed support for the Neighborhood Stabilization Act, saying that the market alone cannot fix the crisis. She also said the crisis has disproportionately impacted minority communities and that the market has “preyed upon” people who cannot afford subprime lending.

Witness Daniel Kildee, Genesse County Treasurer from Flint, Michigan, said in his written statement that vacant land is a “Tyhpoid Mary to a neighborhood struggling to sustain itself.” When asked by Kucinich about the lessons to learn from his county about non-interventionist government, Kildee said the government should not be allowed to treat high-value property differently from property whose value is “upside-down.”