Democratic Report

Duty Roster

Group Leader: Cherinoh Nyelenkeh

Cover Page: Gloria Roberts

Introduction: Jestina Spaine

Challenge of Bailout Plan

Section 1: Schntae Graham and Briana Robinson
Section 2: Ashley Taylor
Section 3: Taqiyya Thomas
Section 4: Andrew Cephas

Our Proposal
Section 1: Ezinnie Ebi
Section 2: Gloria Roberts
Section 3: TyA’na Wheeler

Conclusion: Smartha Neptune

List of duties: Jon Boda

Compilation: Jon Boda
Proposal one-Challenge Bailout plan Introduction

The source of our problem is greed. The issue started around 10 years ago when
lenders started giving out sub prime loans to people they know couldn’t afford them. The
buyers were all to happy to receive a loan they disregarded the adjustable rate. Well the
time has come and there is foreclosure upon foreclose upon foreclosure. However, the
banks don’t seem to mind, that is because for the longest time they have been backed by
big banks like Fannie Mae and Freddie Mac. These smaller banks simply act as middle
men and when things get bad they move out of the way leaving these bigger banks and
homeowners with all sorts of problems. These massive losses forced many banks to
tighten up their lending requirements but, for most of them it was already to late. These
banks simply crashed leaving less credit in the economy. Which means even wise
homebuyers cant purchase homes, new businesses can’t get off ground floor and current
businesses can’t receive a helping hand. Loss of jobs, failure of businesses, less money to
spend within the economy, all around bad situation.
Regardless of who is/isn’t to blame our committee presents a fair sound solution.
We challenge the current bail out plan on the grounds that it gives money to the source,
raises taxes, put pressure on the middle class in favor of upper class, and it allows the Big
banks to lead the bailout. Our solution however favors the middle class it would rehire
risk consultants, without raising taxes, and provide restricted and regulated Individual
cash bailout plans for select auto companies.

We have rejected the bailout due to the following reasons:

• Gives money to the source.
• Raises taxes
• Pressures middle class in favor of upper class
• Big banks lead the bailout

Failure of Bailout Plan

The problem in this situation is regulation; regulations should be put on
the banks. The bailout plan entails giving banks money as much as 7 billion dollars and it
does not state any details of how the banks should spend the money. The details are not
included any where in the bailout plan but politicians continue voting for the plan, our
concern is how something can be issue without precise details. The government plans to
give a large amount of money to banks who don’t know how to manage money in the
first place. The banks were the people who dug themselves in the hole that they are in
now. In pervious incidents bank got money and owners spent the money on their selves.
Another big problem in this situation is greed the banks were so greedy the bank were
greedy that they did not look at the bad securities that they were taking. Also if the
government never fired the risk consultant they would not be in the state they are in
know. The consultant told them that they should slow down.
Thus, an alternative to this problem; of giving money directly to the source,
would be to give the money to the rehired risk consultants. Since they're job was to
acknowledge the banks of wrong doing to prevent disaster (moreover got fired for it),
they should have the power to regulate capital the bank uses. In view of the fact that they
scrutinize the peril of banks status, they will be able to determine whether the banks and
businesses are doing well and if there is a logical need for the money. Subsequently, they
will settle on whether to approve or deny the needs after having fully thought through the
judgment, alternatives, and possible effects of the organizations money request.
Realistically, if they were to have listened to begin with, then we would never be in this
situation we are facing today; hence economic recession. Therefore, in simplest terms,
banks are to be on chastisement till proven they can be trusted once again. This will
strengthen the bailout plan by regulating cash flow closely and using our tax dollars
usefully in hopes of reviving from this financial crises and gaining back Americans trust
with these financial institutions.

Rising Taxation
The American society has been overwhelmed by this major financial crisis that
has fallen upon them. This economic recession has not only effected the major banks, but
has caused an issue with many middle class Americans, who are the backbone of the
country. The major source of this crisis was the increase in the housing market. Clinton
unaware of the drastic increase of homes, to provide all Americans with their own home
seemed to be an excellent idea at the time, but as times changed and president Clinton
moved out of the white house. The housing industry was on the rise and the loans for
Americans to own homes were getting riskier and riskier. Though the banks knew that
these loans were risky they found many sneaky ways to make deals and lower the interest
rate to chump change at first. After the contract ended the interest rose to its rightful price
and the country was left with foreclosures and banks that were bankrupt. This caused a
drastic lose of jobs leaving the country in a rut. The Governments bailout plan is to spend
$700 billion dollars putting money back into these banks that were responsible for this
crisis. The money they plan to get this from is by the raising of taxes that are coming
from the many middle class Americans. Why should the American people have to pay for
irresponsibility of the banks? The government feels that the bailout plan can help cure the
financial crisis were in by stimulating the society with money that was once loss, but that
problem of this is that what if the banks don’t use this money responsibly and use it like it
supposed to be used. How can they be trusted to get America out of this crisis? The
answer is no they can’t be trusted and America must find ways to get themselves out of
this crisis. In recent years the government gave $150,000 dollars to the AIG, which is a
well known prominent bank in America instead of using this money for this company
they used. The major business leaders used the money for a vacation and other luxuries,
so we can not possibly support giving any more money to these banks. The democratic
party has proposed to lower taxes for the American people. We feel as though with the
raising of taxes for the bailout plan that many Americans who are on the boarder line of
foreclosure need to keep taxes low in order for them to pay for their homes because the
effects of bailout plan will cause more foreclosures and more stress on the American
society. This bail out will only help the corrupted banks and not the middle class
American people who should truly control and end the financial crisis that we are in.
Over the course of 5 to 7 years with the taxes at a freeze people will be able to pay their
homes and money can stimulate through the society. This also makes it effective in
making the public go and buy goods at the store. With the buying of goods this can
effectively bring money back into the economy without relying on free market and more
of regulation of the banks and Americas money as whole.

Middle Class Issues

The bailout plan supports the rich and denies others an average chance. How can
the government suggest a rise in taxes for middle income families but not the rich? The
rich people got to their position by stepping on those less fortunate so why would they
expect help now. The middle class has enough problems with making ends meet without
being ripped off by the government just to help keep the rich people on top. No, in fact
those CEOs and Vice Chairmen have many responsibilities. So those rich citizens should
be ones to pay this debt, especially since a few are the cause. Now people may fear that
there will be repercussions for allowing the rich people to be faced with this challenge
but there are policies and laws and regulations to demand fairness for all workers, and if
that means a loss of profit for the company or the CEO doesn’t get a bonus every month,
so be it. The public is what matters and the needs of the few, no matter whom, should
never outweigh the many.

Why Banks Shouldn’t Lead Bailout

Many Americans look to banks as being one of the, if not the main reason why we
are in the economic crisis. Bank owners became very greedy and started skipping some
important steps in the loaning process. These overlooked steps were probably some of the
most important parts. For example banks that were giving out loans to Americans didn’t
check the consumers credit to make sure that they would get their money back and if
banks repeat this process to many Americans who don’t have the money to pay back
what they loaned than the result is an economic crisis such as the one we are in now and
millions of foreclosed homes. With no-one regulating or overseeing these bank activities
it was possible for banks all over the nation to do these same mistakes out of pure greed,
multiplying the amount of problems there was across the nation. It is going to take a lot
of hard work to get our economy back to how it once was and America must make very
thought out and smart decisions about who should do what for the economy.
We can’t leave it up to the banks to lead the bailout because if there one of the
main ones that got us into this mess, why should they be rewarded with receiving money
or being able to handle large sums of money. The banks cant be trusted right now on a
non-regulation type of economy and it is no need for the bank to handle any unnecessary
money until our economy is back to how it was a few years ago. For all the public knows
the bank owners might make another greedy move just to raise their level of nobility with
no care for the middle or lower class of America. Even if the banks were given the power
to lead the bailout, it is too much power for one organization to have because once they
have this type of power they can become somewhat of a monopoly and even further
hinder our economy. It is for the best of America to let the government regulate and lead
the bailout for the economic crisis.
Our Proposal
• Rehire risk consultant
• Maintain taxes
• Restrict and regulate

Regulate Banks
Because of our current condition we Americans are skeptic to reinvest into these same
banks that have caused us monetary grief among our nation. Many are hesitant to invest
and feel that they owe no debt to people that who partake in schemes and unethical
practices, have now inevitably turned into a failed finial system. The bank is like a child
whom gets into debt. If you continuously and without thinking bail him/her out and pay
off their debts, and inequities they may take the money for granted, and think that its
inevitable that the banks will clean up their mess So, in the future, they just gets into a
bigger debt because they are aware of the nations reliance on them. They are aware that if
a bank goes bankrupt it would seriously “undermine the whole financial sector”. So we as
well as well as the Federal Reserve are facing a dilemma. If we do nothing, we risk a
financial meltdown in the banking sector. However, if we intervene, with regulation, and
save the bank, we are in a way saving a bank from its own bad decisions, and
consequences.
Our solution is to bail out the banks and prevent any problems or crisis that we may
possibly be faced with in the future. But before we bail them out they must agree to have
government employed finical consultants. These regulators have the right to regulate the
banking sector in order to ensure bad loans are not repeated. These assigned regulators
must have prominent qualifications and experience in the banks and financial field.
• At least 10 years working on the finical field
• Do they have experience with cash management & budgeting, tax planning,
investment review & planning, estate planning, advice regarding insurance needs,
retirement planning, and recommendations for investments or investment
products?
• What licenses or qualifications do you hold?
• Do you hold professional certifications or designations?
• How long have you held each of these?
• What states are you licensed in?
• What types of investments are you licensed to offer?
• Do you belong to any financial organizations or societies? Which ones?
Though many are still unsure about supplying the banks with get out of free jail cards we
must think of it as not bailing out the banks, but bailing out America. Reinvesting in the
banks and assigning regulators, the banks will no longer make risky loans or decisions
that could possibly lead us into an economical downturn.

Maintain Current Taxes

If following the current bailout plan, “raising taxes” will not only hurt the people
but further our economic and financially crises. In 1993, the Clinton tax increase actually
hurt the economy, slowed it down. Roughly 116 million taxpayers would see an average
tax increase of $1,833; 84 million women would pay an average tax increase of $2,121;
approximately 48 million married couples would incur average tax increases of more than
$3,000; taxes would increase by an average of $2,323 for 43 million families with
children; about 12 million single women with children would pay an extra $1,091; 18
million elderly individuals would pay an average of $2,181 more; and tax bills for 27
million small-business owners would rise an average of more than $4,000
The American people do not need higher taxes. Already many Americans are
working exceedingly hard just to make ends meet. By raising taxes on the American
people, some who have bought homes that they could barely afford to purchase will not
be able to make the mortgage payments therefore forcing the risk of foreclosure. If taxes
rise American mothers and fathers will not have the money they need to raise their
children correctly and send them off to that outstanding college to further their career. If
taxes rise businesses will not be able to inflate and buy additional equipment; therefore
they will not be able to hire more workers to run that equipment and handle the
expansion. By raising taxes there will be fewer people paying into the system and more
people trying to get money from the system. If you raise taxes you will set the American
economy into a descending spiral which can not be recovered.
As JFK understood, lowering taxes is the best stimulus package Congress can
pass. And raising them is an economic killer. The United States will slowly slide
backwards until we are passed by nations like China and India as the greatest economies
in the history of mankind.

Restrictions and Regulation

Free Market is not the answer to our problem, regulation is the answer. The
number of large and overly extravagant houses the are being built that people can not
afford because of quickly rising house prices is hits an exponential rate. Yet builders
continue to build these houses that many people can not afford. We propose to regulate
the size and amount of house built. A family of 2 should be able to find a nice house that
was not build in the 80's that is not 6 bedrooms and 5 bathrooms priced at 900,000
dollars. A family of 2 does not need this but because few house are being built small
they have to settle for a large house that they have been almost tricked into buying
thinking they can afford it when they really can't. We should only build the necessity of
houses so that we don't have so many houses just sitting there waiting on someone to
purchase them hurting the sellers of the homes.
We also have to set regulations for the Auto industry. The auto industry is looking for
assistants from the government after they have hurt themselves from seriously risky
business practices. Such a GM, they are asking for about 14 billion to keep there
production plants running. They claim they need at least 11 billion to pay monthly bills.
The best way for us to put why they need regulation is not proper budgeting. Dennis
Virag, president of Automotive Consulting Group in Ann Arbor, Michigan, said “You
need to have a hoard of cash built up from the good times to get you through the bad
times.” It is obvious that GM did not do this and is now asking for government funding.
This could have been avoided through restrictions on the automotive industry.

Conclusion