This Week in ESG and Impact Investing

We wrote on September 22, 2008 that we were stunned to learn that banking and financial market regulators were considering using taxpayer funds to finance the creation of a separate entity to hold "toxic" financial instruments. We thought this would be a dangerous suggestion that will not solve the problem. We wrote on April 3rd : With the development of toxic (derivative and subprime lending) financial products, the relationship between investment banks and the economy has turned parasitic. We wrote: "To protect the public and the markets, these newer derivative contracts should be extinguished. To put the fire out, put the fire out." Apparently, we’re not the only ones who saw this coming, raised the alarm, and were ignored. In his Commentary in the New York Times on Sunday, September 28 Ben Stein notes similar concerns and the need to “annul” financial gambling run rampant by the financiers who peddle derivatives, including the impossible to value “credit-def...

Emergency Economic Stabilization Act of 2008 Purpose: To provide authority for the Federal Government to purchase and insure certain types of troubled assets for the purposes of providing stability to and preventing disruption in the economy and financial system and protecting taxpayers, and for other purposes. Title I－Troubled Assets Relief Program Sec.101 Purchases of troubled assets: Secretary (of the Treasury) shall publish program guidelines, including the following: (1) Mechanisms for purchasing troubled assets (2) Methods for pricing and valuing troubled assets (3) Procedures for selecting asset managers (4) Criteria for identifying troubled assets for purchase Sec.102 Insurance of troubled assets. Sec 103 Consideration (of social issues): (1) Protect the interest of taxpayers (2) Protect American jobs, savings, and retirement securities (3) Keep their homes and to stabilize communities (4) Providing financial assistance to financial institutions, including those serving low and...

President George W. Bush last week laid out a $700 billion Wall Street rescue plan ostensibly aiming at preserving the nation’s overall economy. Dubbed "Cash for Trash,” the plan has sparked a sharp debate. The House Financial Services Committee held a public hearing titled, “The Future of Financial Services: Exploring Solutions for the Market Crisis” on Wednesday, September 24th at Rayburn House Office Building. This was a legislative hearing to examine the Bush Administration’s financial services proposal. Secretary of the Treasury Henry Paulson and Federal Reserve Chairman Ben Bernanke explained the proposal at the hearing. The hearing started at noon and included two parts. At the beginning, members of the Committee were given an opportunity to note their concerns and to comment on the bailout plan. Most did not endorse the plan: they thought it would be a mistake to rush such a huge expenditure, one that would boost the national debt to over 70% of GDP. Committee members addr...