By Margaret Flowers and Jill Stein

The year 2016 is off to a rocky start for the stock market, not just in the United States but also globally. Many economists are predicting a financial crash this year or next. Stocks are overvalued without a foundation to hold them up, production is down and debt is high. Central banks, such as the Federal Reserve, have run out of solutions, and investors have run out of confidence in them. The grand illusion of economic recovery is about to be exposed.

Financial fraud is at the heart of the coming crisis. In 2008 when a sector rife with fraud crashed, instead of having to face responsibility the too-big-to-fail banks were bailed out with public dollars. The public, meanwhile, bore the cost not just in dollars but also in lost jobs, lower wages and home foreclosures.

We don’t have to stand by and watch the next crisis, which will hurt millions, unfold. There are steps that should be taken right now by the president to stop financial fraud and stabilize the economy. A new group of financial fraud experts, Bank Whistleblowers United, created a 19-point plan that could be implemented within 60 days, with minimal action by Congress. President Obama could start putting the plan in place now, but so far he has not even prosecuted bank executives responsible for the 2008 crash.

To create a finance system that works for everyone, the next president needs to commit to taking on Wall Street, restoring the rule of law and rooting out corruption. We invite all presidential candidates to join us in endorsing the 19-point plan. And there are additional, essential steps we must take to end Wall Street’s grip on our communities.

In the past 15 years, the U.S. has weathered devastating aftereffects of two financial bubbles: the “dot-com” bubble in the late 1990s, which burst in early 2000, and the housing bubble, which burst in 2008. Many pundits contend that the 2008 financial crisis is over and that we are in recovery, but the reality is that the “recovery” has really been only for those at the top who were bailed out by the Treasury Department and Federal Reserve. Foreclosures and high levels of non-participation in the economy continue, as do underemployment, temporary jobs and wage stagnation.

Half the people in this country have no savings and two-thirds cannot handle an unexpected expense of more than $500, including not being able to borrow what they need from family or friends. The low-wage “recovery” has devastated the middle class, with 51 percent of workers now earning under $30,000 a year. Economist Jack Rasmus describes the current situation:

“The real US economy since 2008 has grown at only roughly half to two-thirds its normal rate. Decent-paying jobs in manufacturing and construction today are still a million short of 2007 levels. Median wages for non-managers are still below what they were in 2007, and households are piling on new debt again to pay for rising medical costs, rents, autos, and education. Retail sales are slowing.”

In fact, major retail chains in the U.S. are planning to close hundreds of stores this year, and many that stay open are carrying low inventories of goods.

Part of the reason for the “recovery” was a massive buyback of bonds and toxic derivatives that were based on risky mortgages that brought on the crash. This was done in the form of “quantitative easing,” through which the Federal Reserve bought up tens of billions of bonds and bad bank debt each month for a total of $3.5 trillion. A 2011 audit of the Federal Reserve found that $16 trillion had been allocated to banks and corporations for “financial assistance” after the 2008 collapse. As a result, the Fed is currently leveraged 77 to 1 — more than double what Lehman Brothers was when it failed in 2008.According to Rasmus, this massive infusion of liquidity has created a new set of corporate and government bond bubbles. Additionally, the “leveraged loans and debt markets are now helping to fuel a record boom in mergers and acquisitions.” And “retail investors are over-exposed as they desperately search for … higher returns on increasingly risky investments” in exchange-traded funds (ETFs).”

Instability is compounded by other problems. Stocks are overvalued and are starting to “correct” — or represent their actual worth — and manufacturing is falling because there is an excess of goods. Commodities are also falling, especially oil.

All of this is causing global financial instability so that the economy is bouncing along the bottom. At some point there will be a trigger and the global economy will crash, perhaps worse than what we have experienced before. This time around, the central banks around the world that are trying to prop up economies are running out of tricks.

How did we get into this mess? If you’ve seen “The Big Short,” you have a sense of the extent of the breadth and depth of the fraud and corruption that lie at the heart of Big Finance.

Bill Black, an associate professor of economics and law at the University of Missouri, Kansas City, and a financial fraud expert, says that “fraud is “pervasive” among “most elite financial institutions.”

The reality is that there are no ethics on Wall Street. Everyone is playing against each other and using whatever tools there are — even some they do not fully understand — to make money without regard to the impact they will have on others. It is an “As long as I get mine, then screw the rest” mentality. This mentality has been enabled over the past decade or so by the lack of meaningful oversight. Basically, this behavior occurs because those involved are getting away with it and raking in millions, if not billions, of dollars as their reward. If fraud creates wealth, people will engage in it until they are stopped.

During the savings and loan debacle in the late 1980s, Black oversaw the re-regulation of the industry. He reports that the savings and loan crisis was 1/160th the size of the 2008 financial crisis, yet it led to 30,000 criminal probes, which in turn led to 1,000 felony convictions. In the 2008 crisis, no top-level bank executive has been held accountable for the widespread fraud.

According to Black, “The three epidemics that drove the [2008] crisis are appraisal fraud, ‘liar’s’ loans (collectively, these were the loan origination frauds), and the resale of those fraudulently originated mortgages through fraudulent ‘reps and warranties’ to the secondary market and the public.” In liar’s loans, the bank agrees not to verify important information, such as income of the borrower.

Contrast this with the response to the 2008 financial crisis in Iceland. There they prosecuted the heads of the banks, sending 29 to jail, and let the big banks fail and nationalized them without taking on their outstanding debt. Iceland also maintained its social safety net, unlike the United States, by rejecting austerity measures. The result is that today Iceland’s economy is stable.

If the U.S. had followed a similar path out of its crisis, we would probably be in a better situation than we are today. It’s not too late to take action.

Bill Black recently co-founded Bank Whistleblowers United (BWU) with three other whistleblowers. Their biographies are impressive. Gary Aguirre, a lawyer, is a Securities and Exchange Commission whistleblower. Richard Bowen, a Citigroup whistleblower, has 35 years of banking experience. And Michael Winston blew the whistle on Countrywide Financial’s liar’s loans.

The founders of BWU created a 19-step plan that a president could implement within a minimum of 60 days, without much action by Congress, to rein in the corruption on Wall Street and immediately shrink the big banks. They are currently reaching out to President Obama and all of the presidential candidates, looking for someone who has the courage and integrity to implement the plan. At its foundation, the plan uses existing law to go after top executives, the “lions,” rather than chasing the “mice,” largely those at the bottom who were following instructions from the higher-ups or were victims of fraud themselves. It also strives to end industry influence over regulatory agencies and to end the revolving door between industry and government. It sets limits on the risk that financial institutions can carry, which would cause them to downsize. And it rewards whistleblowers (not monetarily) for their honesty in calling attention to corruption in the system in hopes of inspiring others to come forth. The full plan and an explanation of it can be viewed on their website, New Economic Perspectives.

In addition to holding the lions of Wall Street accountable, BWU founders hope that acting on their plan now would mitigate damage from the coming economic crash. Financial executives would be much less likely to engage in risky and fraudulent behavior if they knew they would be held personally responsible. And banks would scale back if they were forced to respect minimum capital requirements.

The alternative — not taking action now — evokes a frightening scenario. As Ellen Brown writes in “A Crisis Worse Than ISIS? Bank Bail-Ins Begin,” in the next crisis, too-big-to-fail banks will not be bailed out again by the public. Instead, under the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in 2010, the big banks were required to develop a plan for what they will do if they become insolvent. Their solution, as we witnessed in Cyprus, is to use a “bail-in” — essentially, converting deposits into bank stock.

Brown explains that “the goal of the bail-in scheme is to place losses on private creditors. Alternatives that allow them to escape could soon be blocked.” This is already happening outside the U.S. in the form of negative interest rates and steps being taken to move to a cashless society. Negative interest rates mean that instead of paying interest on deposits, the bank charges interest to hold the funds. If that is combined at the depositor level with a ban on cash transactions in favor of digital, most of us would be forced to keep our money in banks where it could be subject to negative interest rates and fees and could become altogether worthless in a crash.

So far, negative interest rates are being imposed by central banks in Japan and the European Union on commercial banks, but there is no guarantee that negative interest rates won’t trickle down in some way, overtly or through fees, to depositors. Most banks are reluctant to do this out of concern that people will switch banks. One financial institution in Switzerland has started to use negative interest with large depositors.

There are signs that negative interest rates could spread to the United States. On Thursday, Janet Yellen, head of the Federal Reserve, told the Senate Banking Committee that her agency is studying negative interest rates again in case they become necessary. And recently there have been murmurs of large financial institutions urging a move to a cashless society.

As late-stage capitalism rears its ugly and predatory head, we have a narrowing opportunity to tame, and hopefully defeat, the beast. Money is an institution that can be used for public good or as a weapon to drive widening wealth inequality. It’s up to us as a society to decide.

We can bail out the people through bottom-up approaches such as a basic universal income, which would immediately eliminate poverty. We can invest in local solidarity economies. We can create public banks at the municipal, county and state level to fund infrastructure projects and local needs, and postal banks to provide services to the unbanked, who make up nearly 30 percent of the population. We can even rein in Wall Street and end the culture of corruption.These solutions and others are already being put into place. The city of Utrecht in the Netherlands is experimenting with a basic income. Latin American countries such as Brazil and cities in the U.S. including New York are building solidarity economies that promote worker-owned cooperatives and other forms of community wealth-building entities. Public banks are common in other countries, and movements for public and postal banks in the U.S. are gaining ground. North Dakota has had a public bank for nearly 100 years.

It’s up to us to be aware that these solutions exist and take action collectively to demand that they be enacted. This begins by asking the basic question: Will we continue to allow the financial elites to control the global financial system and extract wealth from us and our communities, or will we take control collectively and democratically to create economic institutions that serve everyone?

If you believe, as we do, that Wall Street’s looting and plundering should end and money should serve the public interest, then we urge you to raise awareness of the BWU’s 19-step plan. And we urge you to find out what you can do in your community to take back control of money from Wall Street. In addition to the sources cited above, we recommend the Democracy Collaborative as another resource for information on how to do that.

A different world is possible.

Margaret Flowers, M.D., is a Maryland pediatrician seeking the Green Party nomination for a U.S. Senate seat. She is co-director of and a board adviser to Physicians for a National Health Program and is on the leadership council of the Maryland Health Care Is a Human Right campaign. Read her endorsement of the Bank Whistleblowers United plan here.

Jill Stein, M.D., is a Massachusetts internist seeking the Green Party nomination for the presidency. She was the party’s 2012 presidential nominee. She is an internationally known public health advocate and a former co-chair of her state’s Green Party. Read her endorsement of the Bank Whistleblowers United plan here.

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