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Ralph Nader > In the Public Interest > Importance of Nonprofits

American history books rarely give due recognition to the importance of the not-for-profit institutions in our society. As a capitalistic society, our country must have had good reasons to spawn huge numbers of not-for-profit banks, insurance companies, hospitals, colleges and myriads of social service associations from the blood banks to housing and other consumer cooperatives.

Whatever those early public interest reasons were that motivated many Americans to start these groups, the present generation of Americans is letting these institutions be bought up, closed down, converted or commercialized by stock corporations without being equipped to challenge this massive takeover.

Hospitals are being bought up by corporate hospital and HMO chains like Columbia/HMO. Their non-profit assets have already reached $9 billion and the conversion of these taxpayer and charitable assets have created health foundations. But the commitment to serving the poor that has characterized non-profit hospitals is gone. The zealous bottom line of the Columbia/HCAs is dominant now.

Over the past century, thousands of mutual insurance companies and banks were established. Most of the Savings and Loans were mutuals — owned by their depositors — as the large mutual insurance companies, such as Prudential and Metropolitan Life — are owned by their policyholders. Together they represented trillions of dollars in assets.

Look what happened and what is happening. In the Eighties, over a thousand of mutual savings and loans converted to stock companies and many were so run into the ground by their looting or speculative executives that their lobbyists secured a half trillion dollar bailout (principal and interest) from the Congress.

A mutual bank is more difficult than stock owned banks for officers and directors to loot or pay themselves large compensation packages. Mutual banks helped tens of millions of Americans to finance their own home purchases. They are mostly now history.

Right now, however, another power grab is spreading through state legislatures. Mutual insurance companies are feeling the itch of temptation to convert to stock companies and free up their executives to pursue their dreams of avarice. Some small mutuals have converted in recent years and under existing state law the executives had to appraise each policyholder’s share of the surplus and send them checks.

Why bother, advised their current corporate attorneys who have drafted legislation to take away this asset right and replace the policyholder’s getting a check with the option to send a check to buy stock in the new company. Of course the bills say that the policyholders have to approve this surrender of their money rights to the surplus, but since the election process is seriously rigged with virtually no notice rights, no rights to a public hearing and very limited rights to go to court, approval becomes a rubber stamp. Mutual policyholders are not organized.

Already, with little awareness by the press, state officials and most legislators about this great mutual insurance heist, laws have passed in Pennsylvania, Michigan, Illinois and the District of Columbia. Only one small consumer group, the Center for Insurance Research (1130 Massachusetts Avenue, Cambridge, MA 02138, 617-441-2900), is filing detailed protests before state lawmakers. If the big mutuals begin to convert under these laws, over 100 million policyholders will lose their money rights. There will be undue enrichment of the executives and boards of directors and policyholders (life, health and property/casualty policies) will no longer receive dividend refunds.

For profit companies are taking over some state non-profit blue-cross associations, commercially tempting universities with joint-venture contracts and consultantships that distort the kind of research done toward narrow profit-seeking goals, and have even successfully pressured the federal government to sell off its highly sensitive uranium enrichment operations (for weapons and reactor uses) to one or more private stock corporations later this year.

The commercial juggernauts, with their ample campaign finance slush funds and their frequent hiring of former top government officials, know what they want.

They are seeking and getting the non-profit assets worth hundreds of billions of dollars that belong to taxpayers, policyholders, and depositors through complex maneuvers that the evening television news and most newspapers are not clarifying and reporting to the public. The historic diversity of the nation’s economy is falling to the imperative of profits uber alles.