Marching on K Street to Transform Wall Street
Today, I will join thousands of others in a creative protest on a street that most Americans don't know exists. It is "K Street" in Washington, and it is home to thousands of corporate lobbyists who get paid six figures to buy votes in Congress. K Street is Washington's counterpart to Wall Street, and powerful people on both streets have been working hard, in tandem, to preserve our casino economy, our plunder economy, and our military economy.
The rally, led by Jobs with Justice, National People's Action, the AFL-CIO, and SEIU, comes at a critical moment. The Senate is headed towards a vote on a financial reform bill to put some checks and balances on Wall Street. The K Street lobby firms have spent hundreds of millions of dollars to gut the bill.
These are the same shady characters who pushed Congress to strip away the sensible financial regulations put in place after the crash of 1929, opening the door to the gambling insanity that caused the 2008 crash. Then they had the nerve to go back to Capitol Hill and demand trillions of taxpayer dollars to prop up the "too big too fail" banks. Today, pumped full of public money, these financial giants are now bigger than ever and handing out fat CEO paychecks.
With public anger at its height, this is the moment to shrink Wall Street and restore it to its proper role in serving the financial needs of small businesses and ordinary Americans. What we don't need is to "fix" Wall Street so that it can go back to business as usual. As David Korten puts it, policymakers need to be asking the fundamental question: "How do we create a financial services sector that directs money where it is needed: toward creating living wage jobs that provide essential goods and services for all Americans in ways consistent with a healthy environment?"
The pending financial reform bill would get us only partway towards this goal. And it's too early to tell how successful the K Street lobby will be in blocking or gutting even these modest reforms.
Fortunately, public anger does seem to be having some impact in countering Wall Street's limitless lobbying resources. Some amendments to curb Wall Street excess appear to be gaining ground, while others are being defeated.
Here are some highlights:
Financial Secrecy: Socialist Senator Bernie Sanders led the way on an amendment to force the Federal Reserve to reveal which banks received more than $2 trillion in emergency aid during the financial crisis (Sander's amendment passed 96-0). The legislation would also force most derivatives trading out of the shadows and onto open clearinghouses and exchanges.
Curbing the Casino: On the top of the K Street hit list is an amendment to force banks to spin off units that gamble in the dangerous derivatives that helped send the economy into a tailspin. And one of the great reforms of the Depression era is back on the table: the 1933 Glass-Steagall reform to separate banking functions between commercial and investment banking. Until its repeal in 1999, it helped stabilize the U.S. financial system and keep alive thousands of small banks. A transformed Wall Street would need to restore this sensible regulation.
Consumer protection: A new Consumer Financial Protection Agency would help protect ordinary Americans from the worst abuses of greedy financiers, including predatory lenders and fraudsters.
Once this round of financial reform is over, there will be much unfinished business if we are going to shut down the worst parts of Wall Street and transform the rest so that we can have a financial system that supports an economy centered around green, vibrant Main Streets. Two key battles to come:
Breaking up the banks: Last week, an amendment to limit bank size, led by fair trade champion Senator Sherrod Brown, was defeated. As long as we have banks that are "too big too fail," taxpayers will always have to face the prospect of funding future bailouts. One way that people are already working to undercut the power of the big banks is through a campaign launched by Arianna Huffington and others to "Move Your Money." Thousands have answered the call to transfer their personal funds from Wall Street banks to local banks.
Taxing the speculators: There is growing momentum in the United States and around the world behind proposals to place tiny taxes (not more than 0.25 percent) on trades of derivatives, stocks, and currencies. This "financial speculation tax" would both put a damper on speculation and raise hundreds of billions of dollars that could go to green jobs, health care, and climate finance. My organization, the Institute for Policy Studies, has joined with allies around the world to press this issue at the upcoming G-20 meeting next month in Canada.
I'm looking forward to joining with the throngs on K Street, carrying our signs with the slogans: "Tax Speculators: Shut down the Wall Street Casino." This is the struggle of our lifetimes and only by bringing the message to the streets can we rein in the corporations and banks that threaten our democracy and our well being.
John Cavanagh is the director of the Institute for Policy Studies. He is the co-author of 10 books and numerous articles on the global economy, including Development Redefined: How the Market Met Its Match (2008, Paradigm Publishers), written with Robin Broad.
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