FacebookTwitterGoogle+RedditEmail

The Great Gap in Financial Reform

by RALPH NADER

Dear President Obama, Senator Schumer and Senator Shelby:

On the eve of the portentous Senate debate over the extent to which the financial industry is to be so as to avert future megacollapses on the backs of taxpayers, workers and consumers, a great gap has been left unattended.

That gap pertains to the continued powerlessness of the investors and consumers—the people who bear the ultimate brunt of Wall Street’s recklessness, avarice and crimes and who have the greatest interest in strong regulatory enforcement.

Among all the amendments filed for the upcoming Senate debate, only amendment number 29, introduced by Senator Schumer, provides a facility to establish an independent non-governmental non-profit Financial Consumers’ Association (FCA).

Amendment 29 includes the following for funding this unique institution:

“…the financial industry has enjoyed virtually unlimited access to represent its interest before Congress, the courts, and State and Federal regulators, while financial services consumers have had limited representation before Congress and financial regulatory entities;” and

“…the Federal Government has a substantial interest in the creation of a public purpose, democratically controlled, self-funded, nationwide membership association of financial services consumers to enhance their representation and to effectively combat unsound financial practices.”

Anyone modestly familiar with the history of regulatory failures knows that the gross disparity of power and organized advocacy between big business and consumers outside of government leads to an absence of fair standards and law enforcement.

It also leads, as everyone knows, to massive taxpayer bailouts, subsidies and guarantees when these giant banks and other financial firms immolate themselves, after enriching their bosses, while engulfing tens of millions of innocent people in the subsequent economic conflagration.

Given all the privileges and costly rescues for culpable corporations that flow regularly from Washington, D.C., adopting ever so mildly the principle of reciprocity makes a powerful case for facilitating a nationwide Financial Consumers’ Association—one that would be composed of voluntary memberships by consumers who, through their annual dues, will sustain the FCA for an expert place at the table.

Senator Schumer, when he was a Congressman during the savings and loan bailout in the nineteen eighties, introduced such a proposal. But the bankers took the $150 billion bailout and blocked this reciprocal respect for depositors in the House Banking Committee.

Then Representative Schumer and his supporting colleagues on that Committee understood that without the supposed beneficiaries of regulatory authority being organized to make regulation and deterrence work, the Savings and Loan collapse could happen again. And so they became prophetic beyond their wildest nightmares.

Before he died in a plane crash in 2002, Senator Paul Wellstone recognized the need for such a facility, when he introduced the Consumer and Shareholder Protection Association Act.

A key enhancing feature in amendment 29 is a requirement that invitations to membership in the FCA be included in the billing envelopes or electronic communications of financial institutions with their customers. At no expense to these vendors, these notices would ensure that the maximum number of consumers are invited to join and fund such a democratically run, educational and advocacy organization.

In early 2009 I met with Chairman Christopher Dodd and explained the nature and importance of the FCA and Senator Schumer’s earlier role in advancing this civic innovation. He seemed receptive to the idea and urged us to have his colleague Senator Schumer take the lead, which he has done with amendment 29 just a few weeks ago. Senator Shelby and I have also discussed the FCA proposal.

The major valiant but overwhelmed consumer groups, who experience daily this enormous imbalance of power between corporations and consumers, presently stacked by unprecedented amounts of federal funds and bailout facilities for the misbehaving companies, support the creation of a self-funded FCA.

The Federal Government has long paid for facilities in the U.S. Department of Agriculture for agricultural businesses to band together and assess themselves to promote beef, corn, cotton and other commodities to increase their profits. By contrast the FCA, once launched, would be composed of consumers paying their own way to preserve their hard-earned savings from predatory financial speculators.

Allow one prediction. Even if the ultimate legislation comes out stronger than expected on such matters as derivatives, rating agencies, too big to fail, using depositor funds for speculation, and the consumer financial regulatory bureau, unless the consumer-investor is afforded modest facilities to band together with their experts and advocates, the laws will hardly be enforced with sufficient budgets, personnel and regulatory will power.

Give the consumer a modest round in this prolonged deliberation following the destructive events of 2008.

Sincerely,
RALPH NADER

 

WORDS THAT STICK

Ralph Nader is a consumer advocate, lawyer and author of Only the Super-Rich Can Save Us! 

More articles by:
Weekend Edition
June 24, 2016
Friday - Sunday
Pepe Escobar
Goodbye to All That: Why the UK Left the EU
Michael Hudson
Revolts of the Debtors: From Socrates to Ibn Khaldun
Andrew Levine
Summer Spectaculars: Prelude to a Tea Party?
Kshama Sawant
Beyond Bernie: Still Not With Her
Mike Whitney
¡Basta Ya, Brussels! British Voters Reject EU Corporate Slavestate
Tariq Ali
Panic in the House: Brexit as Revolt Against the Political Establishment
Paul Street
Miranda, Obama, and Hamilton: an Orwellian Ménage à Trois for the Neoliberal Age
Ellen Brown
The War on Weed is Winding Down, But Will Monsanto Emerge the Winner?
Gary Leupp
Why God Created the Two-Party System
Conn Hallinan
Brexit Vote: a Very British Affair (But Spain May Rock the Continent)
Ruth Fowler
England, My England
Norman Pollack
Fissures in World Capitalism: the British Vote
Paul Bentley
Mercenary Logic: 12 Dead in Kabul
Binoy Kampmark
Parting Is Such Sweet Joy: Brexit Prevails!
Elliot Sperber
Show Me Your Papers: Supreme Court Legalizes Arbitrary Searches
Jan Oberg
The Brexit Shock: Now It’s All Up in the Air
Nauman Sadiq
Brexit: a Victory for Britain’s Working Class
Brian Cloughley
Murder by Drone: Killing Taxi Drivers in the Name of Freedom
Ramzy Baroud
How Israel Uses Water as a Weapon of War
Brad Evans – Henry Giroux
The Violence of Forgetting
Ben Debney
Homophobia and the Conservative Victim Complex
Margaret Kimberley
The Orlando Massacre and US Foreign Policy
David Rosen
Americans Work Too Long for Too Little
Murray Dobbin
Do We Really Want a War With Russia?
Kathy Kelly
What’s at Stake
Louis Yako
I Have Nothing “Newsworthy” to Report this Week
Pete Dolack
Killing Ourselves With Technology
David Krieger
The 10 Worst Acts of the Nuclear Age
Lamont Lilly
Movement for Black Lives Yields New Targets of the State
Martha Rosenberg
A Hated Industry Fights Back
Robert Fantina
Hillary, Gloria and Jill: a Brief Look at Alternatives
Chris Doyle
No Fireworks: Bicentennial Summer and the Decline of American Ideals
Michael Doliner
Beyond Dangerous: the Politics of Climate
Colin Todhunter
Modi, Monsanto, Bayer and Cargill: Doing Business or Corporate Imperialism?
Steve Church
Brexit: a Rush for the Exits!
Matthew Koehler
Mega Corporation Gobbles Up Slightly Less-Mega Corporation; Chops Jobs to Increase Profits; Blames Enviros. Film at 11.
David Green
Rape Culture, The Hunting Ground, and Amy Goodman: a Critical Perspective
Ed Kemmick
Truckin’: Pro Driver Dispenses Wisdom, Rules of the Road
Alessandro Bianchi
“China Will React if Provoked Again: You Risk the War”: Interview with Andre Vltchek
Christy Rodgers
Biophilia as Extreme Sport
Missy Comley Beattie
At Liberty
Ron Jacobs
Is Everything Permitted?
Cesar Chelala
The Sad Truth About Messi
Charles R. Larson
A Review of Mary Roach’s “Grunt”
David Yearsley
Stuck in Houston on the Cusp of the Apocalypse
FacebookTwitterGoogle+RedditEmail