The Great Gap in Financial Reform


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.




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

November 26, 2015
Ashley Nicole McCray – Lawrence Ware
Decolonizing the History of Thanksgiving
Joseph Grosso
The Enduring Tragedy: Guatemala’s Bloody Farce
Roxanne Dunbar-Ortiz
Imperial Myths: the Enduring Lie of the US’s Origin
Ralph Nader
The Joys of Solitude: a Thanksgiving!

Joseph G. Ramsey
Something to be Thankful For: Struggles, Seeds…and Surprises
Dan Glazebrook
Turkey Shoot: the Rage of the Impotent in Syria
Andrew Stewart
The Odious President Wilson
Colin Todhunter
Corporate Parasites And Economic Plunder: We Need A Genuine Green Revolution
Rajesh Makwana
Ten Billion Reasons to Demand System Change
Joyce Nelson
Turkey Moved the Border!
Richard Baum
Hillary Clinton’s Meager Proposal to Help Holders of Student Debt
Sam Husseini
A Thanksgiving Day Prayer
November 25, 2015
Jeff Taylor
Bob Dylan and Christian Zionism
Dana E. Abizaid
Provoking Russia
Oliver Tickell
Syria’s Cauldron of Fire: a Downed Russian Jet and the Battle of Two Pipelines
Patrick Cockburn
Trigger Happy: Will Turkey’s Downing of Russian Jet Backfire on NATO?
Robert Fisk
The Soothsayers of Eternal War
Russell Mokhiber
The Coming Boycott of Nike
Ted Rall
Like Father Like Son: George W. Bush Was Bad, His Father May Have Been Worse
Matt Peppe
Bad Policy, Bad Ethics: U.S. Military Bases Abroad
Martha Rosenberg
Pfizer Too Big (and Slippery) to Fail
Yorgos Mitralias
Bernie Sanders, Mr. Voutsis and the Truth Commission on Greek Public Debt
Jorge Vilches
Too Big for Fed: Have Central Banks Lost Control?
Sam Husseini
Why Trump is Wrong About Waterboarding — It’s Probably Not What You Think
Binoy Kampmark
The Perils of Certainty: Obama and the Assad Regime
Roger Annis
State of Emergency in Crimea
Soud Sharabani
ISIS in Lebanon: An Interview with Andre Vltchek
Thomas Knapp
NATO: This Deal is a Turkey
November 24, 2015
Dave Lindorff
An Invisible US Hand Leading to War? Turkey’s Downing of a Russian Jet was an Act of Madness
Mike Whitney
Turkey Downs Russian Fighter to Draw NATO and US Deeper into Syrian Quagmire
Walter Clemens
Who Created This Monster?
Patrick Graham
Bombing ISIS Will Not Work
Lida Maxwell
Who Gets to Demand Safety?
Eric Draitser
Refugees as Weapons in a Propaganda War
David Rosen
Trump’s Enemies List: a Trial Balloon for More Repression?
Eric Mann
Playing Politics While the Planet Sizzles
Chris Gilbert
“Why Socialism?” Revisited: Reflections Inspired by Einstein’s Article
Charles Davis
NSA Spies on Venezuela’s Oil Company
Michael Barker
Democracy vs. Political Policing
Barry Lando
Shocked by Trump? Churchill Wanted to “Collar Them All”
Cal Winslow
When Workers Fight: the National Union of Healthcare Workers Wins Battle with Kaiser
Norman Pollack
Where Does It End?: Left Political Correctness
David Macaray
Companies Continue to Profit by Playing Dumb
Binoy Kampmark
Animals in Conflict: Diesel, Dobrynya and Sentimental Security
Dave Welsh
Defiant Haiti: “We Won’t Let You Steal These Elections!”