April, 29 2010, 12:56pm EDT
Congress Must Strengthen Financial Reform Bill if It Hopes to Rein in Wall Street
Statement of Robert Weissman, President, Public Citizen
WASHINGTON
Now that the Kabuki dance is finally over and the financial reform bill is moving to the Senate floor, attention can be turned to the real issue: Will the new rules rein in Wall Street? The key issue is not whether the financial regulatory bill is going to pass but whether it will be strengthened.
The Senate banking committee bill contains a wide range of important reforms that should be enacted quickly, but the bill also must be strengthened considerably to establish a framework to prevent a recurrence of the financial crisis.
Here are five priorities as the debate goes forward:
1. Break Up the Banks
The largest banks are now larger - considerably larger - than they were before the financial crisis. Despite politicians' protests to the contrary, the market believes the biggest banks are "too big to fail" - which gives them unfair power in the marketplace and an advantage over smaller competitors and an incentive to engage in risky behavior. Their giant size gives them far too much political power and is incompatible with democracy.
The Senate bill, like the House bill, does nothing of consequence to shrink the mega-financial institutions. Sens. Sherrod Brown (D-Ohio) and Ted Kaufman (D-Del.) will introduce an amendment to require banks exceeding a certain threshold to reduce their size. The amendment should be adopted.
The Senate bill does contain a version of the "Volcker Rule," named for its initial advocate, former Federal Reserve Chair Paul Volcker, which would establish that banks cannot undertake "proprietary trading" - basically using their own resources to gamble in the stock, bond and over-the-counter markets. This needs to be strengthened, as Sen. Jeff Merkley (D-Ore.) and others will propose. A strong rule would require the banks to scale back and likely lead to them spinning off their hedge fund-like divisions.
2. Create a Strong, Independent Consumer Financial Protection Agency
In the years leading up to the financial crash, regulators ignored calls to protect consumers from predatory loans and other financial rip-offs. A vigorous stand-alone consumer protection agency not only would have saved billions and billions of dollars for millions and millions of consumers, it would have helped protect the financial industry from its worst excesses. Those rip-off loans ended up imploding the banks and Wall Street.
The Senate bill contains a reasonably strong consumer agency but houses it at the Federal Reserve, which was one of the agencies most hostile to consumer interests during the run-up to the crash. The Senate bill doesn't give the Fed operational control, but embedding the agency in the Fed is asking for trouble. The agency should be made independent. Nor should its rules be subject to veto by other bank regulators, as is the case in the current Senate bill. Senators also should ensure that the bill does not block states from protecting their own consumers. A bill that is supposed to strengthen consumer protection is no place to weaken state consumer protection laws and state enforcement. Finally, various creditor interests - auto dealers, pawn shops, payday lenders - are going to be lobby to be exempt from the consumer agency's jurisdiction; it is crucial that these most predatory of lenders fall under the new agency's authority.
3. Clamp Down on Out-of-Control Pay
Wall Street is paying itself something like $145 billion in bonuses and compensation for 2009 performance - the same year in which the financial sector was saved from ruin with trillions of dollars of public supports.
The congressional financial reform bills do nothing about this outrage other than to give shareholders authority to hold an advisory vote on top executive pay. (And Wall Street is up in arms about this trivial infringement on its pay prerogatives.)
We need a windfall tax applied on the bonuses paid in 2009 and likely for 2010. We need to eliminate the outrageous "carried interest" rule that enables hedge fund managers - many of whom pulled in more than $1 billion in compensation last year - to pay income tax at less than half the standard rate. And, we need rules that insist bonus pay reflect long-term performance, not just the results of short-term speculative bets. The Wall Street bonus culture provides incentives for traders and executives to take risky bets and inflate bubbles - they benefit massively from the upside, but don't pay when bubbles burst.
4. End the Casino Economy
Wall Street and the financial sector are far too big relative to the real economy. There is a legitimate role for Wall Street firms in helping allocate capital for productive uses. And people, businesses and communities need banking services. But there is no social benefit from the financial sector's speculative frenzy - and it is that speculative impulse that destroyed the national and global economies.
A small tax on financial speculation - .25 percent on a stock trade and equivalent amounts on bonds and exotic financial instruments - could raise $100 billion a year, with the costs overwhelmingly borne by the rich. A speculation tax would curb the churning on Wall Street, discouraging highly leveraged trades that aim to capitalize on small up or down ticks in share values over very short periods of time.
Additionally, derivatives trading must be brought under control. Many derivatives should be banned outright, and there is some hope for winning a ban on some categories. But the main issue at stake in derivatives regulation is whether derivatives trading must be done in the open, on regulated exchanges. Right now, most financial derivatives are handled as private contracts between parties. That opens the possibility of cheating by insiders - since prices are not transparent. It means that parties are not required to maintain sufficient collateral against the risk of payout (the problem highlighted by AIG). And it prevents regulators from having any sense of what is going on in the market - precluding them from recognizing emerging risks.
The Lincoln-Dodd derivatives amendment suggests that outrage with Goldman Sachs and Wall Street in general may lead to some meaningful derivatives regulation.
5. Prevent Global Deregulation
Under Timothy Geithner's stewardship during the Clinton administration, the United States entered into a deregulatory financial services agreement at the World Trade Organization (WTO). New deregulatory proposals are still being floated at the WTO.
The idea that financial regulatory legislation would subordinate new regulatory efforts to the WTO deregulatory rules boggles the mind. A provision in the Senate bill related to insurance regulation would do just that, however. It must be scrapped.
Public Citizen is a nonprofit consumer advocacy organization that champions the public interest in the halls of power. We defend democracy, resist corporate power and work to ensure that government works for the people - not for big corporations. Founded in 1971, we now have 500,000 members and supporters throughout the country.
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Columbia Faculty Walk Out Over Student Suspensions, Arrests for Gaza Protests
While expressing gratitude for solidarity actions, Congresswoman Ilhan Omar—whose daughter was suspended—said that "this about the genocide in Gaza and the attention has to remain on that."
Apr 22, 2024
Over 34,000 Palestinians in Gaza have been killed by U.S.-backed Israeli troops, and Columbia University students have been suspended and arrested by New York Police Department officers in recent days for protesting the slaughter—which led to a walkout by the Ivy League institution's faculty on Monday.
The Guardian reported that "hundreds of members of the teaching cohort at Columbia walked out in solidarity with the students who were arrested" while "students put protest tents back up in the middle of campus on Monday after they were torn down last week when more than 100 arrests were made."
Yonah Lieberman, co-founder of IfNotNow, a Jewish-led U.S. group that organizes against Israel's apartheid, declared: "Solidarity with these faculty members. Shame on establishment politicians and agitators who are smearing the anti-war protest at Columbia as anything other than what it is: a courageous stand for freedom and peace."
Naureen Akhter, a founding member of the New York-based group Muslims for Progress, said: "Thank you to the professors who stood in solidarity with student protestors, who didn't give into instigators who are fanning flames of hate and division. Remember the calls are for transparency, divestment, and amnesty for students!"
Congresswoman Ilhan Omar (D-Minn.)—a critic of Israel's war on Gaza whose own daughter, Isra Hirsi, was suspended from Columbia's Barnard College last week for "standing in solidarity with Palestinians facing a genocide," as the 21-year-old junior put it—also noted the faculty walkout and "nationwide Gaza solidarity movement."
"This is more than the students hoped for and I am glad to see this type of solidarity," said Omar. "But to be clear, this about the genocide in Gaza and the attention has to remain on that."
Summary of events from the last day not related to Columbia:\n\n- Israel has not provided evidence that UNRWA staff are part of Hamas\n- A mass grave, including women/children was discovered\n- Doctors did an emergency c-section, saving a baby after an airstrikes killed her mother— (@)
The walkout in New York City followed 54 Columbia Law School professors sending a letter to administrators that states, "While we as a faculty disagree about the relevant political issues and express no opinion on the merits of the protest, we are writing to urge respect for basic rule-of-law values that ought to govern our university."
"Procedural irregularity, a lack of transparency about the university's decision-making, and the extraordinary involvement of the NYPD all threaten the university's legitimacy within its own community and beyond its gates," they wrote. "We urge the university to conform student discipline to clear and well-established procedures that respect the rule of law."
In a statement early Monday, several hours before the walkout, Columbia University president Minouche Shafik—who last week enabled NYPD arrests of students at the encampment—announced in her first statement since the sweep that all classes would be virtual "to deescalate the rancor and give us all a chance to consider next steps."
"Faculty and staff who can work remotely should do so; essential personnel should report to work according to university policy. Our preference is that students who do not live on campus will not come to campus," Shafik said. "During the coming days, a working group of deans, university administrators, and faculty members will try to bring this crisis to a resolution."
The national group Jewish Voice for Peace (JVP) on Monday accused Columbia of creating "a climate of repression and harm for students peacefully protesting for an end to the Israeli genocide against Palestinians in Gaza" over the past six months.
"Columbia University has actively created a hostile environment for students who are Palestinian or who support Palestinian freedom. Additionally, the administration's actions have made the campus much less safe for Jewish students," JVP said.
According to JVP:
Instead of listening to the calls of Columbia and Barnard students to divest from the genocide perpetrated by the Israeli government, the university has called in the NYPD to arrest students, suspended them, and even expelled them. At present 85 students, 15 of whom are Jewish, are suspended.
Yesterday's statement by the White House, like the administrators of Columbia University, dangerously and inaccurately presumes that all Jewish students support the Israeli government's genocide of Palestinians. This assumption is actively harming Palestinian and Jewish students.
The administration has not only harassed Jewish students and failed to ensure their safety and well-being, it has also obstructed their religious observances during Shabbat and prevented them from accessing their Jewish community on the eve of Passover.
While President Joe Biden's Sunday statement was officially about Passover—a Jewish holiday that begins at sundown on Monday—and not the protests at Columbia and other campuses across the country, it was widely received as a response to the latter.
Biden said in part that "we must speak out against the alarming surge of antisemitism—in our schools, communities, and online. Silence is complicity. Even in recent days, we've seen harassment and calls for violence against Jews. This blatant antisemitism is reprehensible and dangerous—and it has absolutely no place on college campuses, or anywhere in our country."
Jonathan Ben-Menachem, a Ph.D. student at the university, toldCNN that "Columbia students organizing in solidarity with Palestine—including Jewish students—have faced harassment, doxxing, and now arrest by the NYPD. These are the main threats to the safety of Jewish Columbia students."
"On the other hand, student protesters have led interfaith joint prayers for several days now, and Passover Seder will be held at the Gaza solidarity encampment tomorrow," he added. "Saying that student protesters are a threat to Jewish students is a dangerous smear."
Columbia Students for Justice in Palestine said in a lengthy statement that "we are student activists at Columbia calling for divestment from genocide. We are frustrated by media distractions focusing on inflammatory individuals who do not represent us. At universities across the nation, our movement is united in valuing every human life."
"As a diverse group united by love and justice, we demand our voices be heard against the mass slaughter of Palestinians in Gaza," the statement continues. "We've been horrified each day, watching children crying over the bodies of their slain parents, families without food to eat, and doctors operating without anesthesia. Our university is complicit in this violence and this is why we protest."
The Columbia Spectator reported Monday that Columbia College passed a divestment referendum that "asked whether the university should divest financially from Israel, cancel the Tel Aviv Global Center, and end Columbia's dual degree program with Tel Aviv University," with respective votes of 76.55%, 68.36%, and 65.62%. However, a statement from a university spokesperson signaled the referendum would not lead to any shift in campus policies.
Beyond Columbia, there are ongoing demonstrations at institutions including the Massachusetts Institute of Technology, New York University, the University of Michigan, and Yale University, another Ivy League school, where at least 47 peaceful student protesters were arrested on Monday.
Those arrested were "charged with class A misdemeanors, which is the highest class of misdemeanors in Connecticut—the same degree applies to third-degree assault," according to the Yale Daily News. Citing a university spokesperson, the student newspaper added that they "will be referred for Yale disciplinary action—which could include reprimand, probation, or suspension."
Pushing back against some administrators' statements, journalist Thomas Birmingham, who was with the Yale protesters overnight, said on social media: "Here's some things I saw... 1. Repeated and loud calls to remain peaceful. 2. Students locking arms, teaching Arabic and Hebrew, and passing around pizza and water. 3. Lots of singing."
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​Modi Slammed for 'Direct Attack on Muslims of India' in Campaign 'Hate Speech'
"Modi's rhetoric against Muslims is extremely divisive and dangerous," warned one critic. "It would only fuel more hate and violence against the already battered community."
Apr 22, 2024
Critics on Monday condemned far-right Indian Prime Minister Narendra Modi for what one group called a "hateful and dangerous" campaign speech in which he claimed that Muslim "infiltrators" would steal Indians' wealth if the opposition wins parliamentary elections that began last week.
Speaking to supporters at a rally in the western state of Rajasthan on Sunday, Modi said that the manifesto of the opposition Indian National Congress (INC) party details how to calculate "the amount of gold that mothers and sisters have" so that it can be redistributed to Muslims.
"When they were in power, they said Muslims have first right over resources," the prime minister claimed out of context. "They will gather all your wealth and redistribute among those who have more children. They will distribute it among infiltrators. Do you think your hard-earned money should be given to infiltrators? Would you accept this?"
Prime Minister Narendra Modi's rhetoric against Muslims is extremely divisive and dangerous. It would only fuel more hate and violence against the already battered community. pic.twitter.com/KT36FVpS6u
— Raqib Hameed Naik (@raqib_naik) April 21, 2024
Members of Modi's ruling Bharatiya Janata Party (BJP)—which does enjoy the support of a significant number of Indian Muslims—have often portrayed Muslims as outsiders. BJP officials have also pushed a baseless conspiracy narrative roughly analogous to U.S. white supremacists' "great replacement" theory, in this case positing that Muslim migrants and rapidly reproducing Indian Muslims will eventually outnumber Hindus—who make up around 80% of the country's 1.4 billion people.
Modi's remarks came a day after India's seven-step election of 543 members of the Lok Sabha, or lower legislative house, began. Modi is running for a third consecutive term. He's being challenged by INC President Mallikarjun Kharge, leader of the opposition in the Rajya Sabha, the upper legislative house. Results will be announced on June 4.
Kharge responded to Modi's remarks by blasting the "panic-filled" address as "not only a hate speech but also a well-thought-out ploy to divert attention" by the prime minister, the BJP, and Rashtriya Swayamsevak Sangh (RSS)—a fascist-inspired political and paramilitary movement whose brand of Hindu supremacy heavily influenced the rise of the BJP.
"Lying for power, making baseless references to things, and making false accusations on opponents is the specialty of the training of RSS and BJP," Kharge said, adding that Indians "are no longer going to fall prey to this lie."
Indian journalist and
Washington Post opinion columnist Rana Ayyub said on social media that "this is not a dogwhistle, this is a targeted, direct, brazen hate speech against a community."
Thousands of Indians petitioned the country's Election Commission seeking punitive action against Modi.
"The prime minister, while campaigning... made a speech on April 21 in Rajasthan that has disturbed the sentiments of millions of Constitution-respecting citizens of India," one petition states. "The speech is dangerous and a direct attack on the Muslims of India."
Muslim groups around the world also slammed Modi's speech, which the U.S.-based Council on American Islamic Relations (CAIR) called "hateful and dangerous."
"It is unconscionable, but not surprising, that far-right Hindutva leader Narendra Modi would target Indian Muslims with a hateful and dangerous diatribe despite his role as the leader of a nation with such a diverse religious heritage," said CAIR national executive director Nihad Awad.
"We again call on the Biden administration to declare India a 'country of particular croncern' over its discriminatory and violent policies targeting Muslims and other religious minorities," Awad added. "Global Islamophobia is alive and well in India and must be confronted before it escalates to something even worse."
South Asia historian Audrey Truschke, a professor at Rutgers University in New Jersey, accused Modi of "straight-up fascism."
"Modi had a history of encouraging mass violence against Muslims," Truschke added. "So we should all take his words seriously."
Modi was chief minister of the western state of Gujarat in February 2002 when a train full of Hindu pilgrims was set ablaze, killing 58 people. The cause of the disaster remains disputed, but Modi was quick to blame Muslims for the fire. In a three-day paroxysm of intercommunal bloodletting, Hindu mobs murdered at least hundreds—and perhaps thousands—of Muslim men, women, and children. Many women and girls were raped. More than 250 Hindus were also killed during what came to be called the Gujarat riots, during which an estimated 150,000 people were also forcibly displaced.
A team sent by the British government concluded that Modi was "directly responsible for a climate of impunity" that enabled the pogrom. However, a special investigation commissioned by the Indian Supreme Court cleared him of complicity in 2012. Modi's alleged role in the massacre led to a U.S. visa ban during the George W. Bush administration that was lifted during the tenure of former President Barack Obama after Modi became prime minister.
Deadly violence against religious minorities and others has increased during BJP rule. And while the U.S. State Department has perennially criticized the Indian government's human rights record, Modi was courted by both the Trump and Biden administrations. Last year, the White House literally rolled out the red carpet for Modi, who was lavishly feted by President Joe Biden and invited to speak before a rare joint session of Congress. Several progressive lawmakers boycotted the address.
Earlier this year, Progressive International's (PI) executive body used Modi's consecration of a highly controversial Hindu temple on the former site of a 16th-century Muslim mosque destroyed by a Hindu nationalist mob as an opportunity to issue a warning about the accelerating erosion of democracy in India.
"The Modi government has made a decisive move to overthrow India's secular constitution in the name of a new Hindu supremacist nation," PI's statement asserted. "As prime minister, Modi has pushed this Hindu nationalism as India's dominant political force: banning the hijab in schools, introducing 'anti-conversion' laws, abusing municipal forces to demolish Muslim households and shops in cities, and pushing for a 'uniform civil code' in law."
Anti-Muslim speech has also increased dramatically in India, according to a report published earlier this year by the U.S.-based India Hate Lab. The publication detailed 668 incidents in 2023—75% of which occurred in BJP-ruled states.
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Liberal Justices Grill Attorney in Supreme Court Case on Criminalizing Homelessness
"Where are they supposed to sleep? Are they supposed to kill themselves not sleeping?" asked Justice Sonia Sotomayor of unhoused people who have been barred from sleeping outside in Grants Pass, Oregon.
Apr 22, 2024
As housing rights advocates and people who have been unhoused themselves rallied outside the U.S. Supreme Court Monday to demand an end to the criminalization of homelessness, the court's three liberal justices demanded to know how the city of Grants Pass, Oregon can penalize residents who take part in an act necessary for human survival—sleeping—just because they are forced to do so outside.
After an attorney representing Grants Pass, Thomas Evangelis, described sleeping in public as a form of "conduct," Justice Elena Kagan disputed the claim and reminded Evangelis that he was presenting a legal argument in favor of policing "a biological necessity."
"Presumably you would not think that it's okay to criminalize breathing in public," said Kagan, who was appointed by former President Barack Obama. "And for a homeless person who has no place to go, sleeping in public is kind of like breathing in public."
Evangelis is representing the city in Grants Pass v. Johnson, a case stemming from a 2018 lawsuit filed by an unhoused woman, Debra Blake, who accused officials of "trying to run homeless people out of town."
"On any given day or night, hundreds of individuals in Grants Pass, Oregon, are forced to live outside due to the lack of emergency shelter and affordable housing in their community," the original lawsuit stated.
The city has passed ordinances banning people from sleeping or camping on publicly owned property, with violators subject to fines of hundreds of dollars.
A lower court ruled that the city's bans were in violation of the Eighth Amendment, which bans excessive fines and cruel and unusual punishment, "when there was no other place in the city for [unhoused persons] to go."
The city's only homeless shelter, Gospel Rescue Mission, has 138 beds, and the plaintiffs have said there is frequently no room for many of the hundreds of unhoused people in Grants Pass.
On Monday, Justice Sonia Sotomayor appeared inclined to agree with the plaintiff in the original lawsuit who claimed Grants Pass ultimately wanted unhoused people to leave the city. She pointed to comments city officials have made about their aim "to remove every homeless person and give them no public space."
"Wasn't Grant Pass's first-attempt policy choice to put people, homeless people, on buses so they would leave the city?" she asked Deputy United States Solicitor General Edwin Kneedler. "Police officers would buy them a bus ticket, send them out of the city. But that didn't work because people came back because it had been their home... So then they passed this law, and didn't the City Council president say, 'Our intent is to make it so uncomfortable here that they'll move down the road,' meaning out of town, correct?"
Kneedler acknowledged that the statement was made at a City Council meeting.
"Not only is [sleeping] something that everybody engages in, but it's something that everybody has to engage in to be alive," Kneedler said in response to a question from Justice Ketanji Brown Jackson. "So if you can't sleep, you can't live, and therefore by prohibiting sleeping, the city is basically saying you cannot live in Grants Pass."
The city argued in its case that prohibiting local officials from regulating and banning homeless encampments in public places would cause more people to sleep outdoors—an argument U.S. Rep. Cori Bush (D-Mo.), speaking at the rally outside the court, said exposed "how absurd our country's approach to the unhoused crisis is."
"Instead of enacting real solutions to the unhoused crisis, Grants Pass has taken this case all the way to the Supreme Court and is calling for the court to overturn a landmark decision from 1962 that says the government cannot punish people based on status. So we're here today to demand the Supreme Court support humanity, adhere to constitutional precedent, and protect the rights of our unhoused neighbors," said Bush, who has spoken about previously being unhoused herself and sponsored related legislation.
"A person should never be punished for not being able to afford rent or a home," Bush added. "A person should never be punished for sleeping outside or in a car when they have no other place to go. A person should never be punished for simply existing. We need universal housing, universal housing vouchers, and a permanent federal rental assistance program—these are all tangible steps that would actually solve this crisis."
The case arrived at the high court four months after the U.S. Department of Housing and Urban Development released annual data showing a 12% increase in homelessness last year from 2022, largely due to a sharp rise in the number of people who were without housing in 2023 for the first time in their lives. Experts often argue the federal figures are an undercount.
On Monday, the Eviction Lab at Princeton University released new data showing that in 25 of the 32 cities it analyzed, an increase in eviction filings was seen between 2022-23.
"The country lacks millions of units of affordable rental housing, and in those units that are available, a record number of tenants are paying well beyond their means," reported the Eviction Lab. "High interest rates prevent younger, middle-class renters from buying homes, which in turn increases demand in the rental sector."
Considering the dynamics contributing to a growing unhoused population, Sotomayor asked of people facing homelessness in Grants Pass: "Where are they supposed to sleep? Are they supposed to kill themselves not sleeping?"
The conservatives on the Supreme Court, who make up the majority, signaled a willingness to rule in favor of the city, with Chief Justice John Roberts acknowledging that the case is centered on "a policy problem because the solution, of course, is to build shelter to provide shelter for those who are otherwise harmless," but noting that "municipalities have competing priorities."
The answer to the questions being asked at the Supreme Court Monday "is not complicated," said Rep. Delia Ramirez (D-Ill.). "Unhoused people need housing. Housing is the answer. Housing NOT Handcuffs."
Ramirez repeated a phrase that was seen on many signs held by rally attendees, who included the national grassroots economic justice group VOCAL and organizers with the Southern Poverty Law Center (SPLC) and the National Homelessness Law Center (NHLC).
"What the Supreme Court decides in this case will say a lot about what kind of country we are and what country we want to be," said Efrén Olivares, director of strategic litigation and advocacy at the SPLC. "We demand a future without policies like the one before the court and a government that instead works to ensure that the right to affordable housing is guaranteed for all."
A ruling in the case is expected in June.
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