5 reforms Wall Street protesters should demand
Their demonstration has grown into a multi-city movement with a muddled message. Here are some changes they should be calling for.
NEW YORK -- The Occupy Wall Street protest has evolved from a ragtag group of activists with no clear message and minimal media exposure to a multi-city movement with more than 1,000 participants in New York City alone, plenty of coverage on the major networks and newspapers -- and still no clear message.
When the protesters first moved in to downtown New York, the group posted a message to its unofficial website, OccupyWallSt.org, declaring its goal to not "let corporate greed and corrupt politics set the policies if (sic) our nation." In the two weeks since, the message has only become more confused as hundreds more protesters have joined.
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Those marching down Wall Street have professed their desire for student loan amnesty, greater taxes on the rich, the prosecution of "Wall Street criminals" and a reversal of the Supreme Court's Citizens United decision, which allows corporations to make unlimited contributions to political campaigns.
Each of these issues surely merits a certain amount of outrage and could be reason enough to spark a protest on its own, but collectively it sounds like a laundry list of disparate demands, some of which have only a limited relationship to Wall Street. Student loans, for example, are a huge issue but one that arguably has at least as much to do with the colleges that set tuition as the banks that make the loans.
Meanwhile, raising taxes on the rich is something the president is already pushing for. Protesters looking to see this particular cause through would probably do better to march down to Washington, D.C., and picket outside the offices of Congress members who don’t support the policy.
Instead, MainStreet would like to see the Occupy Wall Street protest focus on a smaller range of issues that directly relate to the financial markets and have not received nearly enough attention. Each could be helped significantly by thousands of activists voicing their complaints.
End 'too big to fail'
It’s been three years exactly since President Bush signed the Troubled Asset Relief Program into law, essentially providing a round of bailouts to the nation’s largest financial institutions. So what better time to stage a protest down on Wall Street to remind legislators that bailing out financial firms anytime in the future with taxpayer money will not be tolerated. To their credit, the Dodd-Frank financial reform package and a recent set of FDIC rules will require banks to outline how to unwind their businesses should they go bankrupt, thereby establishing a pathway around the “too big to fail” principle, but there is still nothing on the books technically preventing government from bailing out a financial firm should they deem it necessary.
The Glass-Steagall Act was passed in the aftermath of the Great Depression to prevent commercial banks from offering investment services, thereby limiting the size and scope of America’s banks and preventing institutions that handle the savings and loans of millions of households from engaging in riskier activities like underwriting securities. This regulation was undone in the late ’90s under President Clinton’s tenure in the White House, helping Wall Street boost profits. But some like Citibank became too big for their own good and when they wound up on the brink of collapse, countless Americans found their nest eggs at risk. Pushing Wall Street and Washington to re-establish the division between commercial and investment banks would be a worthy cause for the protesters.
Push for a stronger CFPB
The Consumer Financial Protection Bureau was one of the few good things (for consumers) that came out of the financial crisis. The entire function of the new government agency is to act on behalf of Americans for important issues ranging from credit card reform to military members struggling to keep their homes. Unfortunately, many in Congress made it their mission to weaken the CFPB to the point where it would operate within the Federal Reserve – rather than as its own entity – and be subject to veto authority from an outside group of 10 regulators. In fact, some in Washington would like to see the bureau’s power limited even further, which is why the protesters should take it upon themselves to urge Washington to continue working to make the CFPB more autonomous rather than less.
During the peak of the financial crisis, executive compensation was one of the few issues that could unite the country in outrage, most notably the bonuses paid to bosses at AIG or Goldman Sachs. At the time, the main issue was that these institutions had – directly or indirectly – received taxpayer funds to help them remain in business, only to then turn around and pay out lavish bonuses to their own managers. In 2009, Washington put in place significant limits on what executives of companies who had received TARP money could earn in bonuses until those funds were paid back. Since then, the only other regulation came from the Dodd-Frank financial reform act, which gives shareholders more authority to make sure CEO pay is closely tied to performance.
However, given that CEO pay increased by 12% last year while the unemployment rate remained stagnant, perhaps it’s time to ask if executive pay should be more closely tied to the performance of the economy rather than just the performance of the company. More reasonably, legislators could consider limiting the amount of stock options executives receive, restricting bonus payouts to a certain percentage of each person’s salary, or perhaps adding an extra “unemployment tax” to the salaries of any financial executive earning more than $5 million a year, by which I mean add a symbolic tax of whatever the annual unemployment rate is and have the government devote that added revenue to help pay for the cost of unemployment benefits and food stamps.
We understand that many of those protesting are students who are frustrated by the awful combination of high loans and low employment prospects – as they should be – but we hope the protesters don’t forget about the many Americans whose bigger concern is paying off their mortgages, often on property that is worth less than the outstanding loan amount.
The government has struggled to get banks to modify mortgage loan agreements and temporarily show leniency to homeowners who have come upon tough times and are struggling to keep their homes. If Occupy Wall Street is looking for a cause to get people riled up about, the group should march through the financial district calling attention to the many homeowners who have been kicked off their property and call for banks to show more generosity in their lending agreements.
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