Thursday, Feb 16, 2012, 8:26 am
Occupy Hearts The Volcker Rule
A central criticism of the Occupy movement has been the group's wide array of mission statements, so it's odd that a recent ideologically-focused OWS protest received relatively little media attention.
Occupy submitted its 325-page technical comment letter – written by the working group Occupy the SEC in the atrium of 60 Wall Street – to U.S. regulators this week.
The submitted letter is an impressive document (Felix Salmon calls it "absolutely astonishing") calling for the SEC to strengthen and enforce the Volcker Rule, named after former Federal Reserve Board Chairman Paul Volcker, a reform that would curb the same risky speculative trading that tanked the world's economies in 2008. (The letter can be read in its entirety here, PDF).
Occupy the SEC's working group is comprised of a remarkable gathering of wonks and legal experts: a former derivatives trader, a former compliance officer at a major financial firm, a corporate lawyer, and a technology expert who helped Wall Street firms design proprietary software for "volatility surface modelling."
The goal of their very detailed letter: “We want the regulators to enforce the Volcker rule vigorously,” said Akshat Tewary, the lawyer, in an interview. “There’s obviously a lot of pressure” on regulators coming from foreign governments, banks and “pretty much everyone to try to dilute and winnow away the rule as much as possible. So we want to take the counterpoint position and try to have it enforced as much as possible.”
Since the working group's members are savvy industry players, they took the opportunity of penning a response letter to regulators about some of Wall Street's claims that any proposed regulation would damage financial markets.
The Occupy group argues the banks are exaggerating the impact the proposal would have on liquidity, noting that junk bond trading volumes “are at record levels” even as firms begin to fall in line with Volcker rule prohibitions.
“The idea put forth by industry lobbyists and trade groups, that the removal of a government subsidy within a segment of market makers will cause serious and permanent market-wide reductions in liquidity defies both common sense and the foundations of free-market capitalism,” the Occupy letter argues.
Occupy the SEC held a march Monday night in New York City to celebrate the release of the letter to the SEC. The publication of a seriously wonky letter is part of what Occupy calls its " diversity of tactics." Yes, OWS is famous for its camps and disruptive protests, but the movement also wants to become a force at the policy-crafting stages.
Josh Harkinson explains what makes Occupy SEC so unique and a potentially potent force:
On the one hand, it's authentically grassroots, forged in Zuccotti Park's crucible of discontent. As such, it is transparent, open to anyone, and accountable to everyone. On the other hand, it includes financial insiders with the education and regulatory vocabulary to challenge high-powered lobbyists at their own game. That's a powerful combination that the SEC can't easily ignore.
But even the wonks within Occupy are aware most citizens nod off when experts start droning on about derivatives trading and collateralized debt obligation. Occupy the SEC hopes to wage a broad educational campaign to teach the public about the inner workings of the financial industry.
At its website, Occupy the SEC encourages concerned citizens to read through the Volcker rule and related documents listed at its site, and to write their own comment letters.
Regulators are currently facing some 15,000 public letters attempting to shape the final outcome of the 2010 financial reform bill, and the banking lobby will certainly be an influential player in the process.
"The banking lobby exerted inordinate influence on Congress and succeeded in diluting the statute, despite the catastrophic failures that bank policies have produced and continue to produce," the group's letter says.
Allison Kilkenny is an In These Times Staff Writer and the co-host of the critically acclaimed radio show Citizen Radio. Her blog for In These Times, Uprising, focuses on efforts around the world to address the global economic crisis.