The protest, with thousands expected, follows a week of progress in taming an out-of-control financial system. “Pay Czar” Kenneth Feinberg just announced limits on top executive pay at bailed-out financial institutions. The Fed announced plans to limit and re-design pay packages at any banks if they seem likely to significantly increase financial system risk. The House Financial Services Committee approved a version of the Consumer Products Financial Safety Commission (CPFSC). House committees this month also approved new regulations on financial derivatives.
All of these steps fall far short of what’s needed – including breaking up the big banks, shrinking the industry, turning it into a public utility, exposing the “shadow banking” world to the sunlight of regulation, democratizing both regulators like the Federal Reserve and the governance of big corporations, and restricting the costly, dangerous game of “risk management” through financial derivatives.
Even by more modest standards, the steps proposed so far in the United States lag behind ideas in Europe, and the steps taken here fall far short of what was proposed.
Already executives and pay consultants are figuring out how to get around the proposals, or in the case of the Fed plans, many financial institutions already meet the guidelines–with little threat to speculative excess. Campaign for America’s future co-director Robert Borosage noted some of the CPFSC shortcomings:
The Committee limited enforcement authority for 98 percent of the nation’s banks, which control 20 percent of assets; exempted auto loan and insurance products; and omitted provisions to enforce important community lending standards. Most damaging, it replaced President Obama’s proposed independent oversight board with an advisory committee of financial regulators who failed to protect the American public from Wall Street in the first place.
But keep in mind Sen. Richard Durbin’s confession about Congress – “the banks frankly own this place.” These small, compromise reforms are all signs that it is still possible — and never more necessary — to fight what former International Monetary Fund chief economist Simon Johnson calls “the silent coup” by the financial elite in capturing control of the government.
With some of the big banks roaring back to profitability thanks to taxpayer bailouts and other financial support totaling $17.8 trillion, and with Wall Street’s bonus pool for this year potentially setting a record, popular anger at the financial institutions seems ready to be kindled.
The Obama administration has made it clear it not only won’t strike the match; it’s ready with water to douse any populist outrage, even though politically Democrats would benefit from directing discontent with the real economy towards the overpaid, bailed-out masters of the universe who crashed the system.
So the showdown in Chicago will be important if it’s the first of many mobilizations to put the finance system in its place, serving the growth of the real economy and the incomes of most American workers. It’s either that or submit to the wisdom of Goldman Sachs International vice-chairman Lord Griffiths that people should “tolerate the inequality as a way to achieve greater prosperity for all.”
Tell that to the families who lost their homes and jobs. Tell that to the 95 percent of American workers who saw no gain in real income as their productivity climbed. It’s time for some righteous anger – before the next crisis hits.
A complete schedule of the three-day rally is available here.
David Moberg, a former senior editor of In These Times, was on staff with the magazine from when it began publishing in 1976 until his passing in July 2022. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy.