When the Senate bank reform legislation passed in May, Senate Majority Leader Harry Reid (D-Nevada) said it sent the message to Wall Street that they can no longer "recklessly gamble away other people's money." The bill told Main Street, "you no longer have to fear that your savings, your retirement or your home are at the mercy of greedy gamblers in big banks. And it says to them, 'never again will you be asked to bail out those big banks when they lose their risky bets,' " according to Reid.
Reid was correct. The bill the Senate passed did protect the taxpayers from reckless gambling by the big banks, largely due to the last-minute inclusion of strong derivatives reforms authored by Senator Blanche Lincoln (D-Arkansas). So why is it that Senate and House leadership are now busy behind these scenes trying to kill the best provisions in their own banking reform legislation?
Even though the bank reform bill working its way through Congress is far from perfect, there are some strong provisions well worth fighting for as the bill moves to a House-Senate conference committee.
Two recent articles illustrate the pros and cons of this behemoth bill. New York Times reporter Gretchen Morgenson, does a great job reminding us that the original Glass-Steagall legislation was only 34 pages long and it was key to keeping our financial system stable for 60 years. She points out that the two bills that the Senate and the House have now passed are a whopping 3,000 pages combined:
Yet despite all that verbiage, there are flaws in both bills that would let Wall Street continue devising financial black boxes that have the potential to go nuclear. And even if the best of both bills becomes law, investors, taxpayers and the economy will remain vulnerable to banking crises.
According to a story in the Washington Post by Mike Konczal, the Big Banks have just created an astroturf or cashroots group called the "Consumers Against Retail Discrimination Alliance" to fight a provision of the financial reform bill: This nominal "consumers" group is constituted of really, really big "consumers," according to Konczal, including "Visa, MasterCard, Bank of America, JP Morgan Chase, U.S. Bank, Citi" and almost every banking association that is part of the more accurately named "Electronic Payments Coalition." They have attempted to label this a corporate "civil rights" issue by talking about "discrimination" -- or "retail discrimination," that is.
A special report for the Center for Media and Democracy by Glen Frost, Editor of The PR Report: "Class action against banks ensures 'access to justice' says Australian Minister"
According to the organizers, it's Australia's largest class action lawsuit: a case of disgruntled bank customers versus the big banks.
Financial Redress, a specialist in recovering compensation from financial institutions for excessive charges or mis-selling, and a subsidiary of litigation funder IMF Australia, is launching a class action against a number of Australian and foreign banks (with operations in Australia) who have allegedly overcharged customers for years.
The fees in question are honour and dishonour fees on overdrawn bank accounts and over-limit and late payment fees on credit cards. Financial Redress refers to these as "exception fees" and alleges that the banks have been charging customers an "unfair" amount. Customers are both individuals and businesses.
At the end of last week, the U.S. Senate passed a financial reform bill that was far stronger than what had been proposed by the Obama administration and passed by the House. Now it's time to hold President Obama's feet to the fire to ensure the strongest possible bill.
UPDATE ON THE BANKING FRONT: The only thing with teeth left in the Dodd financial reform bill -- provisions introduced by Arkansas Senator Blanche Lincoln that would force the biggest banks to spin off their swaps (or derivatives) desks into separate entities -- may be taken out without even getting a vote. It may be stripped out via a Dodd "manager's amendment," which is being created privately in negotiations with Senators. A manager's amendment is a package of numerous individual amendments agreed to by both sides in advance.
Right now is an important moment to call Senator Lincoln's office and tell her to defend her original language to end federal and taxpayer backing for reckless Wall Street gambling. You can reach her office at (202) 224-4843.
Last year, right-wing activists masqueraded as a pimp and a prostitute and used a phony storyline and a hidden camera to take down the community group ACORN. ACORN was eventually absolved and the unsavory tactics of the right exposed, but that hasn't stopped the right from moving on to a new target: the Berkeley, California-based Greenlining Institute. Like ACORN, the Greenlining Institute is a progressive organization that advocates for the poor and works for economic justice. It also supports implementation and enforcement of the Community Reinvestment Act, a federal law passed in 1977 to mitigate deteriorating conditions in low and moderate-income neighborhoods by addressing the practice of redlining -- denying credit or insurance to people based on their ethnic background or neighborhood. Groups like ACORN and the Greenlining Institute draw the wrath of wealthy corporate interests because they seek government regulation of lucrative but abusive or harmful business practices.
U.S. prosecutors charged two former executives of a "faith-based" bank with conspiracy, bribery, bank fraud and securities fraud. The case involved $80 million in fraudulently-obtained loans that helped sink Integrity Bank of Alpharetta, Georgia.
Last week's "flash crash," which sent stocks plummeting 1,000 points in an afternoon, was just the latest indicator that the U.S. financial system is still spinning out of control and desperately in need of new rules.
Wagering On Angelina Jolie
When I visit London, I can drop into a corner kiosk and bet on anything I want. I can put down a million dollars on whether or not Angelina Jolie's next baby will be a boy or a girl, but these bets are regulated for what they are -- gambling. In America, the big banks can spend billions in a far more destructive type of speculation, but this speculation in the so-called "swaps" or derivatives market is completely unregulated.
Payday lenders, who charge high fees and interest rates approaching a 500% for short-term loans, are pressuring their customers to call their Senators and oppose financial reform legislation that would regulate them for the first time.