Break the banks

Not an ATM withdrawal

And a new report from the New Economy Working Group, called “How to Liberate America from Wall Street Rule,”  offers a “six-part policy agenda to rebuild a sensible system of community-based and accountable financial services institutions.”

Unfortunately, most of those who hold the cash and the corporations they control have lost interest in long-term investments that build and expand strong enterprises. The substantial majority of trades in financial markets are made by high-speed computers in securities held for fractions of a second. Business pundits still refer to this trading as investment. It bears no resemblance, however, to the investment required to put people to work rebuilding a strong America. Corporations are using their stores of cash primarily to buy back their own stock, acquire control of other companies, invest in off-shoring yet more American jobs, and pay generous dividends to shareholders and outsized bonuses to management. … Raising taxes on the rich and implementing financial reforms are essential elements of the solution to our seemingly intractable fiscal and economic crisis. Yet proposals currently on the table fall far short of the need.

Tania in action

Read the full report here.  It leans heavily on proposals William Greider has put forward in recent years. But it’s well-organized and stimulates thought; I particularly like the “seven action clusters” at the end.  Figuring out a road to real redistribution is the most important issue in American political life today. Most liberal politicians are so many costumed Tanias: rich kids playing at helping the poor, with acts of random Robin-Hoodery that only shift a few coins from pocket to pocket.  Change means breaking into the main vault.

Occupy Wall Street: Until we crush capitalism, this might do

Aaron Greenspan has a few ideas for what the Occupy Wall Street protests should be demanding. The financial system is so intricate (as he points out) that any proposals short of scrapping it and starting over soon become far too technical to fit in a popular manifesto — much less on a T-shirt, or in a “hey-hey, ho-ho” slogan.  So these are unlikely turn into new lyrics for the Internationale.  Moreover, I am not sure the demonstrators  really ought to take advice from a Palo Alto tech CEO.   Still, many of these are intelligent reforms in themselves, and waystations on the longer path to deep structural change.

  • Reinstatement of the Glass-Steagall Act. This law kept retail banks separate from investment banks from the Great Depression until 1999, when Larry Summers thought it was no longer necessary. …
  • Federal preemption of state money transmission laws. Money transmitters, such as PayPal (and FaceCash, which my company operates), are the best hope consumers have for an alternative to traditional banking services. With banks instituting fees left and right for debit card use, checking accounts, ATMs, and other supposed benefits, one would think that an entire industry of money transmitters would be popping up in order to take advantage of consumer anger. That’s not happening because the financial lobby has made money transmission illegal in most states without licenses that come at exorbitant expense. …
  • Elimination of Wall Street bonuses. For a while the investment banks decided that it would be bad PR to keep on giving away six-figure bonuses to traders–“a while” meaning a few months. Wall Street bonus culture is toxic and needs to be fixed.
  • New taxes and SEC requirements for extremely high (greater than 500,000) levels of executive compensation. The last CEO of Hewlett-Packard, a publicly-traded corporation, walked away with more than7 million as part of his golden parachute after only 11 months on the job. During that time he made a series of catastrophically bad decisions that hurt the company’s brand, employees, and stock price. Yet this is hardly an exception; criminal levels of compensation are the norm among CEOs of large companies, and Board of Directors rarely if ever account for the reasoning behind fat paychecks.

Greenspan, by way, is one of the people who claims he invented Facebook. Just think: if he were in Mark Zuckerberg’s shoes today, he’d be ruling the world, not kibitzing on HuffPost about how to change it.