Washington, D.C., hit near-record high temperatures on Wednesday. But that didn’t discourage more than a hundred dedicated activists from making the two-mile walk from Dupont Circle to the headquarters of Crossroads GPS, one of those outside groups spending millions of dollars to sway the elections. These brave souls were marching to demand that Crossroads co-founder and GOP strategist Karl Rove be held accountable for selling out our democracy to the highest bidder.
As we journeyed together through the streets of our nation’s capital, I heard people talking about lots of different issues—from jobs and retirement to health care and elections. Ultimately, however, most of their grievances boiled down to a single word: fairness. These folks were out in the scorching heat because they believe that American democracy is about every citizen having a voice in government. Not about how many dollars a person (real or corporate) can spend on TV and radio ads.
At our destination, all one had to do was look around to see what real democracy looks like. It’s not the small group of people who were upstairs in an air conditioned room, figuring out how to manipulate voters into favoring the candidates that corporations want in office. Democracy is those who cared about their country enough to brave the heat for a chance to shout in the streets that people, not corporations, should have the power in our system.
To JPMorgan shareholders who have witnessed a $25 billion drop in market value since the “London Whale” gambled away $2-plus billion: Look on the bright side. Think of this as a public service investment in sound financial policy education. As Congress continues with hearings on JPMorgan and CEO Jamie Dimon himself takes the stand tomorrow, many reforms now enjoy an urgent new argument. This expensive episode means we should act now on a number of reforms.
Implement a strong Volcker Rule Banks shouldn’t gamble with a taxpayer backstop. This is why a strong Volcker Rule is needed. JPMorgan’s gambling partners allowed the bank to risk so much because they knew the U.S. taxpayer would make good on extraordinary losses. Within the details of the rule, JPMorgan’s ability to continue such betting in the future boils down to the interpretation of two words in the Wall Street reform law statute: “aggregate position.” The Senate authors explain that this means the bank can hedge a specific position, such as a single bond, which the bank purchased at various times, at various prices. JPMorgan believes this means an entire portfolio, such as its ownership of 130 separate bonds. The Volcker Rule must be tightened, implemented and enforced.
Break up big banks
Failure of a bank JPMorgan’s size could cripple the economy. At some point, banks become too large to manage. Detail-focused CEO Jamie Dimon failed to catch what he subsequently called a “badly conceived” gamble. Federal Reserve Bank presidents in Dallas and St Louis have called for a break-up. Sen. Sherrod Brown (D-Ohio) introduced legislation recently to reduce bank size. The bill could even garner bipartisan support, as Sen. Richard Shelby (R-Ala.) voted for the same legislation two years ago, along with 32 other senators. In the House, Reps. Brad Miller (D-N.C.) and Keith Ellison (D-Minn.) introduced a parallel bill.
Increase bank capital
Even industry apologists who oppose reducing bank size and limiting risky activities agree that bank capital—what shareholders invest and lose when loans or gambles go bad—must be high. Fortunately, JPMorgan exceeded minimum capital standards, though many think mandatory levels should be doubled. Sen. Pat Toomey (R-Pa.) supports higher bank capital, a view he voiced at the both the May 22 and June 6 congressional hearings on the JPMorgan fiasco.
Reform banker compensation
The now-terminated chief investment officer earned 94 percent of her pay from “incentive compensation.” No wonder she swung for the fences, as Gary Gensler put it at the May 22 hearing. Gensler chairs the Commodity Futures Trading Commission, the primary financial gambling regulator. The Wall Street reform law specifically bars pay that promotes “inappropriate” risk-taking, but regulators are now more than a year late finalizing it.
Stop derivative deregulation
Wall Street shills, as Rep. John Tierney (D-Mass) labels some of his fellow members in the House, are moving nine bills. Of varying danger, one of them leaves offshore derivatives trading, such as JPMorgan’s London trades, free of basic regulation. Rep. Frank Lucas (R-Okla.), chairman of a key committee, cancelled a vote on two problem bills.
Bank officers should not oversee themselves
CEO Jamie Dimon sits on the New York Federal Reserve Bank, which supervises his bank. U.S. Sens. Barbara Boxer (D-Calif.) and Bernie Sanders (I-Vt.) introduced a bill May 22 that prevents active bankers from serving on the federal supervisory agencies. Massachusetts senatorial candidate Elizabeth Warren and former New York governor Eliot Spitzer think Dimon should step down from the New York Fed.
Good financial laws, unfortunately, require a disaster, such as the failed JPMorgan bet, or the 2008 crash, which has been an enormous cost to Main Street. That’s because of massive spending by Wall Street, which collectively spends $1.5 million a day lobbying. Let’s hope that the unintended investment by JPMorgan in reform advocacy secures substantial reform.
Nestle's "health food" - flickr photo by Howard Lake
“This is an amazing day in the city of Newark!” Booker exclaimed. Amazing, indeed. It’s amazing that Newark is partnering with a giant candy bar and infant formula corporation to conquer health problems that the company itself plays a role in perpetuating. A press release announced that Nestlé had helped to devise a nutritional education curriculum for Newark families highlighting “the importance of breastfeeding, increasing fruit and vegetable consumption, healthy snacking, dealing with a fussy eater, portion control and physical activity.” The program draws on “the nutritional expertise of Gerber,” Nestlé’s infant formula brand.
But why would a company that depends for its profits on women not breastfeeding and families purchasing candy (not fruits and vegetables) be an ideal source of nutritional expertise?
Last week’s launch of Public Citizen’s campaign to stop infant formula marketing in healthcare facilities got lots of people talking – and acting. In less than a week, more than 13,000 people signed their names to a petition calling on the three major formula companies to stop using healthcare facilities to market their products. Dozens of newsoutlets and blogscovered the campaign’slaunch, which also included sending letters, co-signed by more than 100 other organizations, to more than 2,600 hospitals across the country. The organizations are calling on hospitals to stop allowing formula companies to co-opt their facilities for profit-making purposes that undermine the advice of all major healthcare provider organizations: Breastfeeding is best for babies and mothers’ health.
People signed on to the petition and cheered our efforts because they agree that allowing corporations to commercialize an environment that we turn to in our most vulnerable moments – when we seek out healthcare – is unconscionable. Moreover, many families know just how challenging breastfeeding can be. Obstacles to successful breastfeeding abound. Prominent among these is the unrelenting pressure Big Formula marketing places on women to use their products. Formula marketing also creates barriers by instilling doubt in many women about their capacity to successfully breastfeed.
The Infant Formula Council, the industry trade group, responded to our campaign in typically misleading fashion. The IFC claimed that we had called for the elimination of “infant feeding education materials and samples for mothers in hospitals.” This “education,” they claimed, is necessary to ensure the health and safety of babies. In similar fashion, the American Hospital Association defended its members’ practices, claiming that “having information and resources” available to moms in hospitals is the duty of responsible hospitals.
Congress has just returned from recess and life here for your favorite watchdog continues to be busy!
Last week, we reported on a victory for democracy: The Vermont State Senate approved a resolution calling for a constitutional amendment to overturn Citizens United v. Federal Election Commission, the U.S. Supreme Court ruling that has ushered in a corporate political spending free-for-all, the negative effects of which we began seeing in the congressional midterms and we see now in the presidential race. The ball is now in the court of the Vermont House, but the clock is ticking. The House Government Operations Committee has yet to schedule a vote on the resolution — the first step in moving it through that chamber. The state’s legislative session ends next week. If you live in Vermont, please call your state representative and urge him or her to move this bill forward.
If the Vermont House passes the bill — and there is a lot of support for it among Vermont House members — Vermont would be the third state to call for an amendment to overturn the Supreme Court’s 2010 ruling. Public Citizen’s Democracy Is For People Campaign is playing an instrumental role in getting Vermont, California, Maryland and Massachusetts on board with calling for a constitutional amendment to help curb corporate power in elections.
We also are working with activists throughout the country to persuade local councils to support an amendment – and to do so the second week of June as part of, “Resolutions Week.” Resolutions Week and other efforts by other organizations — as well as congressional lawmakers — will be the focus of a congressional Summit on Capitol Hill this Wednesday (Facebook event invite link, here). Public Citizen is pleased to have had the opportunity to help facilitate and witness the growth of an ever-more powerful team of lawmakers, organizational allies and activists that are determined to make sure the voices of everyday people are not drowned out by mega-rich individuals and corporations. This summit is a signal: This movement is the real thing. We are determined. We are growing and together we will ensure that our democracy is for the people and by the people.