The McConnell-Boehner Corporate Congress next week will go after an agency that has, in its four short years of existence, done great things for consumers: The Consumer Financial Protection Bureau. It is just one of several public interest attacks next week that are on Public Citizen’s radar screen:
• The U.S. Senate Judiciary Committee’s Subcommittee on the Constitution is scheduled to hold a hearing at 2 p.m. Thursday, July 23, about the Dodd-Frank Wall Street Reform and Consumer Protection Act. This is another opening for Wall Street’s backers in Congress to attack the Consumer Financial Protection Bureau’s structure and power. But they will be attacking an agency that, in just four years, has helped 17 million Americans obtain remedies for financial harm and has recovered $10.1 billion in consumer relief from companies that engaged in wrongdoing. If anything, the agency needs to be strengthened, not weakened.
• The U.S. House of Representatives and the Senate are set to convene a conference committee on a customs and enforcement bill that could weaken a strong anti-trafficking provision in last month’s Fast Track bill. The backdrop: The State Department’s Trafficking in Persons (TiP) report, which is expected to be released next week, may include an “upgrade” of Malaysia’s Tier 3 Ranking. Particularly in the wake of the horrific revelations of mass graves of human trafficking victims in Malaysia, this raises serious concerns for anti-trafficking advocates in the U.S. and Malaysia, as well as members of Congress who included a provision in the Fast Track bill that would bar Malaysia and other Tier 3 countries with the worst human trafficking record from entering into Fast Track trade deals. Nineteen senators and more than 160 representatives sent bipartisan letters this week to Secretary of State John Kerry, expressing concern over any manipulation of the TiP report to further the administration’s goals to conclude the Trans-Pacific Partnership (TPP), which includes Malaysia.
• Before going into August recess – possibly even next week – the House will vote on the Regulations from the Executive in Need of Scrutiny (REINS) Act (S. 226 and H.R. 427). This bad bill would require all new economically significant regulations – in other words, the big-ticket public protections that provide the most health, safety, environmental and economic benefits – to be approved by both chambers of Congress before taking effect. If both chambers were unable to approve a major rule within a 70-day window, the rule would not take effect and would be tabled until the next congressional session. In effect, the reigning dysfunction in Congress would endanger any important new regulation, no matter how uncontroversial it might be.
Bankers crashed the economy six years ago. Congress approved reform exactly five years ago to deal with the fallout. Yet the Securities and Exchange Commission (SEC) and our other regulatory watchdogs have yet to erect many of the guard rails needed to prevent another calamity.
Title 9 of the Dodd-Frank Wall Street reform Act is focused on reigning in out of control Wall Street executive pay practices — those misplaced incentives that pushed bankers pursuing larger bonuses and rewards to take some of the riskiest gambles in the lead up to the crash. This reform made the SEC (and other agencies) responsible for creating a host of important corporate governance rulemakings — including disclosure requirements, clawbacks, changing the structure of bonus pay completely and correcting the system that incentivizes systemically risky behaviors with dangerous market consequences.
Unfortunately, we have seen stark delays in the bulk of these rulemakings, including some that seem to most to be outrageously simple. Chief among these is the long-delayed executive-compensation rule requiring that companies disclose the pay gap between chief executives and their employees. The agency proposed the rule in 2013 but has yet to complete it.
Public Citizen members and supporters like YOU are making a real difference in helping grow the momentum around the call for a tax on Wall Street transactions.
Last month, we joined in the Million Strong petition push as part of a worldwide action to make sure the eleven European nations that are negotiating a collaborative financial transaction tax stay strong and come out with a good proposal.
Here in the states, the campaign to achieve a tax on Wall Street trades captured an important win when the media last week began asking candidates if they will stand with Main Street or Wall Street when it comes to tamping down high-speed trading and market speculation by instituting a tiny fee on stock, bond, and derivative trades.
And, just last week, U.S. Sen. Bernie Sanders (I-Vt.) got a ton of much-deserved press for his proposal to fund free public college tuition by instituting a Wall Street speculation fee. At the same time, Sen. Sanders also introduced a Senate companion bill to U.S. Rep. Ellison’s Inclusive Prosperity Act, the first time the bill has been offered in that chamber. It’s clear that Sen. Sanders’ proposal will do a lot to push the public debate leading up to the 2016 elections toward looking at solutions like a Wall Street tax.
In addition to creating hundreds of billions of dollars in revenue, a tiny tax on trades on financial products could make a huge difference in taming Wall Street’s volatility.
Sure, it’s an overstatement to say it alone could save the world, but a tiny tax on Wall Street trades could stack up to hundreds of billions of dollars in revenue that could be used for essential public projects like addressing climate change, fighting poverty, or better enforcement of our nation’s consumer protection laws.
Wall Street Tax (also called Financial Transaction Tax or Robin Hood Tax) proposals in Congress range from 0.03 percent (3 cents on every $100 traded) to 0.5 percent; revenue projections vary accordingly, from $352 billion over ten years to more than $350 billion every year. That’s a lot of funding for programs that are right now suffering under a false premise of austerity that has slashed the social safety net and stymied progressive proposals that could make real headway in solving some of our most pressing issues.
It’s also clear that a Wall Street Tax could save our markets from harmful volatility. Today is the fifth anniversary of the 2010 “flash crash” that shocked markets, causing the Dow Jones to lose nearly 1,000 points in a matter of minutes. Nearly $1 trillion was temporarily erased from the market.