Subject: [big campaign] New Huff Post from Creamer -- Financial Regulatory Reform and Big Banks
From: [email-masked]
To: [email-masked], [email-masked]
Date: Tue, 15 Dec 2009 09:14:16 EST
List-Id: <bigcampaign.googlegroups.com>

Pass Financial Regulatory Reform – Then Break Up the Big Wall Street  Banks 

Last Friday, the House  passed critical regulatory reform legislation aimed 
at preventing the recurrence  of the kind of financial meltdown that 
devastated our economy at the end of the  Bush Administration.   
The lobbyists from  Wall Street worked hand-in-glove with the Republicans, 
and a few Democrats, to  try to kill the bill.  Astoundingly,  the 
Republicans argued that Wall Street should continue to be free to engage in  the same 
reckless speculation that led directly to 10% unemployment and required  
the taxpayers to inject hundreds of billions into the markets so that the  
geniuses of private finance would not plunge us all into the abyss of another  
Great Depression. 
With no regard for history – and here I  mean the events of only 12 months 
ago – the Republicans and Big Banks have the  audacity to contend that the 
creation of jobs and a growing economy requires the  lowest levels of 
regulation and government involvement possible.  
Here’s a news flash:  we tried it your way for eight years.  The results: 
the lowest level of job creation of any eight-year period  since World War 
II; all of the country’s economic growth was siphoned off by the  top 2% of 
the population and the financial sector; and the economy  imploded.  Sure – let
’s try that again.  
The Republicans even  had the brazenness to convene a convocation of 100 
Wall Street  lobbyists last Wednesday to plot how they could completely kill 
financial  regulatory reform.  They failed,  largely due to the great work of 
Americans for Regulatory Reform, House Speaker  Pelosi, Finance Chair 
Barney Frank and intensive lobbying from the Obama  Administration.  
They did manage to  water down the House bill – but it still represents the 
most important move to  re-regulate the out-of-control financial sector 
since the Great Depression.  
Soon, Chris Dodd’s Senate  Banking Committee will report out the Senate’s 
version of this measure and  hopefully a bill will be on the President’s 
desk early next year.  
Financial reform is  terrific politics for Democrats. 
Americans United for Change released a new poll conducted  by Anzalone 
Liszt Research that found broad support for regulatory reform aimed  at reining 
in Wall Street. Among the key findings: 
Ø       Overall, 70% of voters believe that the country’s financial system 
needs  either major reforms or a total  overhaul. 
Ø       When voters learn about President Obama’s plan, support for 
specific changes  increases dramatically. Once voters hear a description of the 
President’s  financial reform plan that focuses on increasing oversight over 
big banks,  protecting consumers, and cracking down on corporate abuses, 
support rises by  25 points to 60%. 
Ø       Independents are particularly receptive to the plan. Among 
Independents,  the increase in support for the plan following the description was 
particularly  large (31 points), leading them to support the plan by a 
19-point margin (56% to  37%). 
But financial  regulatory reform, while necessary, is not sufficient to end 
the domination of  the outsized financial sector on the American economy. 
The next step  requires breaking up the giant Wall Street Banks that dominate 
our economy.  Nothing less will do in order to create  an even modestly 
competitive financial market place. 
Let me relate a story  that illustrates their massively inordinate market 
power. 
A couple of weeks ago,  I got a letter from CitiCorp informing me that they 
planned to raise the  interest rate on my credit card from a really good 
7.24% to 11.99% -- a big  increase by two-thirds, or 4.75 percentage points. 
Since I never miss a payment,  I called to complain – ultimately speaking to 
the service people in the office  of CitiCorp’s President in New  York.    
I was told that all  CitiCorp customers would ultimately have their 
interest rates increased -- that  as far as they knew I would have the lowest 
interest rate of any they would  offer.  In fact, the representative  told me, 
people who had 15% rates had increases of up to 22 percentage points --  and 
that some customers would now be paying as much as 29.99%.  That, of course, 
is getting into the  range of your local neighborhood juice loan operator. 
I pointed out that interest  rates in the United  States had not increased 
at all – much less by  almost 5%.  She said it was due to  their “other 
costs.”  Then I noted  that the material made available to their investors 
indicated that their  overhead costs had actually dropped.  “Other costs,” she 
said. 
Of course those other  costs would be the losses they took on reckless 
speculative investments, and the  increasing credit card default rate caused by 
the recession –  for which CitiCorp, Goldman Sachs,  Chase, Bank of America, 
AIG, and the other “masters of the universe” were mainly  responsible. 
Yet these very same  banks – that caused the economic disaster – are all 
raising credit card interest  rates to siphon tens of billions of dollars 
from the real economy of consumers  and workers into the coffers of the 
financial sector. 
How can they do  this?  Simple, there is no real  competition in the credit 
card sector. The top three issuers control 52.82% of  the market (JPMorgan 
Chase 21.22%, Bank of America 19.25% and CitiBank  12.35%).  Add American 
Express  (10.19%) and Capital One (6.95%) – and it becomes clear that five 
firms control  almost 70% of American’s credit card market. 
Raising interest rates by 5%  on the approximately $972 billion in 
outstanding credit card debt would transfer  about $48 billion from the pockets of 
waitresses, file clerks, cab drivers,  construction workers, teachers and 
firemen – the people who create America’s  wealth – into the pockets of Wall 
Street Bankers. 
This is money that  would otherwise be used to replace the broken TV, or 
pay for gas to get to work,  or buy holiday gifts – to make the purchases that 
would create jobs and economic  growth.  What will Wall Street do  with 
this money?   
According to a report  by New York Attorney General Andrew Cuomo, employees 
at nine banks that received  money from the TARP bailout received a 
combined total of $32.6 billion in  bonuses last year.  As the Wall Street Journal 
reported, the  bonuses included, “ more than $1 million apiece to nearly 
5,000 employees –  despite huge losses that plunged the U.S. into economic  
turmoil.” 
Bloomberg News reported that: “The top 200 bonus recipients at  JPMorgan 
Chase & Co. received $1.12 billion last year, while the top 200 at  Goldman 
Sachs received $995 million. At Merrill Lynch, the top 149 received $858  
million and at Morgan Stanley, the top 101 received $577 million. Those  650 
people received a combined $3.55 billion, or an average of $5.46  million. 
“JPMorgan Chase had 1,626  employees who received a bonus of at least $1 
million last year, more than any  other Wall Street firm,”  according  to the 
report.  “Goldman Sachs had  953 employees who received $1 million or more 
in bonuses, while Citigroup Inc.  had 738, Merrill Lynch & Co., 696, and 
Morgan Stanley, 428.  Bank of America Corp. had 172, while  Wells Fargo & Co. 
had 62.” 
How do they get away  with this? They do it -- as the old John Houseman ad 
for Smith Barney used to  say -- “the old fashioned way.”  They do it the 
same way that the robber barons of the early  20th century did it before 
Teddy Roosevelt “busted the trusts.” They  control such huge percentages of the 
market that they can do pretty much what  they want. 
And of course they try  to maintain their stranglehold on the market by 
spending a fortune on campaign  contributions and lobbyists. President Obama 
reported in his Saturday radio  address that the Banks had spent $300 million 
on lobbying Congress this year  alone.  
There is no economic  rationale for allowing a few big private corporations 
to control  America’s financial markets.  And we’ve just seen the 
outrageous  outcome.  When big banks are “too  big to fail” because of the 
devastating impact of their collapse on the entire economy, taxpayers are forced to  
reach into their jeans and bail them out, so that they can go on making 
tens of  billions of dollars in “bonuses” as compensation for their “financial 
genius.”   
There’s something  wrong with this picture. To put it  succinctly:  if a 
private  institution is too big to fail, it’s too big to  exist. 
Robert Creamer is  a long-time political organizer and strategist, and 
author of the recent book:  “Stand Up Straight: How Progressives Can Win,” 
available on _amazon.com_ 
(http://www.amazon.com/Listen-Your-Mother-Straight-Progressives/dp/0979585295/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1206567141&sr=8-1
) . 

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