For an Occupy Wall Street demand, how about ‘accountability and compliance’?
With protests against Wall Street corruption spreading across the country, a common complaint from the media is that the Occupy Wall Street (OWS) protesters lack a cohesive message or demand. Coming from a mainstream media in the United States that insists upon convenient soundbites and simplifies big, novel ideas into a pre-conceived framework of left-vs-right, this criticism perhaps should not be taken too seriously. There is something to be said for allowing the demonstrators to naturally work out their demands over time, which is an idea articulated by the the OWS slogan, “the demand is a process.”
There is also a point to be made that by articulating one overarching demand, the demonstrations will unnecessarily limit themselves to a single issue, running the risk of becoming myopic and irrelevant. If, for example, the fledgling movement demands the re-implementation of Glass-Steagall, the protesters could end up alienating potential allies who may be more concerned about getting money out of politics and ending “corporate personhood,” climate change, the prison-industrial complex, immigration reform or the U.S.’s ongoing wars.
But if there is one demand that could both focus the demonstrations and encapsulate the broadest possible scope, which would express Americans’ desires to hold Wall Street accountable for crashing the global economy, to ensure fair elections, end corporate rule, as well as broaden the scope to include ending the U.S. wars and prosecute U.S. officials responsible for authorizing torture, that demand could be “accountability and compliance,” or, alternatively, “return to the rule of law.”
As this blog has consistently pointed out, some of the biggest problems facing the nation and the world would be solved if the United States would simply adhere to the rule of law — both domestically and internationally — follow legal principles and live up to political commitments. There are consequences when the rule of law is cast aside by the United States; when it comes to issues such as waging wars of aggression and implementing torture, these consequences tend to be a general decline of human rights standards around the world, and a culture of impunity in which leaders know that there will be no repercussions for their actions.
When it comes to Wall Street greed and Washington corruption, the consequences have included the global financial crisis that began in 2008 and shows no sign of abating.
It is no secret what caused this crisis. Financial and monetary experts around the world see the origins of this crisis as a regulation failure — lack of regulations and failure to enforce existing regulations. And the reason for this, too, is all too clear.
As the International Monetary Fund pointed out in a June 2011 report on the causes of the financial crisis, “regulatory failure, in which the political influence of the financial industry played a part, may have contributed to the 2007 meltdown in the U.S. mortgage market, which by fall 2008 had escalated from a localized U.S. crisis to the worst episode of global financial instability since the Great Depression of the 1930s.”
The IMF continues:
To go beyond anecdotes and systematically study how much lobbying and campaign contributions affected U.S. financial legislation in the years preceding the crisis, we developed a new data set of U.S. financial companies’ politically targeted activities during 1999–2006 (Igan and Mishra, forthcoming). We found that lobbying expenditures by the U.S. financial industry were directly associated with how legislators voted on key bills in the years before the crisis—and that bills proposing regulation that the industry considered unfavorable were far less likely to pass than bills proposing financial deregulation. We chose to focus on the United States not because lobbying doesn’t take place in other countries, but because U.S. transparency laws make it possible to gather the necessary details on political spending and lobbying for such analysis.
It is widely accepted that the current economic crisis has its roots in misguided deregulation policies in the United States, which in turn resulted from the institutionalized corruption seen in the U.S. system of corporate-financed political campaigns and the vast expenditures on lobbying on the part of the financial industry. Further, it is recognized that any sort of economic recovery must include the reinstatement of regulations that were lifted over the past several decades.
Specifically, when the 1933 U.S. Glass-Steagall Act, which separated commercial banking from investment banking, was repealed in 1999, commercial banks began taking on risky activities that directly led to the current situation.
In late 1999, the bill repealing Glass-Steagall passed the Senate by a vote of 90 to 8 and the House by 362 to 57, but there were were those at the time who warned that ignoring the lessons of the Great Depression would lead to a repeat of history. As the New York Times reported on Nov. 5, 1999,
The decision to repeal the Glass-Steagall Act of 1933 provoked dire warnings from a handful of dissenters that the deregulation of Wall Street would someday wreak havoc on the nation’s financial system. The original idea behind Glass-Steagall was that separation between bankers and brokers would reduce the potential conflicts of interest that were thought to have contributed to the speculative stock frenzy before the Depression.
In one particularly prescient statement, U.S. Senator Byron Dorgan said in November 1999 that “we will look back in 10 years’ time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930s is true in 2010… We have now decided in the name of modernization to forget the lessons of the past, of safety and soundness.”
Now, 12 years later, it is clear that those warnings should have been heeded. As Public Citizen recently put it in a statement expressing solidarity with Occupy Wall Street:
Millions of people are out of work because of Wall Street’s recklessness. Millions more have been thrown out of their homes for the same reason. Meanwhile, the federal government fails to take obvious steps to address these problems because of the outsized influence of the very Wall Street firms and giant corporations that caused our economic problems.
Public Citizen identifies a number of specific policy proposals that have been expressed by the OWS movement:
Put the unemployed to work retrofitting energy-inefficient buildings, teaching children and meeting other unmet needs. Invest in a green energy revolution. Impose a financial speculation tax, and increase taxes on the wealthy and corporations (and make them pay). Put in place a single-payer, Medicare-for-All health care system. Undo NAFTA-style corporate trade agreements – and don’t enter in any new ones. Force banks to renegotiate mortgage terms, and let foreclosed-upon families stay in their homes as renters. Overturn the U.S. Supreme Court’s decision in Citizens United v. Federal Election Commission with a constitutional amendment and reestablish the principle that corporations exist to serve the people, not the other way around.
While these are all worthwhile policy prescriptions, what remains unsaid is the importance of simply holding wrongdoers accountable, punishing those who broke the law, enforcing regulations and taking measures to combat corruption as laid out in international law.
As a state party to the United Nations Convention against Corruption, the United States has agreed to take certain measures to prevent the kind of corruption that led directly to the economic crisis that the world is now in. These commitments provide general principles that states parties have agreed to as well as specific measures that should be taken to prevent conflicts of interest, and corruption in both the public and private sphere.
In order to prevent corruption:
Each State Party shall, in accordance with the fundamental principles of its legal system, develop and implement or maintain effective, coordinated anti-corruption policies that promote the participation of society and reflect the principles of the rule of law, proper management of public affairs and public property, integrity, transparency and accountability.
Each State Party shall endeavour to establish and promote effective practices aimed at the prevention of corruption.
With the flood of anonymous corporate money that has been unleashed on the American political process by the 2010 Citizens United Supreme Court decision, it is difficult to see how the United States is complying with the following provision of the Convention against Corruption:
Each State Party shall also consider taking appropriate legislative and administrative measures, consistent with the objectives of this Convention and in accordance with the fundamental principles of its domestic law, to enhance transparency in the funding of candidatures for elected public office and, where applicable, the funding of political parties.
There are also provisions against conflicts of interest which the U.S. appears to be flouting:
Each State Party shall, in accordance with the fundamental principles of its domestic law, endeavour to adopt, maintain and strengthen systems that promote transparency and prevent conflicts of interest.
Each State Party shall endeavour, where appropriate and in accordance with the fundamental principles of its domestic law, to establish measures and systems requiring public officials to make declarations to appropriate authorities regarding, inter alia, their outside activities, employment, investments, assets and substantial gifts or benefits from which a conflict of interest may result with respect to their functions as public officials. …
Preventing conflicts of interest by imposing restrictions, as appropriate and for a reasonable period of time, on the professional activities of former public officials or on the employment of public officials by the private sector after their resignation or retirement, where such activities or employment relate directly to the functions held or supervised by those public officials during their tenure
With the famous Washington-Wall Street revolving door, it is clear that the United States is doing little to nothing in order to comply with this important provision against corruption. The magazine Business Insider recently compiled a list of 29 prominent figures who have gone from careers on Wall Street to careers in Washington as regulators, and then back to Wall Street. “The Wall Street-to-Washington-and-back revolving door has been swinging at least since 1934,” Business Insider reports, “and it’s still going.”
The reality is expressed well by the following graphic from an article in New York magazine:
Obviously, this kind of institutionalized conflict of interest, in which regulators have a financial interest in ensuring that regulations are not too strict, is a recipe for disaster. It makes adhering to the Convention against Corruption unlikely, particularly the following provision:
Each State Party shall take measures, in accordance with the fundamental principles of its domestic law, to prevent corruption involving the private sector, enhance accounting and auditing standards in the private sector and, where appropriate, provide effective, proportionate and dissuasive civil, administrative or criminal penalties for failure to comply with such measures.
It is well known that one of the major causes of the 2008 financial meltdown was the fraudulent accounting methods of the mortgage lenders as well as the “independent” ratings agencies that were supposed to serve as a watchdog. Yet, to date, nobody has been prosecuted for the misdeeds that led to the economic collapse.
This is why a simple demand of “accountability and compliance” is key. While continuing to call for increased government spending on jobs and education, or for the forgiveness of mortgage debt and student loans, or for higher taxes on the rich may be in order, what is most important is that the U.S. government begins respecting the rule of law. This means that no one is above the law, that there is equal justice under the law, and that no one is “too big to jail.” The U.S. must enforce its laws and regulations and if that means imprisoning Wall Street bankers than so be it. As the saying goes, “Let justice be done though the heavens fall.”
Further, the call for accountability and compliance is just as relevant in other areas that are not directly related to the current economic situation, which would both focus the Wall Street protesters’ demands as well as broaden their scope. Not only should bankers be held accountable, and not only should the U.S. begin complying with the UN Convention against Corruption, but so too should Bush administration officials who authorized torture.
While the U.S. protests have been claiming headlines in recent days, the movement is clearly growing internationally, with a call for global demonstrations on October 15:
The international protests will offer a fresh opportunity to make this case for U.S. accountability and compliance.