Occupy the SEC: Against Capitalism Unbound

There is abundant evidence of a shift in the relation of bank capital to state power in the U.S. Historically, the state has facilitated the accumulation of capital through enforcement of laws and spending on infrastructure, intervening to defuse class resistance. Politics has been about control of state power on behalf of one faction or another of the ruling elite, using social wedge issues to conceal the class-warfare nature of state legislation.

But now, the unlimited PAC moneys of billionaire ideologues has destabilized the political system. Rightwing billionaires spectacularly have split the Republican party by the funding of extremist candidates, mobilizing the base against the establishment-supported business candidate. There is a real possibility that Rick Santorum will win more primaries – and the establishment knows his views are so far off mainstream that it would sink the party in the election.

Juan Cole points out: “Big money has always been a problem in American politics, but now humongous money threatens to capsize the ship of state. … the GOP super wealthy, having produced the tea party in 2010, have now given us national candidates so extreme that they often seem to be running for Supreme Leader of Iran instead of president of the United States. Although the Citizens United ruling of the Supreme Court contributed to this problem, the culprits here are, fundamentally, the length of U.S. campaigns and the cost of television advertising for them.”

Santorum’s blend of social conservatism and blue-collar populism has clear racist undercurrents. He inverts conservative morality – that prosperity is a sign of righteousness – to mean that only the righteous (meaning white men) deserve to be prosperous and that everybody else in the world should be punished for their unrighteousness. A spokesman for Santorum stated: “He discusses religion in a broader context, that we are given rights, we are endowed by our Creator with rights, and those rights are being taken away when government grows in size.” Santorum is not objecting to government regulation of the rights of women or minority citizens, but to state limits on the divine rights of white men.

The Democrats are held together by Obama who for them represents a safeguard against extremist Republicans; in his speeches he has adopted some of the rhetoric of the Occupy movement, while behind the scenes his administration has actively prevented bank accountability for fraud. The recent settlement with mortgage lenders was achieved because Obama put huge political pressure on state attorneys-general who were resisting giving the banks a get out of jail card on falsely documented repossessions.

Simon Johnson comments in TruthOut: “… the Obama administration’s settlement with the mortgage lenders is consistent with its track record on all of its policies related to the financial sector, which has been abysmal. But it is also puzzling. Why would the administration continue to bend over backwards to be lenient towards top bankers under these circumstances? … at stake in the mortgage settlement are fundamental and systemic breaches of the rule of law – perjury and fraud on an economy-wide scale. The Justice Department has, without question, all of the power that it needs to prosecute these alleged crimes fully. And yet America’s top law-enforcement officials have consistently – and now completely – backed off. The main motivation behind the administration’s indulgence of serious criminality evidently is fear of the consequences of taking tough action on individual bankers. And maybe officials are right to be afraid, given the massive size of the banks in question relative to the economy. In fact, those banks are bigger now than they were before the crisis.”

Banks’ social power has increased along with mounting personal debt: today, one in seven Americans is being pursued by debt collectors. Matt Stoller comments: “One of the characteristics of the new social contract ushered in by both George W. Bush and Barack Obama is the increasing power of creditors to govern outright, from tax farming by banks to the use of credit checks to access employment opportunities. There are now thousands of people legally jailed because they aren’t paying their bills, ie. debtor’s prisons have returned. … Increasingly, creditors are coming to set up the institutional structures for financial surveillance, state-sponsored enforcement of their claims through tightened bankruptcy laws and the selective use of jail, and the denial of economic opportunity based on one’s interaction with the financial system.”

Michael Hudson points out that Greece is being used as an experiment by policy-makers to see how far wages and pensions can be lowered before the population presses back. “The EU and the banks have appointed a bank lobbyist, who is euphemistically called a ‘technocrat’, to be in political charge of Greece. His job is to see how much labor renumeration can be squeezed out. The neoliberals realize that the left in Europe is completely fragmented and does not have a defense against neoliberal policies. … Greece is being used as a laboratory experiment to determine the results when labor is squeezed very hard. It’s like trying to feed a horse less and less and see whether it’s really going to be more efficient until it keels over dead.”

Unlike Europe, the US has a still-viable civic culture and it will not be easy to impose this kind of austerity on the population. “Occupy the SEC” has taken advantage of legal avenues to present detailed proposals for the implementation of the “Volcker Rule” section of the Dodd-Frank act, whose intent was to reign in the speculation that led to economic meltdown in 2008. Volcker’s idea was to ban proprietary trading and investments in hedge funds at government-backed banks: or to put it another way, to stop banks making risky bets and then have the government bail them out if the bets go wrong. However, the SEC’s proposals have watered down the rule in favor of the banks.

The New York Times editorializes bluntly: “The law prohibits banks from “proprietary trading” — securities’ transactions where the profits and losses are sustained by the bank, not its customers. The sound premise is that taxpayers, who back the banks, should not be on the hook for speculation that mainly enriches traders and bank executives. So that banks can continue to serve customers, the law instructs regulators to allow certain forms of nonproprietary trading, including ‘market making,’ in which banks can buy and sell securities, but only for the purpose of facilitating transactions for clients. The proposed regulations fail to adequately distinguish between the two types of trades. That could allow banks to engage in proprietary trades under the guise of market making. … The Volcker rule is not as complicated as banks so eagerly claim. What is complicated is standing up to the banks, who are determined to do everything they can to preserve their high profits, no matter the risk.”

This is the site of an important struggle against plutocratic power. Occupy the SEC explains: “Whenever a federal agency proposes a substantive new regulation, by law it is required to seek public comment first. Normally the only parties that respond to agency comment requests are the companies that are affected by the regulations, and their attorneys (i.e. lawyers at the investment banks, in this case). As you might guess, their comments are always critical of regulation.” The pressure from bank lobbyists has inflated the size of the legislation document to over 500 pages, primarily to include loopholes that negate Congressional intent; simple rules have been avoided in favor of multi-factor tests and exemptions. Occupy the SEC’s 325-page rebuttal letter to bank lobbyists that oppose the Volcker law makes detailed comments that identify the loopholes and advocates a strong enforcement of the law to protect average Americans from risky banking activities.

Two members of the group, Caitlin Kline and Alexis Goldstein, discuss the letter on video here.


1 Comment

Filed under 2012 Election, austerity measures, credit creation, financiers, monetary economies, Obama, Occupy the SEC, political analysis, We are the 99 percent

One response to “Occupy the SEC: Against Capitalism Unbound

  1. Nalliah Thayabharan

    “Competition is a sin”
    John D. Rockefeller

    Several people assume that the Wall Street is equal to capitalism. Real capitalism requires a looser. The establishing your own business needs resources that others already own. It’s a race to own.
    But Wall Street thinks differently. For Wall street competition is a sin.

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