Contrary to critics, who seem to think that the only way for Occupy Wall Street to have an impact is by taking to the streets, the movement continues to focus on developing novel ways to reduce the power of a deeply entrenched, abusive financial services industry. One way is by serving as a people’s lobbyist to shine light on the way critical aspects of financial services regulation are negotiated, usually out of sight of the public.
Occupy the SEC’s participation in the Volcker Rule rulemaking comment process is a reminder that opportunities exist to fight industry lobbyists on their own turf by exercising rights available to all citizens. The Administrative Procedures Act requires that the regulators solicit public comment on proposed rules and enter those comments into the public record. It also requires the regulators to defend or refute the comments received in their final rulemaking. Press coverage of this publically available information should help to bring pro-regulatory pressure and support to a regulatory community used to hearing from only one side. When the rules are finalized we will have another opportunity to evaluate whose interests have been served by the regulators.
We would prefer that the regulators take a stronger stand against the financial services lobby on their own. Apparently we are not alone, or even in the minority.
- 64% believe corporate misconduct was a driver of the crisis
- 81% want more government involvement in controlling misconduct
- 63% want more government funding for regulators and law enforcement
As the article notes, the survey’s timing is impeccable, as it comes out on the one-year anniversary of the Occupy movement. Although the survey’s results are not surprising, it is encouraging to see so much public support for the kinds of reforms Occupy the SEC and the OWS Alternative Banking are actively pursuing.
In February, 2012, Occupy the SEC submitted a detailed and comprehensive comment letter to address the loopholes and weaknesses in the proposed regulatory rules to implement the Volcker Rule.
In June 2012, Occupy the SEC and the OWS Alternative Banking Group submitted a letter to the SEC Chairman Mary Schapiro and marched on the SEC to urge the SEC enforcement division to initiate an enforcement action against Jamie Dimon for violations of Sarbanes-Oxley CEO internal control certification requirements.
When JPMorgan CEO, Jamie Dimon, was called to testify before the House Financial Services Committee in June 2012, Occupy the SEC and the OWS Alternative Banking Working Group formally requested the Committee to ask Jamie Dimon to answer some pointed questions about his role in the London Whale debacle.
In July 2012, we submitted a letter to the House Financial Services Committee’s Hearing on the 10th Anniversary of the Sarbanes-Oxley Act urging the Committee to act to implement enforcement of the statute in light of the overwhelming evidence of Sarbanes-Oxley violations committed by large financial institutions before, during and after the onset of the financial crisis. We also requested the Committee to call for for an enforcement action by the SEC against JPMorgan, in light of the certified weaknesses in financial controls at the bank that came to light as a result of the London Whale debacle.
In July 2012 Occupy the SEC submitted a comment letter to the SEC regarding the implementation of the odious Jumpstarting Our Business Startups (JOBS) act, noting that:
“We have serious concerns about the JOBS Act and its capacity to promote fraud at the expense of small-time investors. Equally troubling is the fact that the JOBS Act magnifies the unfair structural advantages already enjoyed by insiders, investment banks and their favored clients, and issuers. Accordingly, we urge the SEC, in issuing regulations under the JOBS Act, to utilize the full extent of its authority to impose additional restrictions that protect the public interest.”
We have also called for criminal prosecutions in the Libor scandal and to demand the regulators to seek jail time to deter future criminal activity, especially after such egregious fraud as misquoting the reference lending rate for $800 Trillion of contracts.
Occupy the SEC’s most recent project was to answer House Financial Services Committee Chairman Spencer Bachus’ call for suggestions to ‘simplify’ the Volcker Rule. Our September 7, 2012 submission was probably not what Chairman Bachus had in mind when he made the request in August, but it did provide us the opportunity to formally submit recommendations for implementing a strong version of the Volcker rule to a committee of Congressmen who should have an interest in protecting their constituents from financial misconduct. As part of that effort we relied on a study of campaign contributions to members of the committee from the financial services industry prepared by Public Citizen The study found that members of Congress who signed letters in support of weakening the Volcker Rule on average received far more than those who signed in letters in favor of strengthening it. Alarmingly, the statistics were even more skewed among the members of the Financial Services Committee. (a detailed listing of the members, the amounts contributed, and their position on a weak vs a strong Volcker rule was included in the appendix to the letter). On September 210,2012, the Sunlight Foundation published it’s study of FIRE campaign contributions to members of both Houses of Congress. As we noted in the letter:
“We remain concerned about the inordinate influence of the financial services lobby on legislative initiatives such as the proposed revision to the Volcker Rule under consideration here. The vast majority of comment letters that the Agencies received in connection with the Volcker Rule (numbering over 17,000) favored strengthened regulation. Unfortunately, according to data compiled by Public Citizen, it appears that 36 of the 61 members of the House Financial Services Committee (59% of the membership) have gone on record in favor of weakening the Volcker Rule, by signing certain comment letters to the Agencies that echo industry lobbyists’ positions. Shockingly, no member of the Committee submitted or signed a comment letter advocating strengthening of the Rule. The divergence between public support for the terms of the Rule and the opposition of many of the Committee members is a particular point of concern.”
It’s worth noting that the 17,000 comment letters about the Volcker rule to the agencies included 15,000+ letters from individuals who participated in the comment process to voice their support for a strong Volcker Rule. This unprecedented citizen participation was organized by Public Citizen. The irony, as in the ‘no good deed goes unpunished’ variety, is that the regulators discounted these letters, as ‘unspecific’ while the financial services advocates successfully used the huge volume as evidence of the overwhelming complexity of the rule.
The Labaton Sucharow study helps quantify the disparity between what the public wants and what our representatives in Congress are delivering. It highlights the importance of the participation of concerned citizens in this financial re-regulation effort to remind Congress that the banks need to be reined in, not set loose.