Occupy Wall Street: Two Years Later

Two years ago today, on September 17, 2011, Occupy Wall Street (OWS) was born.  Spearheaded by the Vancouver-based progressive magazine Adbusters, a relatively small group of protesters set up an encampment at Zuccotti Park, a quasi-public space in downtown Manhattan, to protest malfeasance in the financial industry.  The Occupy Wall Street movement quickly gained spectacular momentum, attracting hundreds of thousands of protesters in outcroppings worldwide.

A common criticism of the movement then, and one which persists to this day, is that OWS has sought nothing and has achieved nothing.  Each of these criticisms is flatly wrong.

At its foundation, OWS was an expression of popular exasperation with a financial industry that had propelled the global economy into the worst downtown since the Great Depression.  Too Big To Fail banks placed excessively speculative and under-capitalized bets that led to the collapse of Lehman Brothers, bailouts of AIG and hundreds of other financial institutions, stultification of the credit and housing markets and the consequent global recession.  That recession negatively impacted virtually every person and every business with any meaningful connection to the economy.  The Federal Reserve reported that, in the three years between 2007 and 2010, the median net worth for the typical American family fell almost 40%.

Yet, despite an initial dip, the financial industry continued to enjoy ever-rising profits, lavish bonus structures, and seeming immunity from regulators and prosecutors.  In the face of these pathetic conditions, it was all-but-inevitable that a popular uprising like Occupy Wall Street would emerge.  Indeed, protests against perceived injustices are imbricated in the essential fabric of American history, and date back to the Revolution and before.

The zeitgeist of OWS has not been limited to economic concerns, however, as the energy behind the movement galvanized around many other progressive issues, ranging from foreign policy to local police brutality.  Indeed, the primary “demand” of OWS has simply been a demand to be heard.

In the 1978 movie Network, Oscar-winning actor Peter Finch played Howard Beale, a disenchanted veteran news reporter.  In a seminal scene in the movie, Beale talks directly into the network’s cameras and recounts some of the troubles of the day, including inflation, crime, the prospect of war with the USSR.  Beale admits that he does not have the solution to all of these problems, but insists, quite poignantly, that before they can be addressed, “first, you’ve got to get mad.”  He instructs each member of the audience to get up, open the window, and yell out “I’m as mad as hell, and I’m not going to take it anymore.” The initial Occupy Wall Street protesters followed in this vein, choosing Zuccotti Park instead of their windows.

A second common criticism, that OWS achieved nothing despite its vehemence, is also a myth.  To some extent, recognition of one’s own oppression can be an achievement in of itself.  Goethe said that “none are more hopelessly enslaved than those who falsely believe they are free.”  At the very least, OWS protesters understand the constraints of power that frame their lives.

Even so, the movement’s impact has hardly been circumscribed to the protesters themselves.  By raising the possibility of truly progressive politics — a possibility that had been largely abandoned by the Democratic mainstream — OWS served as a counterbalance to the conservative agenda disseminated by the Koch Brothers, Fox News and the Tea Party.  The movement’s emphasis on progressive causes arguably shifted the political discourse towards the left, paving the way for Democratic victories in the 2011 and 2012 elections.

Activists in various subgroups within OWS have also taken concerted and sustained actions to advocate for specific changes.  Occupy the SEC has advocated before members of Congress, submitted amicus briefs at the Circuit Court and Supreme Court levels, and recently filed a federal lawsuit against financial regulators including the SEC and the Federal Reserve over their delay in implementing the Volcker Rule.  OWS Alternate Banking Group has staged protests against HSBC and recently published a book on the financial system.  Groups like Occupy Our Homes and Occupy Homes Minnesota have successfully battled against unfair home foreclosures.  In April of this year the Rolling Jubilee Fund announced that it had bought out and forgiven over $1 million worth of medical bills owed by over 1000 people.  When Hurricane Sandy devastated the New York metropolitan area in October 2012, even traditional first responders marveled at the efficiency and diligence of Occupy Sandy volunteers who assisted with food delivery and reconstruction efforts.

In the course of two years, the Occupy movement has sought change and has effected change.  Unfortunately, OWS activists have their work cut of for them.  Even in the face of sanguine news reports regarding stock market rallies and economic growth, the struggles of the poor and disenfranchised have not abated since 2011.  A recent study based of IRS statistics revealed that the disparity in income between the top 1% and the 99% is now the worst it has been in a century.  The country could really use a resurgence of the activist spirit that overtook Lower Manhattan two years ago.

- Akshat Tewary

Occupy the SEC Submits Comment Letter to Securities and Exchange Commission on Proposed Money Market Regulations

Occupy the SEC (OSEC) has submitted a comment letter to the Securities and Exchange Commission (Commission) in response to its proposed regulations covering the money market fund industry.

Five years ago the Money Market industry suffered a severe crisis caused by a multitude of factors.  Inadequate and feckless regulation was indubitably one of these factors.

In its comment letter, OSEC commends the Commission for now taking positive steps to fill this regulatory lacuna with prudential regulations that have the potential to preserve market stability and investor confidence. The SEC proposal follows some of the recommendations that OSEC submitted earlier to the Financial Stability Oversight Council (FSOC), but misses several important reforms.

OSEC has submitted its comments in order to ensure that the new MMF rules are developed with input from the perspective of the public, in light of the fact that the public is likely to bear the greatest costs of the systemic risk stemming from the MMF industry.

In its letter, OSEC recommends that regulators consider a series of measures that address gaps in the SEC’s 2010 MMF reforms.  Specifically, OSEC calls for enhanced diversification, increased liquidity and transparency, and greater fund board accountability so that fund investors have full knowledge of the risks involved, and can choose the fund structure that best aligns with their preferences.

The comment letter is available at OSEC’s website as a PDF.

Occupy the SEC Submits Amicus Brief to U.S. Supreme Court in Consolidated Troice Cases, Advocating for Fraud Victims

In October 2013, the U.S. Supreme Court will hear oral arguments on three consolidated cases, Chadbourne Chadbourne & Parke LLP v. Troice, Willis of Colorado Inc. v. Troice and Proskauer Rose LLP v. Troice.  Even though these cases have largely fallen below the general public’s radar, they are extremely important, as an incorrect decision by the Supreme Court could severely limit the ability of victims of financial fraud to seek justice.

These cases relate to two statutes passed in the 1990′s, the Private Securities Litigation Reform Act (PSLRA) and the Securities Litigation Uniform Standards Act (SLUSA).  The financial lobby was able to convince Congress that the nation’s courts were flooded with frivolous securities fraud cases.  To address that perceived problem, Congress passed the PSLRA, which placed several hurdles on securities fraud filings in federal court.  Later, when it seemed that fraud victims had found a way to get around PSLRA, by filing securities fraud cases under state law (instead of federal securities law), Congress passed SLUSA.  The SLUSA statute completely forbids class actions brought under state law if the case alleges fraud that is “in connection with” a federal securities transaction.

Since the passage of SLUSA, every circuit court and the Supreme Court have wrestled with what “in connection with” actually means.  The Court is again addressing the issue in the Troice cases.

The financial lobby has filed briefs arguing the Court should define “in connection with” broadly.  Occupy the SEC (“OSEC”) has filed an amicus brief opposing the lobby.  OSEC’s brief explains that an overly broad definition of “in connection with” would significantly hamper the ability of victims of financial fraud to file civil claims.  Many transactions that have little to do with securities fraud (e.g., loan fraud or mortgage fraud) would no longer be eligible for review under state law.  Federal court filings are generally more burdensome and expensive.  The bottom line is that a broad definition of “in connection with” would mean fewer lawsuits against financial fraudsters.  That outcome would embolden other fraudsters, and would leave fraud victims with fewer civil court options.

OSEC’s amicus brief is available at: http://occupythesec.org/files/OSEC-Troice-Amicus.pdf

The Good, The Bad, & The Ugly – Week of 7/22/2013

Good

Senate hearing earlier this week on bank holding companies (the designation that GS and MS were granted, and one which JPM already had) and their involvement in physical commodity markets, as a follow up to the bombshell NYTimes article last weekend. Warren and Brown asked very hard-hitting questions, and an academic named Saule Omarova gave some fantastic testimony. Her paper is essential reading.  Some background by Michael R. Crittenden and Christian Berthelsen at The Wall Street Journal July 23, 2013.

Federal grand jury delivers a 41-page indictment to hedge fund SAC Capital for insider trading. Heidi Moore at the Guardian July 25, 2013.

Elizabeth Warren and other democratic senators defy party and hold firm on student loan rates. Tracy Jan at The Boston Globe July 24, 2013.

Bad

Recent bombshell New York Times article details how Goldman shuffles aluminum around warehouses, shaving a penny here a penny there, and as a result racks up billions in costs to the public. Not to mention the London Metal Exchange, the regulator here, is filled with bankers from all the major Wall St banks. Next up: Copper. David Kocieniewski at The New York Times July 20, 2013.

Ugly
Lawrence Summers, sexist proponent of complete deregulation, is the potential frontrunner to head up the FED. What worse candidate is there to pick? A most revealing pick for the supposed lesser of two evils Obama. What gymnastics will establishment liberals do to defend this one? David Dayen at Salon July 24, 2013.

The Good, The Bad & The Ugly – Week of 7/15/13

Good

  • The Federal Energy Regulatory Commision (FERC) will fine JP Morgan Chase “close to $1 Billion” for manipulating energy prices in an Enron-esque scheme in Michigan and California. Could easily be an Ugly as Taibbi reviews all the fines “the good bank” Chase has racked up since the crisis. Matt Taibbi at Rolling Stone July 18, 2013.
  • In what still might be an overly optimistic headline, Jessie Eisinger posits that “Finally the Bank Regulators Have Had Enough.” With capital ratios increasing to $6 for every $100, and new derivatives rules being put in place, you can bet the banks will fight back tooth-and-nail. Furthermore there is still time for regulators to back down. We can only hope Mr. Eisinger is right. Only time will tell. Jesse Eisenger at ProPublica July 17, 2013.
  • The SEC has filed suit against hedge fund titan Steven Cohen of SAC Capital for failure to supervise fund managers who were engaging in insider trading. While it would be better if this “failure” was prosecuted at the big banks too, it’s still good to see the regulators going beyond lower- and mid-level folks. Joshua Gallu & Katherine Burton at Bloomberg July 19, 2013

Bad

  • By contrast, the “Fabulous Fab” Tourre trial is nothing more than an attempt to pin the notorious ABACUS case on a lower-level employee while the executives who were really behind it sit in the wings after Goldman signed one of those “neither admit, nor Deny” agreement with the SEC. It’s “like prosecuting a foot-soldier for war crimes” Heidi Moore at The Guardian July 15, 2013.

Ugly

  • Detroit’s emergency manager Kevyn Orr and governor Rick Snyder arranged a rushed bankruptcy filing for the city, the largest in US history. Orr has made clear that he will treat the tens of thousands of retirees who rely on the city’s pension funds as “unsecured creditors” on a par with Wall Street borrowers, regardless of the fact that Wall Street has already pulled nearly $500 million in underwriting fees out of the beleaguered city. Steven Church, Dawn McCarty & Margaret Cronin Fisk at Bloomberg July 19, 2013

The Good, The Bad & The Ugly – Week of 7/8/13

Good

  • Elizabeth Warren along with a group of bipartisan lawmakers are introducing a bill aimed at recreating the Glass-Steagall Act, which separated commercial banking from investment banking, before it was repealed under Clinton with the Gramm-Leach-Bliley Act in 1999. Carter Dougherty and Cheyenne Hawkins at Bloomberg July 11, 2013.

Bad

  • Chase gets caught robo-signing affidavits in credit-card collection lawsuits in order to make selling credit card debt to collection companies even easier. Matt Taibbi at Rolling Stone July 11, 2013.
  • The dust is still settling, so we don’t know yet how this will work out, but the CFTC caved to pressure from industry and overseas regulators to limit the scope of US oversight of crossborder swaps. In a 3-1 vote today, the Commissioners agreed to put out guidance for swaps dealers and investors about how the new regulatory boundaries would work. Considering London’s notoriously “light touch” approach to regulation that brought us the London Whale, it’s hard to be optimistic. Silla Brush at Bloomberg July 12, 2013.

Ugly

  • The SEC gives Wall Street a huge gift as it allows hedge funds to advertise to investors who are “accredited” (people who have at least $1 million net worth not including housing). Nine million people are “accredited”, many of whom will wade into the risky waters of hedge funds for a taste of their  alleged prestige. This is vindication for all those Mary Jo White skeptics who questioned her nomination. Heidi Moore at The Guardian July 10, 2013.
  • Timmy Geithner’s post-Treasury activities highlight the lucrative speaking fee circuit that seems to be the thing to do these days (rather than the bad-optics of lobbying) for slimy politicians after they leave office. Lynn Parramore at Alternet July 10, 2013

The Good, The Bad, & The Ugly – Week of 7/1/2013

Good

One side effect of the Snowden leaks and the revelations of the U.S. spying on it’s supposed “allies” might be the collapse or at least the weakening of two “Free-Trade” Agreements (which really just give aways to multinational corporations), the Trans Pacific Partnership and the US-European “Free Trade” Agreement. Yves Smith at Naked Capitalism July 1, 2013.

Bad

The FED is “clear as mud” as to when the too-big-to-fail banks will have to comply with capital standards setting a hazy “phase in” stage starting January 2014 which may not ever even happen. Pam Martens at Wall Street on Parade July 3, 2013.

Ugly

The FED gives Goldman a huge concession as it gives them two more years (July 12, 2015) to comply with a requirement to divest part of its derivatives business to a separately capitalized unit. Ronald D. Oral at Marketwatch (Wall Street Journal) July 3, 2013.

The Good, The Bad, & The Ugly – Week of 6/24/2013

Good

Gary Gensler is holding firm on cross-border derivative reform, much to the surprise of all the big shots who thought they would get the exemptive waiver extended no problem. Here’s to Gensler going out in style. George Bailey at Naked Capitalism June 25, 2013.

Jon Corzine to be sued by federal regulators for his role in the collapse of MF Global. A rare move against an ex-Goldmanite. But in a case like MF Global, civil charges really aren’t enough. Ben Protess at The New York Times June 25, 2013.

Bad

Obama administration and bank-friendly congressmen try and give Gary Gensler the Brooksley Born treatment as the anxiety rises before the July 12th deadline. However, Gensler unlike Born holds all the cards. Here’s to Gensler not making an 11th hour compromise in the face of adversity. Yves Smith at Naked Capitalism June 27, 2013.

Mortgage rates soar from 3.93% to 4.46% for 30-year fixed mortgage in one week, the highest rate since July 2011. Prashant Gopal at Bloomberg June 27, 2013.

Ugly

A USA Today article details how two-thirds of recipients taking part in the “independent” foreclosure review received a paltry $300 – the smallest possible amount. With many lingering questions about how compensation was determined, who would get it, and the role of the big banks in the process, it’s clear that the people ravaged by the foreclosure crisis still haven’t been given anything resembling justice. Julie Schmit at USA Today June 25, 2013.

The Good, The Bad & The Ugly – Week of 6/17/13

Good

  • NY state superintendent of financial services Benjamin Lawsky (basically New York’s top cop over the banking sector) notched another win, landing a $250 million fine against Bank of Tokyo Mitsubishi-UFJ for its role in secretly handling banking for Iran and other sanctioned countries. As Jonathan Weil at Bloomberg pointed out yesterday, this is in stark contrast to the Treasury Department’s flimsy fine of $8.5 million. Yves Smith at Naked Capitalism takes a closer look today at Lawsky’s performance and is also impressed.
  • Elizabeth Warren takes a stand outside of her normal comfort zone and uses her platform to issue a strong critique of Michael Froman, Obama’s nominee for US Trade Representative, as well as the secrecy surrounding the Trans-Pacific Partnership. Although it’s important to remain skeptical of Ms. Warren, a principled public criticism with no upside should be given some credit, Yves Smith notes at Naked Capitalism June 20, 2013

Bad

  • The Senate votes 93-4 to approve Froman, a Rubinite and by extension a supporter of the Trans Pacific Partnership. Roll Call of the U.S. Senate June 19, 2013.
  • Lynn Parramore takes down the now “official” defender of the uber rich, Harvard economist Greg Mankiw after he writes a bluntly titled paper, “Defending the One Percent”. Mankiw, an extremely influential economist, isn’t even hiding his Randian views from the public. The people in the bubble truly think they are untouchable.  Lynn Parramore at Alternet June 17, 2013.

Ugly

  • The role of the credit ratings agencies in the crisis is well known, as is the outrageous lack of real penalties, but the fact that they knew exactly what they were doing by giving processed subprime junk a AAA rating make the injustice even more outrageous. Emails between rating analysts and their clients reveal how ratings were the result of negotiations rather than analysis, and that the agencies were well aware of the problems in the mortgage market even as they continued to grant AAA ratings. Matt Taibbi at Rolling Stone June 19, 2013.

The Good, The Bad & The Ugly – Week of 6/10/2013

Good

Bad

  • Mary Jo White and the SEC are applying the “Government Sachs” treatment to Deutsche bank as Robert Rice, a respondent in a complaint filed by Eric Ben-Artzi which alleged that Deutsche bank hid billions of dollars by mismarking derivatives, gets hired as chief counsel. Yves Smith at Naked Capitalism June 10, 2013

Ugly

  • Jason Furman, author of a 16-page paper entitled “Walmart: A Progressive Success Story” (*rolls eye*), is nominated by Obama for chairman of the powerful Council of Economic Advisors. 11 economists at the American Enterprise Institute praise the decision giving us more than a clue as to who Obama really wants to impress. Lynn Parramore at Alternet June 11, 2013.
  • Gary Gensler is shown the door presumably in large part for his principled stance that overseas swaps affiliates should comply with Dodd-Frank while Amanda Renteria, an ex-goldmanite with nearly zero experience with derivatives is welcomed in. This could signal not just a more bank-friendly position for the CFTC in the short-term but an aim to render the CFTC ineffectual in the long-term. Yves Smith at Naked Capitalism (For more on Renteria: Shahein Nasiripour at Huff Post) June 12, 2013.