WASHINGTON (PAI) – Saying that it’s time once again to make Wall Street work for Main Street, and not the other way around, top unions and their allies launched a “Take on Wall Street” campaign to rein in, if not actually end, the abuses the financial sector foists upon us.
At a crowded May 24 press conference, AFL-CIO President Richard Trumka praised the Dodd-Frank law, which labor helped push through five years ago after the 2008 Great Recession – caused by the financiers’ fraud and finagling – but said it does not go far enough.
Other speakers, led by Sen. Elizabeth Warren, D-Mass., the banks’ biggest foe, agreed.
“Dodd-Frank has reined in Wall Street’s most reckless practices, but it was designed to deal only with the most acute, urgent problems,” Trumka said. “It’s time to go on the offensive.”
That means a comprehensive program to rein in the financiers. It features:
1) Restoring the barrier between commercial banking – mom and pop’s savings’ accounts-and Wall Street investment banking and trading, which the GOP-run Congress and Democratic President Bill Clinton demolished in 1999. That Great Depression-era Glass-Steagall Act worked and prevented U.S. bank failures for 50 years, Warren said. She’s introduced legislation to restore Glass-Steagall.
2) Imposing a small transactions tax, which the U.S. had until the mid-1960s on financial transactions, but limiting it to speculative mass and computer-generated trading. That trading accounts for 70 percent of all swaps in the financial markets – and for the billion-dollar payouts to hedge fund managers who don’t produce anything, speakers said. The financial transactions tax would not only raise billions of dollars yearly – estimates ranged from $100 billion to $300 billion – but would also curb the speculators, speakers added.
3) Creating a mechanism to break up the big banks. Warren cited a statement from their regulator, the Federal Reserve, two weeks ago, saying that “too big to fail” still is a threat. The Fed, she said, calculated that if any one of the nation’s seven largest financial institutions failed, it would take the entire economy down with it. That’s what happened in 2008.
“There should be two basic rules,” the senator added. “One, financial institutions shouldn’t be allowed to cheat people and two, financial institutions shouldn’t be allowed to force taxpayers to bail them out,” as happened in 2008-2009.
4) Closing two loopholes financiers use to evade taxes, which in turn loads taxes on everyone else. The “carried interest’ loophole lets hedge fund managers pay taxes on their income at the lower federal capital gains rate, rather than at ordinary tax rates. As a result, the top 25 hedge fund managers in the U.S. “earned more than all kindergarten teachers combined,” said Lisa Donner, the new executive director of the labor-backed Americans for Financial Reform. The other loophole lets companies deduct excessive executive compensation.
5) Expanding banking services to the unbanked quarter of the U.S. population who have neither savings nor checking accounts. They now must turn to payday lenders who charge interest rates of 300 percent or more annually, or to similar enterprises. The elderly, minorities, retired workers and others are particular victims of such sharks, speakers said.
Specifically, the coalition would put the U.S. Postal Service back in the banking business, able to offer checking and savings accounts at all of its branches nationwide. Warren touted the idea at the May 24 event, and Sen. Bernie Sanders, Ind-Vt., has included it in his comprehensive postal reform legislation, which major postal unions support.
Warren added another goal: Lobbying federal agencies, particularly the Justice Department, to criminally prosecute financiers and their institutions for fraud as well as their other finagling. Right now, all they do is settle out of court for multi-million-dollar fines. Nobody goes to jail, she said. They should, she declared.
Major unions lined up to support “Take On Wall Street,” with its list of sponsors including the AFL-CIO, AFSCME, the Teachers, the Postal Workers, the Government Employees, the Communications Workers, the Economic Policy Institute, the Auto Workers, the National Education Association, the Service Employees, Unite Here and Working America.
Trumka said the financiers’ finagling, and the wreck they made of the economy and of peoples’ lives “was by design.” He added “we need a bigger, bolder approach” to stop them.
That approach will include demonstrations, lobbying lawmakers, raising the issue during the election campaign, teletown halls to plan street actions and recruiting activists nationwide, Donner said. Warren, among others, warned it could take years. The financial industry would marshal millions of dollars and “lawyers and lobbyists” to stop it, she predicted.
“They’re trying to run the political system to influence us to let them write the rules to let them make more money,” added another congressional backer, Rep. Keith Ellison, DFL-Minn.
“They’re destabilizing us,” added Teachers President Randi Weingarten in a video.
Communications Workers Secretary-Treasurer Sara Steffens said the financial finagling reaches all industries. A former News Guild member and organizer at the San Jose Mercury-News, Steffens noted one hedge fund is now the second-largest owner of U.S. newspaper.
And a hedge fund manager that owned her paper raked in immense profits while opposing the unionization drive there and cutting reporters’ pay, she said. The honcho also had a lower tax rate than reporters did.
“We have seen the devastating effects when corporations care just about the bottom line, not about human beings,” Steffens said. “All I have to say is ‘Let’s get started,'” Trumka concluded.
Photo: stock photo