As news of more criminal activity by the nation’s big financial institutions continued to pile up today, the labor movement pushed hard for a massive turnout at a march and rally on Wall Street April 29. Predicting that well over 10,000 demonstrators will descend on the center of world capital that day, AFL-CIO President Richard Trumka said, “We are taking this fight straight to Wall Street. They created this mess and now they have to pay.”
In a nationally viewed webcast, Trumka said that labor is demanding not just strict new financial reforms but also taxes on financial transactions that can help pay to “fill the 11 million job hole that their recklessness has created.”
“While millions of workers lost their jobs, their homes and their retirement savings the chief executive officer of Bank of America took home $29,930,431 in total compensation,” he declared.
The national outrage over executive pay, sparked when six large banks took $700 billion in taxpayer bailouts at the end of the Bush administration, has mushroomed into a national movement for finance reform and a push by the nation’s unions to compel Wall Street to pay for massive job creation.
In an attempt to put the brakes on financial reform, the 10 wealthiest hedge fund managers have pumped more than $1 million into the campaign coffers of numerous congressional representatives. Consumer advocates warned this week that this is one of the reasons hedge fund managers would get off too easily if the finance reform bill put forward by Senate Finance Committee chairman Christopher Dodd is not strengthened.
Rep. Alan Grayson, D-Fla., who joined Trumka in the webcast, said, “Bank lobbyists are running around all over Washington handing out $5,000 checks to lawmakers who will help them stop finance reform. The American people have to know about this. What do they think about their representatives being bought off like this?”
There were separate reports today that the Chamber of Commerce, by itself, has already spent $3 million to kill the Obama administration’s plan to set up a consumer financial protection agency.
In response, the White House says it is launching a series of speeches and newspaper op-eds this week to draw attention to the financial regulatory overhaul and its impact on the economy.
Trumka discussed how the Dodd bill should be strengthened.
“It must ensure that the Consumer Finance Protection Agency has the independence and full authority to protect consumers from dangerous financial products and practices,” he said.
“It has to bring transparency to our shadow capital markets, requiring that these transactions are fully transparent, and allow regulators to break up banks that become ‘too big to fail.'”
Treasury Secretary Tim Geithner said today, in support of the Dodd bill, that it would ensure no further taxpayer bailouts and that when big firms fail they would follow a “bankruptcy regime” whereby equity holders would lose and assets would be sold.
Trumka said he supports an amendment by Democratic Sen. Sherrod Brown from Ohio which would require that the salaries of any workers affected would be moved to the top of the list of financial obligations that would have to be settled.
As if to underline the timeliness of Trumka’s webcast today and the push for a march on Wall Street, Senate investigators disclosed that Washington Mutual intentionally created the toxic assets that contributed to the economic collapse. Investigators found that the company’s executives knowingly created a “mortgage time bomb” by making sub-prime loans they knew would go bad and then packaging them into risky securities.
The bank took loans in which it had discovered fraudulent activity such as false income statements and rolled them into mortgage securities sold to investors unaware of the fraud.
WaMu executives were questioned about this before Congress today but a decision about whether to refer the matter to the Justice Department for possible criminal charges will not be made until Friday.
Rep. Grayson expressed his anger today that “not one single person has yet to be prosecuted for criminal activity regarding the destruction of one-fifth of the wealth of the American economy.”
Also along these lines, The New York Times reported today that Lehman Brothers created a secret company to shift high-risk transactions off its books:
“Entities like Castle Hudson are part of a vast financial system that operates in the shadow of Wall Street, largely beyond the reach of regulators,” the article said. Such companies exchange bad investments for cash, making the banks look stronger than they are.
Meanwhile, JPMorgan Chase came out fighting against the Obama administration’s proposal for relief for homeowners.
In testimony today Davis Lowman, chief executive officer for home loan lending at JPMorgan, attacked the president’s proposal that lenders decrease the amounts owed on home mortgages by people who are unemployed. He told Congress that it is the responsibility of homeowners to bear the losses that result from borrowing they could not afford.