Reformers, radicals, and challenging Wall Street

Gretchen Morgenson isn’t a household name, and probably never will be. But on Wall Street, everybody knows her. And most, I suspect, don’t like her in this male-dominated, testosterone-driven industry.  

Morgenson, you see, is a journalist and in that capacity an astute and unrelenting critic of the “Street’s” practices. Nearly every week in her column in the business section of the Sunday New York Times, she uncovers the seamy side of Wall Street. Indeed, she spotlights the less than transparent practices and culture that put money, and lots of it, in the pockets of financial insiders and institutions, while recklessly rolling the dice with the financial system, and, as we learned all too painfully a few years ago, the larger economy.

In a recent column, for example, she turned her attention to the efforts of the new Congress to further roll back “regulations put in place to keep markets and Main Street safe from reckless Wall Street practices.”

In its sights, Morgenson tell us, is the Dodd-Frank law – a law passed by a narrow margin in 2010 that is designed to rein in some of the speculative trading and destabilizing practices of Wall Street and its “too big to fail” financial institutions.

While Dodd-Frank isn’t, Morgenson notes, a “comprehensive fix” for a risky banking system and leaves many rules governing financial trading still to be written by congressional committees and regulators friendly to the financial industry, it is still too much regulation for the titans of finance. If they had their way,  “self-policing” would be quite enough.

Which explains their unending effort to eviscerate Dodd-Frank. And to their good fortune, they can count on the congressional Republicans, now in the majority, standing ready to do their dirty work.  In fact, a few days after Morgenson’s column appeared in the Times, House Republicans (joined by a few Democrats) passed a bill that further weakened Dodd-Frank. One casualty was a robust interpretation of the Volcker Rule, named after former Federal Reserve Chairman Paul Volcker. In its robust form, the Volker Rule was supposed to prevent speculative trading by federally insured banks, much like the Glass-Steagall Act did until it was repealed in the late 1990s at the insistence of another friend of Wall Street at the time – the Clinton administration.

The attempt at further weakening Dodd-Frank continues a strategy – or should I say tactic – of this motley coalition comprised of Wall Street financial institutions, their lobbyists on K Street in D.C, and a right-wing-dominated Republican Party to dethrone it not in one fell swoop, but with “death by a thousand cuts,” executed in small committees beyond public view, over “business” lunches, and on the House and Senate floors.

Unless these efforts are blocked by congressional Democrats and/or presidential vetoes, the regulatory environment will soon look much like it did before the the 2008 financial meltdown, that is, barely a wisp of regulation on financial transactions. And everyone remembers what that eventuated in – the freezing up of the financial system and the biggest economic downturn since the Great Depression.

But that awful possibility doesn’t enter at all the calculus of the GOP as they run roughshod over Dodd-Frank or anything else that might regulate financial and speculative trading. How could it be otherwise for a party that is captive of the top tier of the 1 percent and a “free market” ideology that is resistant, even hostile, to reality and facts.

It is a keen awareness of all this that makes Morgenson very unpopular among the predators and parasites (I’m choosing my words judiciously) that inhabit the chic and well secured towers of lower Manhattan.

Don’t get me wrong. Morgenson isn’t a radical; she is a reformer, albeit a tougher one than many sitting in Congress and the White House, which is another problem to air out in a later article.

She’s doesn’t advocate turning the financial industry into a public utility, transparently and democratically governed by a public commission.

Nor, to my knowledge, does she make a case for heavily taxing speculative transactions in their many forms.

Nor does she suggest a concrete solution to the problem of “regulatory capture” – the all-too-frequent situation where regulatory agencies are taken over in one way or another by the very corporate institutions that they are charged with regulating.

But you can’t have everything, as they say. In fact, in any broad-based coalition assembled to rein in Wall Street, there will be reformers as well as radicals, in fact, the former will very likely outnumber the latter. Thus, competing views over exact demands, methods of struggle, and longer-term perspectives will inevitably be part of the conversation.

But there is no reason to think that such views can’t be discussed, negotiated, and resolved in a constructive way. Is there any other option? After all, only a broadly based coalition can de-fang Wall Street. Radicals can’t do it on their own. Nor can reformers, like Morgenson, get the job done by themselves either. One needs the other. And both, when push comes to shove, depend on the engagement of millions of aroused and engaged people to take down the “Street.” So keep on writing, Gretchen!

Photo: Occupy Chicago rally, Nov. 17, 2011. John Bachtell/PW


Sam Webb
Sam Webb

Sam Webb is a long-time writer living in New York. Earlier, he was active in the labor movement in his home state of Maine.