Ralph Nader: The finance reform bill is a set of weak regulations; what’s needed is a shift in power
PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. I’m Paul Jay in Washington. And joining us now in our studio is Ralph Nader. Thanks for joining us.
RALPH NADER, AUTHOR, POLITICAL ACTIVIST: You’re welcome, Paul.
JAY: So, as we speak, the House is speaking to the Senate, negotiating the final finance reform bill. Some people have said there’s no way it’s going to touch real structural blackmail. What’s your take on that?
NADER: It’s a weak bill in both houses, in the Senate and House. It’s premised on weak regulation across the board, rather than shift the power. The only way, really, to get this to work is to bring investors and shareholders into a more powerful role, since they do own the companies but they don’t control the companies and they don’t control the bosses and they don’t control executive compensation. They’re just told, if you don’t like a company, you know, Citigroup, Bank of America, sell your stock. So unless consumers, investors, shareholders have a way to organize—and this is the proposal that Senator Schumer has put forth. We gave him this proposal in 1985 in the savings and loan scandal, in the House, when he was in the House. It didn’t get through. Now he’s reintroduced it in the Senate. And it basically sets up a financial consumer association which would have millions of dues-paying consumer members, credit card, mortgage users, etc., and it would be outside the government, lobbying against the huge lobbying force of Wall Street and the banks, which will descend on whatever law is passed in the agencies. Just for example, thin regulation, the consumer agency, which is the best part of the bill, is strapped in a lot of ways. Elizabeth Warren, who should be new director, said if it’s weakened anymore, forget it, it’s a waste of time, because it’s going to be in the Federal Reserve, for example, and it’s going to be vetoed by a group of regulators if they protect credit card holders too much, for example.
JAY: The House bill had it as an independent agency, but apparently more limited in its power. So maybe they’ll come out with the best of both. Or are they going to come up with the weaker of both?
NADER: It looks like the Senate is going to have the odds on it. They’re going to defer more to the Senate. But that remains to be seen. Barney Frank favors an independent, but, as you say, it’s weaker in some ways. But on the rating agencies, Standard & Poor’s and so on, ridiculous. It’s laughable. On too-big-to-fail we got bigger banks controlling half of the deposits in this country—five giant banks. They’re already too big to fail. Nothing in this bill is going to break them up, or tax them to keep them down, or require spinoffs.
JAY: And there’s another piece of this. But even if they were going to break them up some or limit their size, the problem with the casino gambling stuff, they do it as a pack. So it’s not like one’s going to go down and you’re going to deal with one. If there’s another crisis, you’re going to have—they’re all going to be in doo-doo again and they’re all going to come and say, “Come save us.”
NADER: And that goes to the derivatives part of the legislation, which is very weak. A lot of the derivatives that caused a lot of the trouble will still be off public exchanges. So there’ll still be secret deals, speculating, increasing systemic risk.
JAY: Well, what do you make of the Lincoln amendment in the Senate that they’re saying that has some teeth?
NADER: It does, because it basically separates out. It says to the banks, if you’re going to do derivatives, you can’t be a commercial banker; you can’t deal retail banking and do derivatives; you’ve got to separate the two. But that’s given almost a zero chance to survive in the conference. You know, look, there are 1,000 full-time lobbyists on Capitol Hill representing the brokerage industry, the banks, the investment banks, the insurance companies. There are about 10 representing the consumer. You talk to them, they say, we’re overwhelmed; we just can’t be in all these places at once. Plus all the money that’s coming in—huge money is flowing into the coffers of the senators and representatives. That’s another one. Plus all the propaganda, plus all the networks they have back home. So in the biggest collapse of Wall Street in its history, except the Great Depression, we have a brace of regulatory proposals that’s a fraction of what Franklin Delano Roosevelt got through. And so, in other words, the rascals in Wall Street, after draining and looting trillions of dollars in worker pension money, in mutual savings money, after tanking some of their own companies and getting away with huge executive compensation, severance pay, they go to Washington, they get a bailout on the backs of the taxpayers, okay, trillions of dollars of obligations, and then they go to Capitol Hill and they’re stronger than ever, Paul. That’s when you know you have a decaying society, when the rascals are shown to be rascals by the mass media, they’re shown to be rascals by congressional investigations, they’re bailed out by the taxpayer, they’re left with their hundreds of millions of dollars in wealth, and then their lobbyists are stronger than ever. I’ve seen Republican and Democrat members of Congress say essentially the same thing, including Senator Durbin: the banks own this place.
JAY: So if Wall Street has gotten to the point [inaudible] makes more out of its profits out of parasitical activity than productive activity, if the politics in DC are a mirror parasitism of Wall Street, so what should people do?
NADER: Well, first of all, if they’re tea party people, they should get their focus straight. I mean, this isn’t Washington. This is Wall Street. Wall Street controls Washington. That’s the whole ball. They should redirect their anger to Wall Street, as a few of them have been in signs at some of their rallies. But what we’re seeing here—.
JAY: But on the whole they don’t.
NADER: No, by and large, because they’re funded in part and directed in part to go against the government that deals with ordinary people. You know? Like privatize Social Security, cut back on Medicare, not the huge corporate welfare for corporations and being soft on corporate crime. You put your finger on it: this is a parasitic part of the economy. And all this money, all these derivatives, they don’t create jobs, except the speculator; they don’t build factories; they don’t, you know, improve the real things on the ground in our country. They make money from money from money. So you create these derivatives, which are bets on bets on bets on bets, like tiers, right? Like, you have ten people understand one derivative, they give it a funny sounding name, but then it gets the imprimatur of the rating agencies and the banks. And they’re playing around with other peoples’ money. You know, as—someone who was on the Bill Maher show over a year ago, and he said, it’s not their money they’re stealing; it’s our money they’re stealing. So that’s the thing. They’re playing with other people’s money, so they have no stake. They don’t care. They can be reckless as long as they get their fees and their fees. The key is: how can the American people raise their level of indignation, based on the overwhelming evidence, based on their own personal losses, so they drop some of their routine and start connecting with one another, as they can on the Internet or neighbor to neighbor or whatever, and put more time, talent, and energy in a peaceful political revolution? They’ve got to subordinate these giant corporations to the sovereignty of the people instead of the reverse. That’s the way the Constitution starts: “We the people”. It doesn’t start “We the corporations”. It all comes down to shift of power and the rise of informed indignation so you have people focusing on Congress. Once they control the 535 members of Congress—and they’re the only people who have the votes. Corporations may control Congress; they don’t have any votes. Once they do that, they turn the whole process around, ’cause Congress is the most powerful branch of government under our Constitution.
JAY: Thanks for joining us.
NADER: You’re welcome.
JAY: Thank you for joining us on The Real News Network.
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