Showdown on Wall Street and K Street
By Peter Dreier
HuffingtonPost: April 23, 2007
The shake-out of the American economy has left a handful of large banks at
the pinnacle of the American economy. Next week, a coalition of major
community organizations, unions, and religious groups will launch a campaign
to challenge the economic and political influence of these mega-banks,
beginning with a series of protests in San Francisco, Kansas City,
Charlotte, Chicago, New York, and Washington, D.C.
As a growing number of banks have collapsed and been gobbled up by larger
institutions, the four biggest commercial banks - the Bank of America, Wells
Fargo, JP Morgan Chase, and Citigroup - now control about 40% of the
nation's $8 trillion in bank deposits. The two largest investment banks -
Goldman Sachs and Morgan Stanley - hold one-third of the securities
industry's $4.4 trillion in assets.
"We want to use this moment and the rage that the American people have at
banks as a way to get into the bigger issues of how Wall Street banks and
corporate power have sabotaged the economy and enriched themselves,"
explained Stephen Lerner, a veteran organizer with the Service Employees
International Union (SEIU), who heads the union's campaign on financial
reform.
The organizing campaign is spearheaded three community organizing networks -
PICO, National People's Action (NPA), and the southeast region of the
Industrial Areas Foundation (IAF) - along with SEIU and the AFL-CIO.
Organizers believe that the recent victory on health care reform will help
propel a similar movement to take on banking giants.
"There's only one group of people in this country who are more hated than
insurance companies," Lerner said. "That's the banks and Wall Street. This
is not complicated. A bunch of rich, greedy oligarchs crashed the economy
and got bailed out by tax payers."
A new public opinion poll sponsored by the nonpartisan Pew Economic Policy
Group confirms Lerner's observation. A national survey conducted in March
found that 68% of the public have an unfavorable opinion of big banks.
Two-thirds of the public blame either the big banks or Congress' failure to
regulate banks for the current financial crisis. Seventy-nine percent think
it is important for Congress to take action quickly to reform Wall Street's
abuses.
To help channel public outrage, the coalition's short-term goal is to push
Congress to enact strong consumer protection regulations on the financial
industry. Their intermediate goal is to pressure banks to stop the epidemic
of foreclosures and renegotiate mortgages so owners can keep their homes.
Their long-term goal is to limit the banking industry's political clout and
its economic influence. They believe banking should be reorganized so it
invests in good jobs, affordable housing, and environmentally-friendly
businesses.
"The big banks shattered our economy and left workers and our communities to
clean up the pieces. We've lost 8 million jobs, 1 out of every 8 mortgages
is in default or foreclosure, and our cities, counties and states teeter on
the edge of bankruptcy," said Heather Booth, executive director of Americans
for Financial Reform, a coalition of unions, consumer, and community
organizations. "Now the same banks that we bailed out with billions of tax
dollars are pouring $1.4 million per day into the Senate to stop real Wall
Street reform."
"This is a fight about which side are you on -- Main Street or Wall Street?
Main Street is organizing, forcing the politicians to decide whether they
follow the money or support the American people," Booth noted.
Just as activists hope that voters will reward Congressmembers in November
who supported health care reform, they want voters to re-elect politicians
who support bank reform and punish politicians who are in the pockets of the
bank lobby.
The protests will take place just as the Senate will be debating and voting
on bank reform legislation. Progressive Democrats want the bill to include
strong consumer protections, requirements that banks renegotiate mortgages
for families facing foreclosure, limits on the size of banks, and new
regulations against Wall Street gambling with default swaps and derivatives.
The banking industry and its business allies are pushing hard to weaken the
proposed regulations. In the past few months, the major banks, along with
the U.S. Chamber of Commerce, have dramatically increased their lobbying
activities and campaign donations to thwart reform. Senator Mitch McConnell
of Kentucky, the Republican leader, has become the banking industry's top
ally, but every other Republican and some Democrats also oppose any reform
that bank lobbyists don't like.
To rally public opinion, President Barack Obama gave a speech Thursday at
Cooper Union in New York, close to Wall Street, and insisted that Congress
needed to rein in the risky practices that led to the financial crisis and
the recession. He criticized the "battalions of financial industry lobbyists
descending on Capitol Hill, as firms spend millions to influence the outcome
of this debate."
"It is essential that we learn from the lessons of this crisis, so we don't
doom ourselves to repeat it," Obama said. "And make no mistake: That is
exactly what will happen if we allow this moment to pass. And that's an
outcome that is unacceptable to me, and it's unacceptable to you, the
American people."
"Unless your business model depends on bilking people, there's little to
fear from these new rules," Obama said to an audience of 700 people that
included Goldman Sachs CEO Lloyd Blankfein and executives from JP Morgan
Chase, Morgan Stanley, Bank of America, and other financial powerhouses.
"I want to urge you to join us, instead of fighting us in this effort,I'm
here because I believe that these reforms are, in the end, not only in the
best interest of our country, but in the best interest of the financial
sector."
For the activists, the battle to overhaul federal banking regulations is one
part of a broader strategy.
"We have one eye on winning significant financial reform now and one eye on
building a movement for corporate accountability," explained George Goehl,
executive director of NPA, which has 25 community organizing affiliates in
14 states.
On Tuesday, April 27, organizers expect more than a thousand consumers,
union members, and clergy to march through downtown San Francisco to Wells
Fargo's annual shareholder meeting at the Merchants Exchange Building. Some
of the protesters who have purchased Wells Fargo stock will confront the
board of directors with a list of demands. On that day in Kansas City,
family farmers, retirees, veterans and union members from Missouri, Kansas,
and Iowa will march through that city's financial district to the Bank of
America, an action that organizers are calling "showdown in the heartland."
The following day in Charlotte, N.C., veterans, clergy, and working families
hurt by foreclosures and lay-offs will rally at the First United
Presbyterian Church and then, proxies in hand, march to Bank of America's
annual shareholder meeting at Belk Theater, while in Chicago, unions,
community groups, and faith-based activists will march to the corporate
offices of Goldman Sachs, whose outrageous executive bonuses, illegal
practices, and political influence-peddling have made it the poster child
for public anger against big banks. (Last week the Securities and Exchange
Commission accused Goldman Sachs of defrauding investors). NPA started the
ball rolling last month by announcing and organizing the April 29th march on
Wall Street. Organizers now predict over 5,000 protesters, joined by AFL-CIO
President Rich Trumka, will march on Thursday.
The protest actions will culminate in three-day "Showdown on K Street" in
Washington, D.C. from May 15 to 17. The DC mobilization will focus attention
on the connections between the banking industry's political clout through
its huge campaign contributions and lobbying warchest. It will include a
series of protests at the offices of corporate lobby groups and members of
Congress - Democrats and Republicans -- with close ties to the banking
establishment.
The protestors have a list of demands for each bank. In San Francisco, for
example, they'll insist that Wells Fargo CEO John Stumpf resign from the
board of the Financial Services Roundtable, the powerful lobby group that
represents the nation's largest banks and which is using its muscle to
thwart the proposed federal Consumer Financial Protection Agency, one of the
top priorities of the Obama administration and Congressional Democrats.
The grassroots delegation will also ask Wells Fargo to stop rampant
foreclosures and evictions of homeowners and tenants.
"Everyday Americans from all walks of life are going to be challenging banks
like Wells Fargo to keep families in their homes, to stop predatory and
payday lending, and to start investing to create jobs and rebuild our
communities" explained Adam Kruggel, director of CCISCO, a PICO affiliate in
northern California. "Wells Fargo was one of the biggest subprime lenders in
the United States and it has modified less than 8% of the troubled mortgages
eligible under the president's Making Home Affordable program. That is
unacceptable. It has an awful track record of predatory lending, including
offering payday loans to its own customers at annual interest rates of
240%."
The bank reform coalition hopes to popularize a "move the money" campaign to
help channel public anger with the banking establishment. Drawing on the
boycott tactics of the civil rights and labor movements, and the divestment
efforts that helped dismantle apartheid in South Africa, the campaign is
based on the idea that Americans should move their money from mega-banks
that destroy jobs and communities to financial institutions that act more
responsibly.
"Can you imagine what would happen if we could get the major labor unions
and religious denominations, and even some local governments, foundations,
and universities, to take their pension funds, endowments, and deposits out
of banks that engage in abusive practices and into banks that support our
families and communities?" asked Gerald Taylor, the southeast director for
IAF, a community organizing network with seven chapters in North Carolina,
including one in Charlotte, where the Bank of America is headquartered.
In addition to mobilizing for federal reform legislation and pushing banks
to address the foreclosure crisis, the coalition wants to draw attention to
the banks' responsibility for state and municipal budget crises.
"Cities and states are cutting vital services, and laying off teachers and
other employees, because the banks crashed the economy and starved local and
state government of the revenues they need," explained Gordon Whitman,
director of public policy for PICO, which has 1,200 religious congregations
as members in over 150 cities.
"The compensation bonus pool for the big six banks - over $130 billion --
would solve the entire budget crisis for all the states," noted Lerner, the
SEIU organizer.
Activists in different cities have been organizing people to push for
municipal legislation to hold banks accountable for exacerbating local
economic problems. In Oakland, for example, SEIU and several community
groups have pressured the City Council to demand that banks renegotiate or
cancel interest-rate swaps that cost the city $5.2 million in fees. In Los
Angeles, SEIU, LA Voice (a PICO affiliate), and the Alliance of Californians
for Community Empowerment (a new organization formed by former leaders and
staff of ACORN) worked with City Council member Richard Alarcon on
legislation to renegotiate swap deals on municipal bonds and would require
the City to move its investments (including $25 billion in pension funds and
almost $1 billion in deposits) from financial institutions that failed to
cooperate with local, state and national foreclosure-prevention efforts.
At least five states have introduced legislation to explore how their
deposits in banks can be used to guarantee reinvestment in their state and
more responsible lending practices.
Grassroots organizing against the power of banks goes back to the agrarian
Populist movement in the late 1800s. In the 1970s, community organizing
against redlining - racial discrimination in mortgage lending and bank
divestment from inner cities - led to passage of the Community Reinvestment
Act (CRA) in 1977, led by NPA. NPA is now mobilizing people in cities around
the country to hold banks and bank regulators accountable. Over the past
decade, ACORN, along with the National Community Reinvestment Coalition, the
Center for Responsible Lending, and NPA, led the fight against predatory
lending and the foreclosure epidemic. Two years ago, for example, NPA
brought over 500 people to a protest at Federal Reserve Chairman Ben
Bernanke's house in Washington, D.C. Since then, NPA leaders have meet with
Bernanke three times, pushing him and his staff to toughen regulations on
rip-off "pay day" lenders and to update the CRA.
The battle for bank reform has triggered new alliances. This is the first
time that PICO, NPA, and IAF have worked together on a common campaign. And
the recent involvement of the labor movement in the battle against Wall
Street and the big banks injects additional political clout into the
activist coalition.
"We need stronger reform of Wall Street, but we also need a new business
model for banking," said PICO's Whitman. "We need to get back to the day
when people could trust their banks and banks made their money by lending to
homeowners and small businesses, not speculating in the Wall Street casino.
We want to squeeze speculation out of the banking system. This is about
rebuilding our communities and our economy."
More information about the activities in each city and the coalition's
broader agenda can be found at: http://showdowninamerica.org and
http://www.ourmoneyourvalues.org.
_______________________
Peter Dreier
E.P. Clapp Distinguished Professor of Politics
Chair, Urban & Environmental Policy Program
Occidental College
Los Angeles, CA 90041
Phone: (323) 259-2913
"The hottest place in Hell is reserved for those who in time of crisis
remain neutral" - Dante
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