Home \ Newsroom \ Financial Reform Newsletter: You Want to Read this Fantastic New Book from Steven Brill, Which Features Better Markets' Work

Financial Reform Newsletter: You Want to Read this Fantastic New Book from Steven Brill, Which Features Better Markets' Work

You Want to Read this Fantastic New Book from Steven Brill, which Features Better Markets’ Work
The book is an eye-opening, panoramic, tour de force that connects the dots of what has happened and is happening in America.  It has that rare combination of historical information, in-depth reporting, insightful analysis and great storytelling and vignettes.  Brill’s fifty-year tailspin covers everything from Wall Street, meritocracy, the First Amendment, trade and campaign finance to mandatory arbitration, lobbying, infrastructure, unions, short-termism and drug companies. 

Brill’s organizing metaphor is the moat, which the wealthy and well-connected have constructed to protect themselves from the unprotected, the vast majority of Americans who no longer have access to the American Dream.  He contrasts that with the “moat busters,” which includes “The Wall Street Moat Buster” Better Markets fighting “…to restore that flickering dream”:

“In every arena that the achievers commandeered to create the protected-unprotected divide, there are now equally talented, equally driven achievers who have grown so disgusted by what they see that they are pushing back…non-profits staffed by creative thinkers and undaunted fighters with sterling resumes and hard-knocks experience are going after continuing abuses and lack of accountability on Wall Street.”

“They are doing what they do despite developments in America that seem to be galloping in the opposite direction not because they are gluttons for frustration, but because they believe that America can be put back on the right course.  In a variety of arenas, the people you will meet here are laying the groundwork for disgust to be channeled into a restoration.”

He writes specifically about the work we do at Better Markets:

Better Markets’ “staff, including some drawn from the ranks of congressional aides who would have been likely recruits for more conventional lobby shops, have become a constant if unusual presence at hearings and in the offices of the agencies that write rules like the ones that followed the passage of Dodd-Frank.” 

“Better Markets churns out obsessively detailed rulemaking submissions to regulators (pointing out gaps in drafts of the clawback rules, for example).  A flow of white papers and bulletins for policymakers and the press can be counted on to rebut the Wall Street line with credible collections of facts and arguments putting the banks’ claims in context.”

The book is being released next week, but is already attracting a great deal of well-deserved attention.  An adaptation and excerpt from the book was just featured on the front cover of Time magazine, and Brill also appeared on MSNBC’s Morning Joe to discuss the book.  Bob Woodward, Walter Isaacson, Gillian Tett, Jeffrey Toobin and many others can’t say enough good things about the book, which can be ordered here.

For those who are interested, we will be highlighting events that Brill will be speaking at, including at the Bipartisan Policy Center on Thursday, May 31st at 5PM and at Politics & Prose bookstore on Friday, June 1 at 7 pm.  Better Markets, with Issue One and Open Secrets, will be hosting Brill at an event in DC on Tuesday, June 12th, details to come.

 

 

Why Put Taxpayers on the Hook by Allowing High Risk, Bonus-boosting Gambling Called “Proprietary Trading” at Wall Street’s Biggest Banks?
Want to go to Las Vegas with someone else’s credit card with no limit and you get to keep all the winnings and they pay all the losses?  Who wouldn’t want that deal!  That’s what proprietary trading is at Wall Street’s biggest taxpayer banks: they make big bets and the winnings boost their bonuses, but if they lose and fail then the taxpayers have to pay the bill.  That incentivizes a reckless, swing-for-the-fences, consequences-be-damned mentality and breeds a culture where recklessness if not illegality trumps good judgement and sensible business practices.  

That’s why the financial reform called the “Volcker Rule” in the Dodd Frank financial reform law prohibits proprietary trading.  The rule is also meant to dampen the high-risk trading culture that infected too many banks before the crash, which redirects the banks to socially useful lending to the real economy.  After all, that’s why taxpayers back banks and that’s why “[g]etting the prop trading cowboys out of taxpayer-backed banks has done more to correct the culture and refocus banks on lending to the real economy than almost anything else.”

The problem is that proprietary trading and the bonuses it produces are loved on Wall Street and that’s why killing or gutting the Volcker Rule has been a priority of Wall Street and its army of lobbyists and supporters from the beginning.  Unfortunately, it looks like those efforts are about to pay off.  While they’d love to have it completely eliminated, like many of their financial deregulation victories, they will happily take the incremental path, as the Trump administration’s deregulatory focus is now trained on the Volcker Rule.

While being referred to as “Volcker 2.0,” it should be called the “Volcker Rule Loophole.”  As proved by record-breaking revenue, profits and lending, there is no legitimate basis for reducing common sense protections for Main Street taxpayers from Wall Street recklessness.  Plus, as we’re said, now that the recovery is nine years old and that the inevitable downturn in the business cycle is coming, this is no time to be deregulating banks.  Banks need to be as strong as possible going into the down cycle or their weakness will make it worse as they pull back on lending, cover losses and generally stop supporting the jobs, small businesses and the economy generally.   

 

House Republicans Pass Foolish, Unnecessary and Poorly-Timed Bank Deregulation Bill
The House of Representatives has passed the foolish, unnecessary and poorly-timed Senate bank deregulation bill (S. 2155), sending it to the President’s desk to be signed.

This is a bill that really benefits 26 of the 40 largest banks in the country.  These were some of the banks that received massive taxpayer-funded bailouts following the 2008 crisis, have continually been charged and fined for breaking banking laws, and strips away regulations on foreign banks operating in the U.S. that also benefited from taxpayer bailouts.

Additionally, this legislative deregulation comes on top of extensive deregulation at the financial regulatory agencies, including capital, liquidity, stress tests, living wills, proprietary trading, money market funds, consumer protection and more like the Volcker Rule.  Add it all up and it’s like pouring a little gasoline on a smoldering fire.  That’s irresponsible and wrong.  This late in the business cycle, with debt levels higher than before the last crash, interest rates going up and wage stagnation, now is the time to increase regulation, including capital and other countercyclical buffers, to prepare for the inevitable economic downturn.”

 

Cops Walking Away from the Wall Street Beat?  SEC Enforcement Drops
Signaling a retreat from the more frequent and substantial sanctions imposed by the Securities and Exchange Commission (SEC) in the past, a new report shows that enforcement activities by the SEC continued to fall in the first half of Fiscal Year 2018.

According to the report by Cornerstone Research, the SEC filed just 15 new enforcement actions against public companies between October 1 and March 31.  Additionally, these same companies paid far less to settle their cases than they have in the recent past, imposing only $65 million in sanctions.  Compare this track record with 2016, in which the SEC brought 868 enforcement actions with monetary sanctions of $4 billion, far more even on an annualized basis.

Some argue that enforcement statistics don’t tell the whole story.  Recently, for example, SEC Commissioner Hester Pierce , took issue with the SEC’s recent “broken windows” approach to enforcement, in which small infractions were pursued with fervor in an effort to deter and/or prevent larger violations. 

But the bottom line is that it isn’t an either/or proposition.  American investors deserve both quantity and quality: an SEC enforcement program that imposes tough sanctions against all wrongdoers, large and small, individual and corporate, with penalties that reflect the nature of the offense, the harm done to investors, and the ill-gotten gains reaped by the violators.  Measured in these terms, SEC appears to be taking the cops off the Wall Street beat, which not only decreases the punishment of lawbreakers but also doesn’t deter others.  That’s the wrong message to send at the wrong time.

 

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