Three Concrete Demands to Hold Wall Street Accountable
The demands of the several hundred protesters camped out on Wall Street have been criticized as ad hoc and poorly articulated. The protesters emphasize that their demands are "a process" intended to allow people to "talk to each other in various physical gatherings and virtual people's assemblies ... [and] zero in on what our one demand will be, a demand that awakens the imagination."
Since they're looking for suggestions, here are three policy changes that should be on their list of demands. There is often a conflict between demands that are specific requests versus visions of where we want to end up. These three try to do both. They are specific demands that speak to the long-term end goal of a better, more just economy.
1. Cancel the debts. The crisis we face is fundamentally about a giant pool of bad mortgage debt. We need to work through these debts for recovery to really take off. The only question is who will absorb them—the creditors who made the loans or the people on the other side. In this case, there is no way to share these losses, and the government has stood behind the owners of many of these debts as being "Too Big to Fail."
Anthropologist David Graeber cites historian Moses Finley, who identified “the perennial revolutionary programme of antiquity, cancel debts and redistribute the land.” This remains the case. The modern inventions for dealing with failed debts, bankruptcy and inflation, both have failed. The bankruptcy code has a flaw preventing mortgage workouts and inflation is so low that markets are worried that the level of debts could increase with time.
The recession is far worse in areas of the country with the most bad debts and foreclosures, and debt relief can take the edge off. By making banks write down bad loans and work out failed mortgages we’ll have an system where the fraud that originated on Wall Street isn't borne entirely on the real economy.
2. Investigate Wall Street. In the buildup to the crisis, bad loans that could never be paid back were passed out to unsuspecting homeowners. These loans were then passed along a chain until they got to investors who thought the loans were made with the utmost diligence. When the entire house of cards collapsed, homeowners were left with bad loans, investors looked to cover their investments, and a mind-boggling 5 million people were foreclosed on. Loans were made so fast that proper records weren’t kept, which means it’s difficult to hold creditors and debtors accountable.
Now that the housing sector has collapsed, banks are cutting corners and using fake documentation to foreclose on properties that they don't have proper access to. In this mess of a system, homeowners who haven't missed a payment are being dragged down, through faulty paperwork. Several state attorneys general, including ones from New York and Nevada, have taken the lead in demanding an investigation, much to the chagrin of the Obama administration and financial elites. By supporting them, we’ll help build a country where there isn’t a two-tier system of justice.
3. Create a Financial Transaction Tax. It is hard to think of something with such a boring name as a particularly radical solution, but an FTT would be an important first step toward remaking our economy so it is not so dependent on the financial sector.
Thanks to a wave of deregulation laws in the late 1970s and early 1980s, finance has been one of the fastest-growing sectors over the past 30 years. It’s become so important, in fact, that some argue the economy should be run in accordance with the ideas and goals of the financial sector. This way of viewing our economy is less about long-term value than short-term price manipulation, less about investing in communities and peoples than about gaming tax codes and regulation and less about markets as a means of expression and more about consolidated, cornered market power. A financial transaction tax would help fight back against this and begin to steer our economy toward more sustainable and workable ends.
There are endless problems that plague America, but if the battle is brought to Wall Street, the demands should address the financial sector directly. Creating a post-recession economy that is more egalitarian is going to be a battle for generations. But there are straightforward steps that can put us well on our way.