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« SONG - Wall Street Bailout Bull | Main | Dr. James Galbraith, Professional Fed Killer »

Barry Ritholtz: Wall Street Protesters Must Occupy Congress, State Attorneys General Offices

Source - The Big Picture

There is an unfocused financial rage in the United States.

It was born in the late 1990s on an unholy trinity of accounting swindles, the dotcom collapse and analyst scandals. It grew on a housing boom and bust that created 5 million (and counting) foreclosures, leaving more than a quarter of bank financed homes worth less than their mortgages. It matured on a growing wealth disparity that eviscerated the middle class, and brought back the plutocracy of the 1920s. It reached its peak with the bailout of reckless bankers, who were rewarded for their irresponsibility with the greatest wealth transfer in human history.

To become as focused and influential as the Tea Party, what Occupy Wall Street needs a simple set of goals. Not a top 10 list — that’s too unwieldy, and too unfocused. Instead, a simple 3 part agenda, that responds to some very basic problems regardless of political party. It must address the key issues, have a specific legislative agenda, and finally, effect lasting change. By keeping it focused on the foibles of Wall Street, and on issues that actually matter, it can become a rallying cry for an angry nation.

I suggest the following three as achievable goals that will have a lasting impact:

1. No more bailouts: Bring back real capitalism
2. End TBTF banks
3. Get Wall Street Money out of legislative process

Let’s look at each of these in turn:

1. No more bailouts/Bring Back Real Capitalism!
The United States was once a capitalist system. Companies lived and died on their own successes. “Corporate Welfare” – the term coined by Wisconsin senator William Proxmire – came into being in 1971 with the bailout of Lockheed Aircraft. Thus began a run of corporatism and bailouts of connected companies, not capitalism. Some firms, less than successful in a competitive marketplace, chose instead to suckle at the teat of the public trough. Innovation, execution and hard work were replaced with lobbying, crony capitalism and bailouts of failure. Of course, all paid for by taxpayers.

“Socialism for bankers, wrenching capitalism for the working stiff” is not a slogan you are likely to see on a bumper sticker anytime soon. But that’s wht the US had morphed into.

America needs to end this system of spoils. There should be no more bailouts, no more crony capitalism, no more government determined winners and losers. We simply cannot live in a society of privatized gains and socialized losses.

2. End Too Big To Fail /Restore Competition
As George Shultz once said, “”If they’re too big to fail, make them smaller.”

The current economic approach of “Too Big to Fail” is itself a failure. It reduces economic competition, concentrates risk, and raises costs for consumers.

I agree with University of Missouri–Kansas City (UMKC) professor of Economics and Law William Black, who notes that the TBTF moniker is misleading. We should start calling these firms by the more accurate phrase “Systemically Dangerous Institutions” (SDIs). TBTF makes it sound like the size is the problem – in reality, the systemically, regardless of size, is what we should be focused on. SDI is an accurate phrase, and appropriately pejorative.

The TBTF size has brought a different set of problems: The bailouts have made the top 10 SDI an even bigger, less competitive oligarchy. We need to bring back competition by limiting the size of these firms. We can do that by capping their deposits, in terms of total percentage or a specific dollar amounts. There are many ways to accomplish this, including an FDIC caps on deposit insurance. And if the OWS people were smart, they would bring in former FDIC chair Sheila Bair (now private citizen) into the discussion.

3. Take Congress back from Wall Street
Whatever changes come, they will only be temporary if the current system of spoils is allowed to continue.

The Supreme Court has ruled repeatedly on campaign finance reform, finding against voters and in favor of corporate interests. The only way to take the government back is a Constitutional Amendment.

The United States has become a “corporatocracy.” Campaign finance and lobbying money has so utterly corrupted Congress that we might as well put elected officials up for bid on eBay – that is how corrupted the system has become. We have even seen the State Attorneys Generals become targets of aggressive lobbying, most recently in Florida. We must become a democracy again, where one man one vote matters. To do that, Wall Street money must be taken out of the process.

The only way to accomplish that goal and have it withstand Supreme Court review is a Constitutional Amendment, mandating public financing of Congressional elections and criminalizing the purchases of politicians. We need to marginalize lobbyists, and make voters the most important people in the nation (again).

A national campaign to get that amendment on every ballot in every state should be the objective.


You will note that these three goals are issues that both the Left and the Right — Libertarians and Liberals — should be able to agree upon. These are all doable measurable goals, that can have a real impact on legislation, the economy and taxes.

But amending the Constitution to eliminate dirty money from politics is an essential task. Failing to do that means backsliding from whatever gains are made. Whatever is accomplished will be temporary without campaign finance reform . . .


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Reader Comments (10)

Oct 17, 2011 at 2:38 PM | Unregistered CommenterJosie
John stewart is a pretty funny guy, but if he's going to report on one incident of alleged "police brutality", for the sake of entertainment, he should probalby get the other side of the story too. No cop, no matter how stupid, is going to pepper spray some girl for no reason. Stewart should also feel free to report on the incidences of mayhem and unlawful conduct by the OWS protesters where hundreds had to arrested over a few days in crowds of only a couple thousand. This stands in sharp contrast to Tea Party rallies, where in gatherings of tens of thousands, there are no arrests, and coincidentally, no signs of "police brutality" either .
Oct 17, 2011 at 3:09 PM | Unregistered Commentersteever99
Occupy Boston Update:

Occupy_Boston Occupy Boston
54 minutes ago
Oct 17, 2011 at 3:47 PM | Unregistered Commenterjohn
People want to keep punishing the guilty rather than immediately saving the wounded. It's really sad.

If I suggest that simply changing one rule of law would instantly allow main street to begin healing, would those who want to see wall street punished actually care?

Presently banks are stealing main streets wealth by requiring a default before a debt restructure can occur. This is absolutely nuts, but other than Jeffrey Nickelsburg, economist at UCLA, nobody has brought this one issue into the public limelight.

Change "Debt restructure first requires a default", to "Debt Restructure DOES NOT first require a default" and main street can begin to heal.
Oct 17, 2011 at 3:58 PM | Unregistered CommenterAlessandro Machi
Occupy Boston ....from twitter

PWeiskel08 Paul Weiskel
by Occupy_Boston
Ben Bernanke speaking at The Fed building tomorrow in Boston. #occupyboston @Occupy_Boston Time for a welcome party? #occupywallstreet #OWS
1 hour ago
Oct 17, 2011 at 6:19 PM | Unregistered Commenterjohn
No cop, no matter how stupid, is going to pepper spray some girl for no reason.



Did you even watch the Bologna clips. There were 2 mace incidents and both were completely unprovoked. Get your damn facts straight if you wish to be taken seriously around here. As for your comparison of #ows to tea party rallies - they are nothing alike. the Tea Party groups come together for a few hours and disperse. And this site supports the movement, so I have no axe to grind. But these protests are a completely different animal.
Oct 18, 2011 at 1:49 AM | Registered CommenterDailyBail
"No cop, no matter how stupid, is going to pepper spray some girl for no reason."

That made me laugh. She's lucky he didn't plant some coke on her to meet his arrest quota

Getting wall street money out of politics should be the FIRST demand. Then charge the elected rep.s with aiding and abetting a crime.
Oct 19, 2011 at 7:51 AM | Unregistered CommenterCanuck
You should read the Green Book written by a guy who has recently been in the headlines. It is very interesting to get informed from a surprisingly sober intellect about the concerning point that you can not pass over your wishes into the hands of a government. Some thoughts you could get updated there that governments always will be corrupt if people on the place of their living do not have a decisive saying.

Advice for better government take their starting point from the impossible outcome. To control society supported with the ability to think. It sounds good first. But not if you get aware what is being thought.
Oct 26, 2011 at 3:45 PM | Unregistered CommenterBruno Ernst
Perhaps OWS will consider shifting focus to occupying the political process.

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