One of the causes of the financial meltdown of September 2008 was massive global speculation (betting) by a handful of huge banks on opaque and confusing financial instruments know as derivatives.
Astonishingly, so far Congress has passed no law to control financial speculation. Wall Street continues its destabilizing derivatives system. Economists and other experts predict that we are in for a second and more devastating crash in the future.
Recently the Senate’s financial reform bill known as the American Financial Stability Act of 2010 passed out of committee and is headed for a heated battle on the Senate floor.
But is the bill any good and will it prevent another crash?
Unfortunately, in its present form, it won’t. Committee chairs Sen. Christopher Dodd and Rep. Barney Frank and other finance committee members have been recipients of large donations in campaign contributions from Wall Street, which most likely resulted in the weakening of the House and Senate bills.
Your voice is essential! It’s time to get out your phone and your computer and contact Sens. Mark Udall and Michael Bennet and your House member (Jared Polis for Boulder). Tell them to support American Financial Stability Act of 2010 only if it:
— Makes the consumer financial protection agency stronger and independent of the Federal Reserve. The bill must protect consumers by policing unfair and deceptive practices by credit card companies, mortgage companies and predatory lenders.
— Reins in executive pay and bonuses to end the perverse incentive to gamble with investor and taxpayer dollars. Ask them to amend the bill so that corporate officers are paid for long-term performance, not short-term speculation.
— Breaks up the banks; too big to fail is too big to exist. Ask them to limit the risk and size of giant financial firms.
— Prohibits the trade in exotic financial instruments such as derivatives.
For more info go to citizen.org or http://ourfinancialsecurity.org. You can send an e-mail to Congress at citizen.org and call toll free at 866-544-7573. To help create a more just economy, call the Rocky Mountain Peace and Justice Center at 303-444-6981 ext. 2.
Carolyn Bninski is on the staff of the Rocky Mountain Peace and Justice Center.
