Why Are We Rewarding Wall Street — Again?
As working families slowly recover from lost jobs and slashed wages of the Great Recession, bankers are being rewarded yet again with the ability to challenge common-sense Wall Street regulations that were supposed to protect the Americans from future crises. This bonus arrives in the form of sweeping new trade agreements in Asia and Europe that would give the big banks the ability to challenge and undermine key financial reforms passed by Congress or adopted by regulators.
While we haven’t yet seen the Trans-Pacific Partnership (TPP) — because U.S. negotiators refuse to make the terms of this huge trade deal public — news reports are confirming that under the TPP, banks will be able to use the Investor-State Dispute Settlement (ISDS) process to challenge financial rules that they claim are “arbitrary.” In fact, if the reports are accurate, the TPP will give banks a broader right to use the ISDS process than they have under any previous US free trade agreement.
As Senator Elizabeth Warren (D-Mass.) and others have pointed out, banks will likely use this language to raise challenges to common-sense banking requirements. That means a panel of three lawyer-arbitrators would determine what regulations should govern the big banks, not US lawmakers and regulators.
Financial services is an even more heated, contentious issue in a proposed trade deal between the United States and European Union called the Transatlantic Trade and Investment Partnership (TTIP). Big banks are gearing up to use the TTIP to roll back or sidestep Dodd-Frank regulation. In fact, analysts from two NGOs — the Corporate Europe Observatory and Centre for Research on Multinational Corporations — reviewed a leaked policy document and determined that European negotiators are lobbying for “a number of mechanisms that will both scale back existing regulation, and prevent future regulation that might contradict the interests of financial corporations from both sides of the Atlantic.” If they prevail, American banks could move their business to Europe where financial rules are much weaker.
So far the Obama administration has rejected the EU’s push to include financial regulations in the deal. But will US negotiators hold their ground? Will our next president continue to side with financial reform advocates?
The troubling truth is that European banks still may have the opportunity to dismember Dodd-Frank through ISDS and other provisions up for negotiation.
Like the TPP, we don’t fully know how the TTIP is being written. Recently, CWA activists and our allies rallied in Miami outside the 11th round of trade talks to shine a spotlight on this secrecy. Unlike European negotiators, who have made their TTIP proposals public, US negotiators have flatly refused to make their proposals available for public scrutiny. Meanwhile, the administration has given hundreds of corporate lobbyists special “cleared advisor” status that provides them with access to the texts.
We need real financial reform, including a tax on speculative financial transactions and an end to banks being able to co-mingle depositor dollars and Wall Street money — not more Wall Street Gone Wild.
