When Regulation Isn't Enough

By Jay Diamond
Consortiumnews.com, April 28, 2010

Editor’s Note: Democrats are trying to pass some modest financial reform to rein in Wall Street’s worst abuses; Republicans are playing their usual games, claiming they want a better “bipartisan solution” while using filibusters to block any bill reaching the Senate floor; and the Wall Street titans who were bailed out by public money still think they deserve million-dollar bonuses.

Given the intractable problems with the American political/economic system, some critics, like Jay Diamond, think the debate should be more ambitious, looking at public ownership of the means for allocating America’s wealth:

Back in 1999 on a radio program I had in NYC at the time, I was stridently critical of the Gramm-Leach-Bliley Act, which was euphemistically called "The Financial Services Modernization Act of 1999" and was pushed by today’s Teabagging maestro, Dick Armey.

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On the radio program, for months I protested every day that this law was nothing but yet another attempt to inflict Ayn Rand feudalism on hapless Americans. It should be noted that this execrable law was signed by Bill Clinton and was beloved by his economic “brain trust.”

Gramm-Leach-Bliley was rapturously endorsed by Lawrence Summers, Clinton’s Treasury Secretary (now chief economic adviser to President Obama), and Summers’s predecessor Robert Rubin, both of whom were mentors to Timothy Geithner, the current Treasury Secretary.

What does it say about Obama's commitment to financial regulation that his principal economic advisers come from the same group that counseled President Clinton to endorse and sign this obliteration of the regulation rubric, the Glass-Steagall Act of 1933, which codified hard-learned lessons from the Great Depression and separated commercial banks from Wall Street speculation.

The law had protected the American people for over 65 years from the Dodge City economics that has recently brought suffering to billions of innocent people here and abroad.

What I will say now is heresy in the United States, but after all the financial anarchy and pain from the last three decades – the savings and loan crisis of the 1980s; the stock market crash of 1987; the Long Term Capital Crisis of 1998; the accounting scams of Enron, Tyco and Worldcom in 2001 and 2002; and the current mortgage/derivatives crisis – the people of the United States have suffered enough.

It is also apparent that the problem is not regulation, nor is the "solution" to be found in "reasonable" milquetoast rules crafted by the same wretched people who imposed this fiasco in the first place, especially since the Executive Branch often is in the hands of politicians who are determined to block the regulators from doing their jobs.

From 2001 through 2008, we experienced the intrinsic vulnerability of even the most carefully crafted regulatory framework given the ease with which the reactionary Cheney/Bush regime was able to subvert regulation across the board by merely appointing openly dedicated enemies of regulation to the chairmanships of the regulatory bodies.

What's necessary is to begin a serious inquiry as to why an economy of 300 million citizens should be held prisoner by the private money interests of a small number of people who, on the basis of nothing more than their staggering assets, can control the nation’s financial destiny and the economic futures of the other 300 million voting citizens.

There is no reason in reality why such an irrational scheme as the above should continue.

Big Business and Big Finance need to be controlled by all the citizens, for the benefit of all the citizens, not for the benefit of a tiny and elite cadre of private owners on the basis of their own whim, wealth and private benefit, for the pleasure of themselves alone and for the misfortune of so many others.

The citizens need to control the wealth of the nation, and the day-to-day management of that wealth needs to be directed by people directly accountable to the 300 million citizens rather than by self-interested boards of directors accountable only to themselves and their private fortunes.

Jay Diamond pioneered progressive radio in New York City and is currently a media critic and activist.