More than five months after protestors first descended on Wall Street and set up camp in Zuccotti Park, it looks like the Occupy movement has finally decided to send in the wonks.
Then again, “send in” might be a bit of an overstatement. Last week, Occupy the SEC – a working group affiliated with Occupy Wall Street – submitted a 325 page public comment to the Securities and Exchange Commission, which has been debating how to implement the so-called “Volcker Rule” provision in the Dodd-Frank financial reform bill. Originally proposed by former Fed Chairman Paul Volcker, the Volcker Rule was intended to protect consumers by keeping commercial banks from engaging in risky, speculative trading strategies with their clients’ money. Opponents claimed that the rule would limit banks’ ability to increase capital assets and lend money, but President Obama supported the measure and signed Dodd-Frank into law in July of 2010.
But like any other aspect of regulating the US’ increasingly Kafkaesque financial system, it’s not quite that simple. Though Dodd-Frank and the Volker Rule are now law, there’s still the question of how the regulation will be implemented. Despite its complexity, Dodd-Frank is still somewhat vague on the application of the Volker Rule and its exceptions, meaning the Securities and Exchange Commission will have pretty broad authority to decide what is and isn’t covered by the law.
When it’s deciding a question of regulatory interpretation, the SEC usually releases its own preliminary proposal before holding a “public comments” period, where any member of the public is allowed to submit their thoughts on the policy. Though it’s technically an open forum for feedback on proposed rules, the reality is often that no one other than industry lobbyists and trade organizations have the resources, knowledge or interest to submit feedback.
Enter Occupy the SEC, whose members include former financial industry attorneys and employees of the banking giants they’re now fighting against: Morgan Stanley, Deutsche Bank, Merrill Lynch, and the like. In a departure from much of the more dramatic and theatrical tactics with which the movement is usually associated, Occupy the SEC’s comment letter on the Volcker Rule is a dense, policy-heavy tome which is much more focused on delving into the intricacies of Byzantine financial regulations than playing to a broader, more media-friendly narrative about exploitation of the poor (even a brief skim of the document reveals page-turning gems such as: The 5% should be calculated according to a ‘horizontal’ first-loss position, which is defined in the Proposed Rule for Dodd-Frank § 941 to be whereby the sponsor or other entity retains a subordinate interest in the issuing entity that bears losses on the assets before any other classes of interests.).
Occupy the SEC’s comment letter was by far the longest of any submitted- over twice the length of the next-longest, produced by the Securities Industry and Financial Markets Association and the American Bankers’ Association (two banking and investment trade groups) which, unsurprisingly, argued for more lax regulations. Regardless, Occupy the SEC is up against some pretty serious obstacles, as its proposals will still have to find a way to overcome the millions paid out by the financial industry to lawyers and lobbyists every year.
At first glance, it might be easy to look at something like this and call it a meaningless exercise; even if it’s a refreshing dose of specific policy proposals coming from a movement often criticized for lacking them, at the end of the day, it’s still just a letter. But in this case, “just a letter” might be enough to make a difference. Federal regulations state that once a rule change like this has been put to the public for review, the SEC is legally bound to enact some combination of its proposal and the comments received (meaning it can’t add in new material not from comments)- that is, the only way to even have a chance of toughening the regulations in a field dominated by industry interests is to propose tougher regulations yourself.
To me, this seems like the kind of thing for which Occupy is perfectly geared. Because of its significant new media reach, Occupy has the ability to both find people with the necessary skills to produce work like this and to subsequently draw public attention to it. Even though media coverage of the Volcker Rule hasn’t been all that prevalent outside of financial news services, Occupy the SEC has still helped focus much more scrutiny on this process than otherwise would have been possible (if for no other reason than the novelty of OWS producing a several-hundred-page policy memo).
This might not solve the problem – it might not end up doing anything at all – but at least it’s a start.