The Wall Street Reform and Consumer Protection Act of 2010 became law last July. Its first words promised “to promote… accountability and transparency in the financial system, to end ‘too big to fail,’ to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices.” But to get the bill passed, its well-meaning congressional sponsors had to compromise away toothy provisions like those requiring a strict separation between depository banking and financial trading.
The history behind that lame law is sadly relevant to understanding how some among corporate America’s super-wealthy now dominate Ameri-can politics and policymaking in ways that make yesteryear’s Gilded-Age capitalists and robber barons look like simon-pure civic do-gooders by comparison.
The Banking Act of 1933 strictly separated investment banking from commercial banking and imposed many other restrictions on what today we would call “financial services” firms. In every decade thereafter, assorted corporate interests pushed to repeal the law in whole or in part. In the early 1980s, as the number of members of Congress for whom the Great Depression was no mere chapter of a history book decreased, the lobbyists in Gucci loafers almost got their way. But in 1986 President Ronald Reagan’s unexpected support for a major bipartisan corporate-loophole-plugging tax reform law, the sudden October 1987 stock market plunge and the scandals surrounding the savings and loan industry temporarily broke big business’s political momentum.
In 1999, however, Congress passed and President Bill Clinton signed the Orwellian-named Financial Services Modernization Act. The law’s “modernization” provisions begat financial mega-businesses different in form but identical in consumer-exploiting function to those 19th-century corporate conglomerates that Teddy Roosevelt had broken up through vigorous use of the Sherman Antitrust Act of 1890.
The 2010 law did not come close to undoing the 1999 act. Worse, for almost a year now, President Barack Obama has left many key federal financial regulation jobs entirely vacant.
How did it come to this? I will leave the deeper explanations to theologians, philosophers and social critics. My answer centers on the fact that lobbying to influence public policy has become ever more supremely lopsided in ways that favor business interests.
For example, as the political scientists Kay Lehrman Schlozman, Lee Drutman and others have documented, between 1981 and 2006 the ratio of business lobbyists to union and public interest lobbyists working in Washing-ton, D.C., rose to 16:1 from 12:1, including nearly 2,800 lobbyists (up from about 1,500) representing just the Standard & Poor’s 500 corporations.
According to the Federal Election Commission, the U.S. Chamber of Commerce is the single biggest spender on lobbying, with no close second. Between 1998 and 2010 the chamber spent nearly $750 million. Its recent expenditures have shattered all records: $91 million in 2008, $144 million in 2009 and $132 million in 2010.
Many of the other biggest spenders on lobbying are business interests like big oil companies. By contrast, the union membership rate for private sector workers is now below 7 percent (it was nearly 12 percent in 1983) and falling. Public employee unions now claim about 7.6 million workers, but even the American Federation of Teachers’ Political Ac-tion Committee ranked only 26th on the F.E.C.’s 2009 list of the top 50 PAC contributors. And public employee unions are now under political assault in many state capitals.
In 2010, in Citizens United v. Federal Election Commission, the Supreme Court removed the last remaining legal barriers to corporate “electioneering communications” and related political “independent expenditures.”
By doctrine and tradition, the Catholic Church stands against all who selfishly exploit people for profits. But if Catholic bishops hope to be any real political counterweight to the worst elements in U.S. big business today, they need to pick up their game, speak out far more and pressure Catholics in Congress to fight for working families and to protect the needy from the greedy. Labor Day 2011 would not be too soon.