The American people are suckers, the media that pretends to guard the public interest is asleep at the switch, and electoral democracy is a farce. How else to explain the ease with which the big financial interests have had their way with Congress and the president to the detriment of consumers?
Do you know the privacy threat of Senate Bill 900, the "Financial Services Modernization Act," which the Republican leadership is pushing for quick congressional approval this week and which Bill Clinton is expected to sign into law? It effectively will end 65 years of regulation of banking, stock brokerages and insurance companies enacted to protect consumers in response to the debacle of the Great Depression.
The new law will allow financial institutions to merge into mammoth entities possessed of unprecedented economic and political power, permitting them to traffic in private information stored in files of their far-flung affiliates concerning the intimate details of your personal life.
The chicanery of those pushing this bill in the most heavily financed lobbying effort in U.S. history--over $300 million in lobbying costs and campaign contributions--observes no limits of political principle. Their greed is bipartisan, joining the GOP congressional leadership with the machinations of key players in the Clinton White House, all the while blurring the lines between lobbyists and government officials.
Only last week, as the bill was being pushed through a congressional conference committee, Treasury Secretary Lawrence H. Summers rushed back from a trip to China to huddle with lobbyists representing Citigroup, Goldman Sachs, Merrill Lynch and other financial giants. The meeting was closed to the media and public, but one participant told the New York Times that Summers lectured the lobbyists on how to spin this bill so it appears to be in the public interest. "He said it would be very unfortunate if any financial institution were to suggest that they do not see the broad public purpose of this legislation," the lobbyist reported.
Also last week, it was announced that Robert E. Rubin, the man who handpicked Summers to replace him as secretary of the Treasury, will take a position as co-chairman of Citigroup, which lobbied heavily for this legislation, as did Goldman Sachs, Rubin's company before joining the Clinton administration.
Citigroup was formed last year in a $37.4 billion merger of Citicorp bank and the Travelers Group insurance company, which was tentatively approved on a two-year waiver from existing law forbidding the bank from selling insurance. Under the new law, Citigroup will be made fully legit. This legislation was dead until Rubin, as Treasury secretary, worked out a crucial compromise with Federal Reserve Chairman Alan Greenspan last February that allowed the bill to move ahead in Congress.
Federal law prohibits government officials from lobbying their former agencies for a year after leaving their government positions. The Clinton administration has extended that to two years. But Rubin has admitted in interviews that he pushed for this bill's passage in the months after resigning from the Cabinet. Why is no one calling him on that?
Rubin and Summers were crucial to lining up Clinton's support for this bill, but congressional approval was a sure thing, given the unprecedented campaign contributions and lobbying of the financial industry. The two key players, Senate Banking Committee Chairman Phil Gramm (R-Tex.) and the committee's ranking minority member, Christopher Dodd (D-Conn.), have received huge contributions from the industries that will profit mightily from this bill.
Opposition has come from a handful of privacy advocates on both sides of the aisle led by Richard Shelby (R-Ala.) in the Senate and Ed Markey (D-Mass.) in the House. Consumer critics have ranged from Phyllis Schlafly's conservative Eagle Forum to Ralph Nader. "We will look back at this and wonder how the country was so asleep," Nader warned. "It's just a nightmare."
The bill allows banks, insurance and brokerage firms to merge not only their equity but also the vast accumulation of computerized records on consumers' buying habits, health treatments, investments and credit history. The financial industry lobby defeated all amendments to the bill aimed at ensuring an individual's right to deny the release of personnel data. Indeed, the ability to form a detailed marketable profile of individual consumers was clearly a goal of industry lobbyists.
At the very least, as Markey states, "This bill should not be approved without an 'opt out' provision giving consumers the power to stop the sharing of their personal files."
What's the rush in passing this highly questionable legislation? Most of us are not in line for high positions in Citigroup or the financial companies that will benefit from this legislation, and we should not be expected to share their sense of urgency as to its passage. The question is, do our representatives in Congress and the president work for the banks or for us?