Fed Encourages Bank Speculation that led to Great Recession

Mark Gruenberg

Mark Gruenberg Editor, Press Associates Union News

Yielding to big pushes by the big banks, and the deregulation mania of the GOP Trump administration, the Federal Reserve Board voted on May 30 to let the financiers, in so many words, speculate in derivatives and other shady financial instruments with Mom and Pop’s pension money – and your paychecks.

And that virtual repeal of the so-called Volcker Rule, a curb Congress enacted in the post-Great Recession Dodd-Frank law in 2010, led top consumer and union leaders to hit the ceiling.

“Repealing the Volcker rule is risky public policy, bad for the economy and puts everyone at risk because banks will surely gamble with other people’s money, just as they have throughout history when rules are relaxed,” said National Consumers League Executive Director Sally Greenberg.

“Banks also complain the Volcker Rule is burdensome. Well,  profits have been soaring: The Federal Deposit Insurance Corp. reported last week that U.S. banks had a record $56 billion in profits in the first quarter of the year.”

"We agree with the Rule’s namesake, Paul Volcker himself, who headed the Fed from 1979-87, who said he welcomed ‘the effort to simplify compliance’ with the rule as long as it does ‘not undermine the core principle’ of prohibiting taxpayer-backed banks from engaging in risky proprietary trading.”

“Risky proprietary trading” is what the financiers, knowing the Fed insures deposits, did from the 2000 Gramm-Rudman deregulation law through the 2008 crash. They took Mom and Pop’s pension money and people’s paychecks and plunged it into derivatives, stock options, swaps and the other risky pieces of paper. The collapse like a house of cards led to the Great Recession and its loss of millions of dollars and people’s homes, jobs and pensions.

Which was AFL-CIO President Richard Trumka’s point, too.

 

“The Volcker Rule prevents Wall Street banks from gambling with taxpayer-backed money. Gutting it would be a huge gift to the big banks, their well-paid lobbyists and substan-tially increase the risk that working people will have to bail out the banks again,” he tweeted.

Ever since Dodd-Frank passed, the banks and their financial friends have lobbied to end the Volcker Rule, which they tried – unsuccessfully – to stop in the wake of the crash. Now, they’ve succeeded, said Marcus Stanley, policy director of Americans for Financial Reform.

“This proposal is no minor set of technical tweaks to the Volcker Rule, but an attempt to unravel fundamental elements of the response to the 2008 financial crisis, when banks financed their gambling with taxpayer-insured deposits,” Stanley’s statement said. “If implemented, these proposals could turn the Volcker Rule into a dead letter, a regulation that would not meaningfully restrict trading activities at the banks whose problems could drag down the entire financial system — again.”                

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Posted In: Allied Approaches

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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There is Dignity in All Work

There is Dignity in All Work