Forum Post: Some Policy Proposals For The Financial System

I am glad that OWS has not made a specific list of policy demands. Nevertheless, it seems that electoral reform and financial reform are at the top of the list (they are at the top of my list as well). I don't consider myself a part of OWS because that's insulting to all of you who are actually occupying. I don't know of any effective electoral reforms but agree that money is the problem. On financial reform, the single biggest thing that can be done is to cap bank liabilities and break up the big banks. Simon Johnson's work (read 13 bankers) is very convincing. If OWS can put enough political pressure, either a law can be passed or regulators can start enforcing the Kanjorski Amendment. If you want a simple reason for supporting this, think about what happens if JP Morgan Chase is under distress Monday morning. What is bailout? Correct for 200. Odds are these banks would be of higher market value if broken up (a la Standard Oil). The second biggest thing is to increase the amount of convertible debt issued by big banks. It's an easy way for regulators to force bondholders of banks to take a huge haircut. The third thing that can be done is to significantly raise capital requirements to levels that haven't been seen since before the Federal Reserve's creation. Caps on leverage would also be great.

Two things OWS shouldn't waste its time supporting: A financial transactions tax: this is an inefficient way of curbing speculating (raise margin requirements instead) and very difficult to enforce since it requires international coordination. The meme that banks aren't lending: banks are not lending because there's no demand in the economy. Too many households are in debt and not in a position to spend. It's time for some real orthodox fiscal stimulus and unorthodox monetary stimulus.

Cheers