Forum Post: The first request of the Occupy Movement: The repeal of the Gramm–Leach–Bliley Act

Jeffery Sachs, a preeminent economist from Columbia University, has an op-ed in today's New York Times declaring that the Occupy movement is the beginning of the new progressive era (http://www.nytimes.com/2011/11/13/opini ... .html?_r=1). I must admit that my participation in this blog and in the occupy movement is driven by the same feeling. I believe, as do most occupiers, that we are on the precipice of massive social and political change. According to Sachs, we occupiers should coalesce and push for change in three main areas:

1) "revival of crucial public services, especially education, training, public investment and environmental protection" 2) "the end of a climate of impunity that encouraged nearly every Wall Street firm to commit financial fraud. 3) "Re-establish the supremacy of people votes over dollar votes in Washington"

But I think that Dr. Sachs has listed these three issues as if they were mutually exclusive, when I believe them to be related. All of these goals are more realistic with the extirpation of corporate money from politicians and political issues.

The corruption that results from the infiltration of corporate money in Washington has led to the era in which politicians tout the supremacy of trickle-down economics (aka Reaganomics) when there is very little (if any) evidence in the academic literature to support such claims, or to the denial of Darwinian evolution and global climate change when the World's most learned scholars are unanimously in support. Thus I think public-financing for politicians should be one of our most important goals.

A perfect example of how corporations corrupt policy is the enactment of the Gramm–Leach–Bliley Act, which was clearly enacted to favor large financial institutions. G-L-B was an amendment to the Glass-Steagall Act, which was instituted in the years succeeding the stock market collapse in 1929. One of the main purposes of Glass-Steagall was to separate speculative banks, such as investment firms (Goldman-Sachs, Morgan Stanley, etc..), deposit-taking banks, such as Bank of America, and insurance agencies, such as American Insurance Group (or AIG).

In 1999, republicans Gramm, Leach, and Bliley proposed that this function of Glass-Steagall was no longer necessary. As a result, Goldman-Sachs, AIG, and Bank of America (to name just one example from each category) were now allowed to act as the other type of institution. Without the G-L-B Act, the Finanical Products division at AIG (http://en.wikipedia.org/wiki/AIG_Financial_Products) - which was responsible for issuing massive amounts of credit-default swaps and therefore the primary force dragging down financial institutions in the wake of the 2008 financial collpase - would not have prohibited from speculating on wall street. Thus, the financial crash of 2008 would have been avoided, or if not avoided, contained within one sector (i.e. investment firms, insurance agencies, or banks). Yet, due to the enactment of G-L-B, all three of these areas fell together.

So, as a logical first step, the Occupy movement might be well-advised to push for the dissolution of G-L-B, and the reinstatement of the original Glass-Steagall Act. Many politicians are already in support of such measures, and once this happens, we can march on to tackle larger issues, like public financing for politicians.