Grasping at straws has become a favorite hobby of the Obama administration’s defenders – but as of last Wednesday evening, we can say goodbye to one of the last straws left.
That straw is known as the “Dodd-Frank Wall Street Reform and Consumer Protection Act”, which sounds pretty progressive for an administration that has outdone its predecessor in shielding Wall Street firms and top-level executives from criminal prosecution. The Dodd-Frank regulations, we’re told, were meant to re-regulate the financial services industry, supposedly curbing the predatory lending and investment practices that caused the 2007-2008 global financial crisis and led to 10 million Americans losing their homes due to foreclosure.
Let’s assume for a moment that Dodd-Frank was actually a robust answer to the disastrous deregulation of the financial sector under Bill Clinton (it wasn’t) and that it’s been implemented in a timely and effective manner (it hasn’t).
Obama’s reelection campaign certainly held up the law as proof of the President’s willingness to stand up to Wall Street. So why is his administration pushing for a secretive “free trade” deal that would, among other things, make any new financial regulation since the 1990s (including Dodd-Frank) a trade violation punishable by fines of hundreds of millions and even billions of dollars?
Last week, WikiLeaks published a draft text of the Financial Services Annex of the Trade in Services Agreement (TISA). This is (pun intended) a big deal: Even as the past year has seen key portions of the Trans-Pacific Partnership (TPP, also known as “NAFTA on steroids”) come to light, US officials and their foreign counterparts have kept TISA negotiations firmly under wraps – until now.
Here’s what we already knew, thanks largely to this report by Public Services International (PSI), a global trade union involved in the negotiations: Broadly, TISA, which covers 68% of world trade, aims to cement private control over public services (health care, transportation, etc.) by making a trade violation out of any attempt by a government to reverse that privatization.
So not only would TISA permanently secure the services multinational corporations already control, but it also opens up services that are still public to privatization – lest the nation in question be hit with massive sanctions. The leaked Financial Services Annex reveals just how severely TISA would cripple the ability of national governments to protect their citizens (not to mention the world economy) from the grave risks and abuses of the global financial system.
As Lori Wallach of the consumer advocacy group Public Citizen notes in an interview on Democracy Now!, brackets in the draft text (indicating who proposed what) show that the Obama administration and the European Union are pushing “among the most retrograde anti-regulation provisions”, including one called “standstill”.
This provision is what it sounds like: It mandates a freeze on financial regulation, so that any new laws would be violations under the World Trade Organization (WTO). But here’s the kicker:
[I]f you look at the way the different versions of that provision are written, it may require countries to stand still relative to where they were when the WTO services agreement was established in the 1990s, and that would mean all of these new regulations that were put into effect after the global financial crisis would automatically be violations. So the way the language is written, maybe it’s standstill from 1994. And if that’s the case, it would…make trade violations out of all of these new re-regulations.
The same administration that publicly pushed for re-regulation (and prematurely touted its success) is working in secret to undermine, once and for all, the possibility of national governments effectively regulating finance capital – that includes half-assed, Wall Street-approved attempts like Dodd-Frank.
Financial regulation, we hardly knew you.