Fix our Broken System: New Rules for the Wall Street Casino

Outrageous executive pay is symptom of a disease that has infected our entire economic system. It is a disease of greed and corruption made worse by the Bush administration’s obsession with further deregulating Wall Street and ideological aversion to oversight and accountability in our financial system.

While overpaid executives do well in the good times and bad (and they do very, very well indeed), America’s working families are bearing the worst economic crisis in our country since the Great Depression. Whether measured in lost jobs and homes, lower earnings, eroding retirement security or devastated communities, workers have paid the price for Wall Street’s greed.

But it gets even worse. The cost of deregulation and financial alchemy are far higher than the devastating direct effects on workers. The lasting damage is in missed opportunities and investments not made in the real economy. While money poured into exotic mortgage-backed securities and hedge funds, our pressing need for investments in clean energy, infrastructure, education and health care went unmet.

To fix our broken system we must re-regulate our financial markets. Just as passing the Employee Free Choice Act is central to securing the economic future of America’s working families, so is ensuring our financial markets are regulated.

The good news is that the framework for the needed financial services regulatory reform already is in front of us. The Special Report on Regulatory Reform by the Congressional Oversight Panel identifies the key principles essential for meaningful financial reform. The panel was established by Congress to monitor the bailout and to help ensure that aid to the financial sector is accompanied by meaningful market reforms. The report concluded that “the present regulatory system has failed to effectively manage risk, require sufficient transparency and ensure fair dealings.”

The new rules we need can be put this way: No more gambling with public money, no lying and no stealing. Self-regulation is not acceptable. Any regulator of system wide risk must be a fully accountable body and should not have the power to override investor and consumer protections.

U.S. Rep Barney Frank (D-Mass.) and Sen. Christopher Dodd (D-Conn.), chairs of the House Finance Committee and the Senate Banking, Housing and Urban Affairs Committee, respectively, are working on new financial regulations right now. But banks, CEOs and their corporate lobbyists are working hard behind the scenes to make sure whatever new regulations are passed are toothless Band-Aids, designed to maximize PR benefit, not fix the system.

Take action today and tell Frank and Dodd we're counting on them to draft legislation that truly strengthens our financial regulations and begins curing the disease that has infected our economic system. We can’t afford not to.