Walking by Zuccotti Park, you might think that Occupy Wall Street had vanished into thin air. But if you walk a few blocks further, to the public atrium at 60 Wall St, you’ll find working groups deep in conversation. The work of Occupy continues, in New York City and across the country as well. Indeed, some Occupy groups have begun campaigns with a specific goal: policy reform.
One of the most substantial examples of policy efforts within Occupy is a group called Occupy the SEC, which for months has been meeting twice weekly to review the 298-page Volcker Rule through a diligent, line-by-line reading and analysis. The group’s goal is to submit a public comment to the Securities and Exchange Commission examining potential loopholes in the rule. When implemented, the Volcker Rule, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, will restrict American banks from making certain forms of speculative investments, such as proprietary trading.
Alexis Goldstein, one of the founding members of Occupy the SEC (OSEC), worked on Wall Street as an information technology expert and business analyst for years. One day, she realized she was extremely unhappy in her job, which she says made her obsess about money instead of pursuing a meaningful life. Now, Goldstein is using her knowledge of Wall Street to tackle what she sees as a dangerous lack of financial regulation. In the fall, she gave a public teach-in at Occupy Wall Street, explaining how derivatives work, what Glass-Steagall was and how it got repealed, and how Wall Street avoids regulation. “Who usually submits public comment on bills in Congress?” Goldstein said to the crowd. “The companies who are going to be regulated. And what do they say? ‘It’s too strict! Too much regulation!’ ”
OSEC hopes that their hard work will provide an objective voice outside the finance industry. The group consists of lawyers, current and former financial professionals and people with experience in politics. “I felt like I really wanted to do something action-based, around financial reform,” said twenty-five year old OSEC member Elizabeth Friedrich, who works for a nonprofit that does community economic development. “I think banks didn’t really expect a public reaction like this to the Volcker rule—but the [Occupy] movement has really opened things up and motivated people.”
After meticulously reading the Volcker Rule, the group has determined that there is one significant loophole that could potentially allow banks to subvert the rule by allowing a blanket exemption for repurchase agreements, also known as “repo lending.” On the NYC General Assembly website, OSEC describes how repo lending works:
“Repo lending is best described as the financial equivalent of a visit to the pawnshop,” the blog post explains. “An asset is deposited with a lender in exchange for cash, with an agreement that at some point in the future a slightly larger amount of cash will be repaid and the initial goods returned. The pawnshop provides a way to exchange a valuable-but-illiquid asset (a grandfather’s watch) for a source of short-term liquidity (next month’s rent). Repo provides much the same function for banks—except that instead of a watch, one deposits bonds or other securities, and instead of next month’s rent, it is used to fund today’s trading activity.”