All Things in Moderation

Well, it looks like “Occupy Wall Street” is finally getting some media attention. I’ve been following the story a little and I’ve read commentary that they need both a defined message and a goal to get anywhere with their protest, and I’ve also read others stating their lack of those is part of the message itself. I do know it’s spreading to other cities and the number of protesters seems to be growing. Yesterday more than 700 were arrested after a confrontation with police on the Brooklyn Bridge. Protesters are using social media to attract people to the ill defined cause. That sounds familiar.

NEW YORK (AP) — More than 700 protesters demonstrating against corporate greed, global warming and social inequality, among other grievances, were arrested Saturday after they swarmed the Brooklyn Bridge and shut down a lane of traffic for several hours in a tense confrontation with police.

“I don’t think we’re asking for much, just to wake up every morning not worrying whether we can pay the rent, or whether our next meal will be rice and beans again,” Larkins wrote in an email to The Associated Press. “No one is expecting immediate change. I think everyone is just hopeful that people will wake up a bit and realize that the more we speak up, the more the people that do have the authority to make changes in this world listen.”

Nicholas Kristof had a few suggestions for them in the way of demands. It’s doubtful any of this will ever come to fruition or if it does, I’m sure the financial wizards will figure out a way around it. These ideas, while reasonable in my view, seem a little naive coming from someone like Kristof.

*Impose a financial transactions tax. This would be a modest tax on financial trades, modeled on the suggestions of James Tobin, an American economist who won a Nobel Prize. The aim is in part to dampen speculative trading that creates dangerous volatility. Europe is moving toward a financial transactions tax, but the Obama administration is resisting — a reflection of its deference to Wall Street.

*Close the “carried interest” and “founders’ stock” loopholes, which may be the most unconscionable tax breaks in America. They allow our wealthiest citizens to pay very low tax rates by pretending that their labor compensation is a capital gain.

*Protect big banks from themselves. This means moving ahead with Basel III capital requirements and adopting the Volcker Rule to limit banks’ ability to engage in risky and speculative investments. Another sensible proposal, embraced by President Obama and a number of international experts, is the bank tax. This could be based on an institution’s size and leverage, so that bankers could pay for their cleanups — the finance equivalent of a pollution tax.

Much of the sloganeering at “Occupy Wall Street” is pretty silly — but so is the self-righteous sloganeering of Wall Street itself. And if a ragtag band of youthful protesters can help bring a dose of accountability and equity to our financial system, more power to them.

And then there’s this, two of my favorite lefties, David Dayen and Kevin Drum think BofA’s announcement to charge a $5 fee on debit cards is actually a good move for consumers. At least now we see the fees up front, they’re no longer just added into other banking fees or services, and we can choose to not pay it by taking our business elsewhere.

All along, banks have had the option of reforming overdraft fees to make them fairer and more transparent. They had the option of allowing merchants to charge customers for swipe fees or not as they preferred. But they didn’t. That’s because hidden fees, on average, are more lucrative. But hidden or not, we’re all still paying them.

The new fees are annoying, but that’s a feature, not a bug: they’re right up front in black and white, which means that consumers will see them and can be properly outraged (or not) by them. This in turn means that the free market has a chance to actually work: consumers will abandon Bank of America if their fees are too high and force them to charge less. Likewise, other banks will compete openly on the size of their fees. In the end, this competition will force fees down to the lowest possible profitable level, which is exactly what competition is supposed to.

Filed under: Occupy Wall Street | Tagged: BofA, debit card fees, Kristof | 43 Comments »