David Frum

05.01.12

Occupy the Policy Makers

Suzy Khimm has a fascinating piece in the Washington Post about some of the alums of Occupy Wall Street. Where do they go after they stop occupying the parks? A few have become policy wonks intent on changing how America's banking system is regulated:

There, inside a soaring public atrium, dreadlocked teens trade shoulder massages near the evening meditation circle. A young man holds up a sign: “You’re a Federal Reserve $lave.” The dinnertime crowd buzzes over free plates of rice and beans while listening to an improvised, profanity-laden operetta about the evils of agro-giant Monsanto. But amid the din, there’s a small group holding a quieter, and far wonkier, conversation.

“What are the restrictions? Does it let anyone call themselves a clearing agency? It seems like there’s a rigorous definition, but maybe there’s not,” Caitlin Kline says. “What if all you’re taking on is counterparty risk for all of these banks, but you don’t ever take any other exposure? It seems to be covered by several exemptions.”

Kline, a former Wall Street trader-turned-Occupier, is a member of Occupy the SEC, an offshoot of the large movement that has burrowed deep into the regulatory process. At this moment, she’s trying to figure out if the drafting of the Volcker Rule — a provision of President Obama’s Wall Street overhaul that would restrict commercial banks from making speculative investments that do not benefit their customers — is tight enough to keep banks in check.

After much discussion, the group agreed that the Volcker Rule’s earlier definition of clearing agencies, which banks use for exchanging futures contracts, was “clear and tough and good,” but decided that it was worth double-checking section 17(a) of questions that the Commodity Futures Trading Commission raised about it.

Khimm's piece raises a lot of questions, and invites a lot of comparisons between the Occupy movement and the Tea Party.

1. Many members of the Occupy movement interviewed in the piece are young professionals who sound like they had promising careers in finance before they eventually got disillusioned. Is this yet another data point about how many of the smartest people who are graduating college are more likely to have sympathies with liberal as opposed to conservative causes?

2. In the article, Khimm contrasts the efforts of the Occupy movement to change policy with the Tea Party efforts to change politics:

In its heyday, the tea party turned to elections to enact change, rallying supporters to primary incumbents and helping the GOP retake the House. Occupy Wall Street, by contrast, has largely eschewed the traditional political process. Instead, as protesters have moved off the streets, a small minority of Occupiers has waded deep into the weeds of the federal regulations, legal decisions and banking practices that make up the actual architecture of Wall Street.

I wonder how much of this is due to the differences between Republican and Democratic primaries. GOP politicians know that they can face a competitive primary which they could potentially lose. Senator Dick Lugar of Indiana is the latest example of this. In contrast, Democrats seem to be able to hold off primary challengers. Perhaps the focus on policy makes sense when it is clear that politics is not a viable option to change the system.

3. What would a Tea Party focus on policy look like? The answer is probably "The Ryan Budget". I suspect many Tea Partiers would even agree with me.

The contrast is instructive. Occupy seeks to shape exiting policy and regulation. The Tea Party views policy through the lens of budgeting and accounting. The Ryan budget answers the question: "how do we keep Medicare the same for everyone who is 55 and older without paying taxes?"

The Occupiers are asking a different question: "How do we change the fundamental nature of the banking system?"

I don't want to suggest one question is "better" then the other (I have problems with both) but the differences are interesting.