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Movement of the Day: #OccupyWallStreet’s Alternative Banking Group and Occupy The SEC

photo of Michel Bauwens

Michel Bauwens
1st March 2012


‘Occupy the SEC is a group of concerned citizens, activists, and professionals with decades of collective experience working at many of the largest financial firms in the industry. Together we make up a vast array of specialists, including traders, quantitative analysts, compliance officers, and technology and risk analysts. What makes Occupy the SEC so unique and inspiring is the way that it straddles the two worlds. On the one hand, it’s authentically grassroots, forged in Zuccotti Park’s crucible of discontent. As such, it is transparent, open to anyone, and accountable to everyone. On the other hand, it includes financial insiders with the education and regulatory vocabulary to challenge high-powered lobbyists at their own game. That’s a powerful combination that the SEC can’t easily ignore.”

Josh Parkinson gives background to some of the thematic action groups around OWS:

“Cathy O’Neil, a former hedge fund quant … organizes the group, a branch of Occupy Wall Street known as the Alternative Banking Group. She proposed that the gathering of financial experts come up with improvements to Huntsman’s plan and present them to Occupy Wall Street’s General Assembly. Another OWS supporter, whose day job involves consulting for private equity firms, looked up from his laptop and smiled. “That’s an excellent idea!”

As unlikely as it may have seemed when protesters first descended on New York’s financial center this fall, an increasing number of Wall Street insiders are now returning the favor, you might say, by occupying Occupy Wall Street. Sympathetic to the movement’s critiques of the banking system, they’ve been quietly lending their expertise to Occupy efforts to develop real ideas for revamping the industry.

“What I want is to influence the conversation,” says O’Neil, who worked for two years with Lawrence Summers, the former US treasury secretary, at the hedge fund D.E. Shaw.* “It’s about education and outreach and just the message that the financial system is too complicated—that you are not dreaming this.”

Founded in early October by former British diplomat Carne Ross, the 60-person Alternative Banking Group has become a repository for OWS-friendly financial insiders. It includes current and former investment bankers, traders, and lawyers for the securities industry, but also many laymen—including housewives, people who used to sleep in Zuccotti Park, and guys with piercings who wear Che Guevara T-shirts. The group shares Occupy Wall Street’s website, its nonhierarchical structure, and its distaste for partisan politics. “I’d say the one thing that everybody agrees on is that the system isn’t working,” O’Neil says. “And there is nothing about being a Republican or a Democrat in that statement.”

The Alternative Banking Group’s meetings can get contentious. At the confab on Sunday, which took place at Columbia University, members squared off over the NEED Act, a bill by Congressman Dennis Kucinich that would put the Federal Reserve under the control of the Treasury Department and allow it to print money without issuing new debt. The bill could be “a third way that I think would satisfy libertarians as well as people on the left,” said Jamal Mahmood, an independent retirement planner. A group of white-haired Kucinich fans were onboard, but a Harvard-educated high-frequency trader worried that the plan “would turn America into Greece, basically.”

O’Neil sees the group’s diverse views as one of its biggest strengths. “It keeps us from making our own little universe of assumptions, which was one of the causes of the crisis to begin with,” she says.”

Some historical background:

“O’Neil began visiting Zuccotti Park with the idea of holding a teach-in about the financial industry. But the park was noisy and crowded and she was too nervous at first to announce herself on the people’s mic. Eventually she discovered the Alternative Banking Group, which had a presence in Zuccotti and had already begun to attract other students of finance, some of them quite radical.

“Like most people in Occupy Wall Street, I am concerned by rising inequality and the sense that society is fragmented and government has essentially been co-opted,” says Ross, the Alternative Banking Group founder. Ross, who resigned in 2004 from the British government in protest over the invasion of Iraq, hosts Alternative Banking Group meetings at the Manhattan office of his nonprofit diplomatic consultancy, Independent Diplomats. “I don’t believe in referring to government to solve these problems; that is a waste of energy,” he says. “Instead I believe in building new systems that are better.”

With O’Neil on board, the group decided to split into subgroups, with Ross focusing on designing an entirely new banking system and O’Neil facilitating separate discussions of incremental reforms. Their work has already begun to pay off. Last week, the Financial Times published a letter from Ross’ subgroup to the General Assembly describing its vision for an alternative bank and has asked the group to pen a guest column for its blog, Alphaville. O’Neil’s subgroup is designing a web and smartphone app that locates credit unions, talking about hosting its own conference on financial reform, and working on an online forum which will answer people’s questions about the financial system.

The Alternative Banking Group has also grown to include Occupy the SEC, another collaboration between activists and financial insiders that is trying to strengthen the Volcker rule, the anti-speculation banking measure that the Securities and Exchange Commission will implement next year. “Volcker came out with something really simple; in the legislative process it got watered down, and now in the regulation process it is being unbelievably twisted,” said a middle-aged financial risk analyst who briefed the Alternative Banking Group about the Volcker rule on Sunday. (He asked that I not use his name because he still works in the banking industry.) He’d been meeting with Occupy the SEC twice a week for several hours to prepare hundreds of comments on the rule for the SEC—in a direct challenge to banking lobbyists.

The problem, as the risk analyst explained it, is that regular people don’t have the time or temerity to wrestle with $800-an-hour lawyers about the ins and outs of implementing arcane financial rules. “The law gets passed and normally people walk away,” he said. But, he added, Occupy the SEC wants to keep them engaged and shame the SEC into listening to them: “We say, look, this is just a bunch of people who are interested and want to participate.”

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