The Trans-Pacific Partnership: Undermining Wall Street Reform
In the wake of the worst financial crisis and economic recession since the Great Depression, governments around the world are re-regulating financial firms, seeking to reverse the extreme deregulation that led to foreclosed homes, bank bailouts, lost jobs and collapsing economies. Incredibly, the Trans-Pacific Partnership (TPP) would provide big banks with a backdoor means of watering down such efforts to re-regulate Wall Street.
TPP rules, written under the advisement of banks before the financial crisis, would require domestic law to conform to the now-rejected model of deregulation that led to financial ruin. The TPP would undermine bans on particularly risky financial products, such as the toxic derivatives that led to the $183 billion government bailout of AIG. It would threaten policies to prevent banks from becoming "too big to fail" and the use of "firewalls" to prevent banks that keep our savings accounts from taking hedge-fund-style bets.
The TPP would also restrict capital controls, an essential policy tool to counter destabilizing flows of speculative money. Even the International Monetary Fund has recently endorsed capital controls as legitimate for mitigating or preventing financial crises. And the deal would pose new hurdles to taxes on Wall Street speculation, such as the proposed Robin Hood Tax that would generate billions of dollars' worth of revenue for social, health, or environmental causes.
The TPP would empower foreign financial firms to directly attack these and other financial stability policies in foreign tribunals, demanding taxpayer compensation for regulations that they claim frustrate their expectations and inhibit their profits.
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