October 18, 2011
The People's Bailout: How Occupy Wall Street Could Help Millions, and Bring More Supporters Into the Fold—A Commentary by Ray Brescia ’92
The following commentary was posted on the Huffington Post on October 18, 2011.
The People's Bailout: How Occupy Wall Street Could Help Millions, and Bring More Supporters Into the Fold
By Ray Brescia ’92
The Occupy Wall Street movement has caught on like wildfire, and is spreading to smaller cities and towns throughout the country, and large cities throughout the world. Will it be able to sustain itself? Will it be able to convert kinetic energy into lasting reform? A lot will depend on whether the movement will be able to articulate credible claims that lead to meaningful reform. Some criticize the movement as unfocused and unable to express a clear set of demands. "What do they stand for?" is a common refrain of pundits and skeptics alike. While OWS has generated a number of general demands, like "ending wealth inequality," the sense, from the outside looking in, is that those engaged in actions across the country, even the globe, feel that many institutions -- mostly the large banks and multi-national corporations, but also government and elected officials -- have failed to serve the common good. While a majority of Americans appear to view the OWS crowds favorably at the moment, there is a risk that any such support could diminish over time and momentum could peter out unless some concrete solutions -- and real wins -- are generated by the energy the movement has unleashed.
A focused attention on a small number of specific demands, and the ability to accomplish real policy changes that help a wide swath of Americans, could garner not just favorable views of, but also active support for, the broader effort for lasting systemic change the movement appears to seek: i.e., real changes in the practices of the institutions that touch all of our lives, every day. Permit me to suggest one effort the movement could get behind: meaningful mortgage relief for the nearly one quarter of American homeowners currently "underwater" on their mortgages, owing more than their home is worth. This relief would mean banks would have to reduce outstanding principle on mortgage debt and align such debt with present home values.
I have not joined the OWS movement myself, and dare not attempt to speak for it or at it. Prior to joining the academy, however, my fifteen years as a lawyer for community organizing groups in Harlem, the South Bronx, Chinatown and Brooklyn have offered me the opportunity, time and time again, to see from the inside what makes a successful movement for social change and what is needed to sustain one. These experiences have taught me that three things are essential to such efforts: a clear message; broad support; and early, concrete wins. Right now, OWS has one of these: broad support. Certainly one could argue that the fact that the movement seems to be spreading is a win in itself, giving it a second victory. But the ability to sustain and grow support for the movement will depend upon its ability to move from rallies to action, chants to change, tweets to reform.
One of the first rules of community organizing is that for any nascent movement to sustain itself it must go after concrete wins, however small. Such wins often involve low-hanging fruit: early victories that can be attained if focused energy is directed towards achieving them. Wins that fit this bill tend to enjoy a narrative with a strong cultural resonance, one that appeals to a broad audience. Activists must launch these mini-campaigns against targets seen as being at fault for some real pain the broad audience is experiencing. Such targets must be susceptible to popular pressure. Once small victories are secured, they signal to the target audience that the movement is serious and capable, and that the effort expended in joining it will be worth the trouble.
A central aspect of these small, attainable victories is that they must appeal to the self-interest of a broad base of potential supporters. In the end, all social movements are really about self-interest, but self-interest "properly understood" as Alexis de Tocqueville wrote nearly two centuries ago. Whether because one sees more money in his or her pocket, a better world for his or her children, or feels good when acting selflessly and in the best interest of others: some version of self-interest is always at play. Movement building is then about sharing a common vision of the good that flows from this self-interest and working towards it, collectively.
In many ways, a demand for meaningful mortgage relief would satisfy many of these criteria. Getting behind mortgage relief would increase the attractiveness of the movement by appealing to a broad, non-partisan group of Americans. Millions of borrowers, regardless of their party affiliation, are both behind on their mortgage payments and owe more on their home than it is worth. As a result, low interest rates on mortgages are a cruel reminder of these homeowners' fate: without equity in their home, they cannot refinance at more affordable and more manageable rates. This is a real, kitchen table issue many Americans, both employed and unemployed, face every day.
Many feel that banks benefited from the federal bailout and that hundreds of billions in taxpayer dollars did not trickle down to everyday Americans in a clearly identifiable way. This is a narrative with a strong cultural resonance. What's more, in isolated instances, banks have shown they will give in to public pressure; when mass protests oppose the foreclosure of a grandmother or young family in neighborhoods across the country, banks have often responded by finding a way to stop the eviction.
But banks are not the only ones that might bow to public pressure around this issue. Many state attorneys general from across the country are currently in negotiations with some of the biggest banks to reform those banks' foreclosure practices. Last year, it was revealed that banks routinely filed fraudulent documents in tens of thousands of foreclosure actions. Such practices are at the center of these negotiations, and it appears that at least some aspects of the settlement could involve mortgage relief. As elected officials, the attorneys general involved in these negotiations should be responsive to public pressure; such pressure would stiffen the AGs' resolve to press for meaningful mortgage relief as an essential element of any such settlement.
But why might banks be willing to consider settling on aggressive terms, and engage in meaningful mortgage relief? It gets back to self-interest. Banks today face a real crisis of confidence. Mounting pressure for accountability in the financial sector--from the street, lawsuits, investors -- has got to have bankers nervous. A grassroots movement is afoot that is promoting a "bank transfer day" on November 5th when thousands are expected to move their deposits from big banks to credit unions and small, local banks. Recently, the federal government launched litigation against 17 of the largest banks seeking roughly $200 billion in compensation for alleged fraudulent practices in the marketing and sale of securitized loans during the mortgage frenzy of the last decade. These suits come on the heels of actions by large and small investors seeking compensation for their losses due to risky bank behavior over the last decade. Banks can only overcome this crisis in confidence -- and beat back some of these attacks--by offering an olive branch to the American people. In the words of Vikram Pandit, CEO of Citigroup: "Trust has been broken between financial institutions and the citizens of the U.S., and that is Wall Street's job, to reach out to Main Street and rebuild that trust."
Perhaps the extent to which OWS can carry on is enough for it to carry on. But achieving concrete wins that spell real benefits for a wide range of Americans could result in a more sustainable, and more broadly supported, movement. Meaningful mortgage relief could fit this bill. It could meet the real needs of Americans on Main Street, afford elected officials the opportunity to prove they can be responsive to those needs, and give financial institutions a chance to start to gain the trust of the American people. That's a win-win-win, and OWS will only be stronger if it can pull it off.
Ray Brescia is a Visiting Clinical Associate Professor of Law at Yale Law School.