Nov. 7, 2008 at 8:00 AM ET
Not since the 1960s, when seat belts became standard equipment in cars, has the atmosphere been so favorable for consumer-friendly reform. After decades of hands-off capitalism and shrinking consumer protection agencies, the Wall Street meltdown has unmistakably changed the nation's attitude toward regulation. And Americans have just elected a president who has promised to reform the credit card industry, bankruptcy law, and toy safety, to name a few.
So you’d think that Ralph Nader, the father of the modern consumer movement in America, would be happy.
You'd be wrong.
Nader is worried that fundamental reforms of Wall Street, banking and workers' rights issues will remain elusive.
"The Democrats are more corporate than ever," he said in an Election Day interview with msnbc.com. "You know about K Street. (Lobbyists) are just shifting their money to Democrats and they are happy to get it."
Many Democrats in Congress receive sizable campaign donations from Wall Street and other financial firms, the very industries Democrats will now be asked to re-regulate.
For example, he said, Sen. Christopher Dodd, D-Conn., who runs the powerful Committee on Banking, Housing, and Urban Affairs, received more than half the funding for his aborted presidential campaign from banking and insurance companies. Dodd will be a key figure in any proposed banking reforms.
Nader also noted that Vice President-elect Joe Biden has received more campaign donations for his Senate campaigns from credit card issuers than any other industry. True regulatory reform is impossible when Congress members have built-in conflicts of interest from campaign donations, he said.
President-elect Barack Obama, meanwhile, raised and spent more money than any candidate in American history.
“And now he’s going to propose campaign finance reform after opting out of the public financing system during the election? He has no credibility now,” Nader said.
Nader described his own campaign as a success, citing the fact that he managed to get his name on 45 of 50 state ballots. As of Thursday, however, he had garnered only about 655,000 votes, far less than 1 percent of those cast and well below his high-water mark of 2.9 million votes in 2000. On the plus side, however, it was the second-highest total of his four presidential runs and places him first among this year’s third-party candidates (Libertarian candidate Bob Barr received just shy of 500,000 votes).
While he’s not expecting any fundamental reforms on consumer issues, Nader said he's glad that Obama won so easily and that Democrats added to their majority in Congress. "They have no excuses now, no blaming the Republicans," he said.
To support his pessimistic view, he points to the recent $700 billion bailout bill passed by Congress.
"For once, Washington had Wall Street over a barrel,” he said. “Wall Street wanted that money fast. But what happened? Congressional Democrats got 'stuffed' on the bailout. They gave up $700 billion and got nothing in return." By not tying Wall Street reforms to the bailout, Nader said, Democrats surrendered all their potential negotiating leverage.
Nader said he would have paid for the bailout by instituting “speculation taxes” on Wall Street transactions such as the buying and selling of derivatives like oil futures. He claims a one-tenth of one percent tax would generate about $500 billion each year.
"Right now you go out to buy essentials like furniture and pay 5, 6 even 7 percent sales tax. But you can buy $1 million in oil futures and pay nothing," he said. "We had a stock transaction tax during the Civil War and the Spanish American War." (For more, click here)
He also called for expanded shareholders' rights laws, which he said would rein in abuse of power by CEOs.
"It's more important than ever to give shareholders real power," he said.
Reforms already begun
Some other reforms Nader advocates are already under way. The Federal Reserve has proposed a series of reforms on credit card issuers that would bar many practices that penalize consumers, such as retroactive interest charges. A “Credit Card Users Bill of Rights” has already passed the House of Representatives. Food and toy safety were a popular topic of both Sen. Hillary Clinton and Obama early in the campaign. But with such a long legislative agenda, such reforms could easily get lost in the shuffle, Nader warned.
"New regulation will require some kind of legislative deadline to make sure it happens, like we did with seat belts," Nader said.
Obama has offered a series of proposals to protect consumers; most are laid out in a white paper that was published a year ago.
Among them: A rating system for credit card offers managed by the Federal Trade Commission. Cards with risky terms would get low ratings. He also proposed simplified mortgage application forms, which would help consumers understand the real cost of their loans.
So far, there has been no public speculation about who Obama might name to run consumer-oriented agencies, like the Federal Trade Commission.
But Nader is not persuaded that Obama will get far with such rules. While voters have a strong appetitive for new banking regulation, financial firms will argue that new restrictions will only slow the economic recovery and back the new president into a corner, he said.
"Obama will be overwhelmed by the economic crisis," Nader predicted. “There is a real need to shift the power away from corporations and to the people. Perhaps (Obama) will rise to the occasion … but he does not have a challenging personality, that’s why he always talks about unity and so on. And these corporations need to be challenged.”