Why the Only Answer Is to Break Up the Biggest Wall Street Banks

By Robert Reich, Robert Reich's Blog

03 June 18

 

n Wednesday, Federal bank regulators proposed to allow Wall Street more freedom to make riskier bets with federally-insured bank deposits – such as the money in your checking and savings accounts.

The proposal waters down the so-called “Volcker Rule” (named after former Fed chair Paul Volcker, who proposed it). The Volcker Rule was part of the Dodd-Frank Act, passed after the near meltdown of Wall Street in 2008 in order to prevent future near meltdowns.

The Volcker Rule was itself a watered-down version of the 1930s Glass-Steagall Act, enacted in response to the Great Crash of 1929. Glass-Steagall forced banks to choose between being commercial banks, taking in regular deposits and lending them out, or being investment banks that traded on their own capital.

Glass-Steagall’s key principle was to keep risky assets away from insured deposits. It worked well for more than half century. Then Wall Street saw opportunities to make lots of money by betting on stocks, bonds, and derivatives (bets on bets) – and in 1999 persuaded Bill Clinton and a Republican congress to repeal it.

Nine years later, Wall Street had to be bailed out, and millions of Americans lost their savings, their jobs, and their homes.

Why didn’t America simply reinstate Glass-Steagall after the last financial crisis? Because too much money was at stake. Wall Street was intent on keeping the door open to making bets with commercial deposits. So instead of Glass-Steagall, we got the Volcker Rule – almost 300 pages of regulatory mumbo-jumbo, riddled with exemptions and loopholes.

Now those loopholes and exemptions are about to get even bigger, until they swallow up the Volcker Rule altogether. If the latest proposal goes through, we’ll be nearly back to where we were before the crash of 2008.

Why should banks ever be permitted to use peoples’ bank deposits – insured by the federal government – to place risky bets on the banks’ own behalf?  Bankers say the tougher regulatory standards put them at a disadvantage relative to their overseas competitors.

Baloney. Since the 2008 financial crisis, Europe has been more aggressive than the United States in clamping down on banks headquartered there. Britain is requiring its banks to have higher capital reserves than are so far contemplated in the United States.

The real reason Wall Street has spent huge sums trying to water down the Volcker Rule is that far vaster sums can be made if the Rule is out of the way. If you took the greed out of Wall Street all you’d have left is pavement.

As a result of consolidations brought on by the Wall Street bailout, the biggest banks today are bigger and have more clout than ever. They and their clients know with certainty they will be bailed out if they get into trouble, which gives them a financial advantage over smaller competitors whose capital doesn’t come with such a guarantee. So they’re becoming even more powerful.

The only answer is to break up the giant banks. The Sherman Antitrust Act of 1890 was designed not only to improve economic efficiency by reducing the market power of economic giants like the railroads and oil companies but also to prevent companies from becoming so large that their political power would undermine democracy.

The sad lesson of Dodd-Frank and the Volcker Rule is that Wall Street is too powerful to allow effective regulation of it. America should have learned that lesson in 2008 as the Street brought the rest of the economy - and much of the world - to its knees.

If Trump were a true populist on the side of the people rather than powerful financial interests, he’d lead the way, as did Teddy Roosevelt starting in 1901.

But Trump is a fake populist. After all, he appointed the bank regulators who are now again deregulating Wall Street. Trump would rather stir up public rage against foreigners than address the true abuses of power inside America.

So we may have to wait until we have a true progressive populist president. Or until Wall Street nearly implodes again – robbing millions more of their savings, jobs, and homes. And the public once again demands action.

The NDA Protected Our Predator. I'm Breaking My Silence, Because Women Deserve Better.

By Lisa Senecal, The Daily Beast

03 June 18

Craig DeLuca, then the president of Inntopia, dangled a job—and demanded sex. Only after agreeing to a settlement did I discover that I’m not the only person he did this to.

i Lisa. You don't know me but I'm reaching out because I think we have something in common. I know you can't discuss your event in detail but I would like to see if you're open to talking…If not I understand. Thank you, Alison

I received this message from a woman in my small town of Stowe, Vermont. We had never met, but I knew instantly what her message meant: I was not the predator’s only survivor.

The predator was also the president of a rapidly-growing software company, Inntopia. He had approached me about a senior marketing position a year earlier. Although still based in my town, Inntopia is now majority-owned by a large media company in New Jersey which, in turn, is owned by a still-larger New York investment firm. I was well-aware of the company’s growth and that, at the time, it had twice been named one of Outside Magazine’s 100 Best Places to Work. It’s since been named to that list a third time.

I interviewed with the president, Craig DeLuca, and was introduced to the CEO, Trevor Crist. After four months of being strung along, DeLuca arranged to meet with me alone, isolated and under false pretenses. What he did next left me struggling with a painful mix of feelings: vulnerable, angry, sad, and disgusted. His reaction was different. First came his email celebrating what he had done as “awesome.” Not long after, he followed with a job offer.

I did not accept that offer, and with it my swirl of emotions crystallized into resolve; I would not quietly accept what he had done to me. I contacted Scott Labby, an attorney I knew would fall on a grenade for a woman who was being harassed, bullied or abused.  

When the company — including its CEO who lives in my town — and its corporate owners were notified, I assumed they would do the right thing. That they would express genuine shock and concern and assure my counsel that my account would be taken seriously and thoroughly investigated. Instead, the company’s male CEO and the male chairman of the male-dominated board defended the predator while reflexively reaching for the tried and true slut-shame playbook: I wanted it, enjoyed it, should be ashamed it happened and fear that others would find out.

Predators use various forms of psychological, physical, and financial power. When a predator uses his professional position as a source of his power, employers too often deploy the company’s substantial financial and legal resources to overpower the survivor a second time. This is devastating after experiencing any type of sexual harassment, from inappropriate comments to full-on sexual assault.

The standard and appropriate response to a sexual harassment allegation is to assure the complainant that the claim will be taken seriously and then conduct a thorough investigation prior to responding to the charges. My case was very different. The company quickly responded with a letter asserting I had “welcomed and eagerly participated” what he had done to me, and that “hypothesized” I had come forward out of “regret” because I live “in a small community where Mr. DeLuca also lives, or because Mr. DeLuca is a married man.” The letter also asserted that my personal grooming habits—of which DeLuca was unaware—had somehow signaled my desire and consent. For the record, I was dressed for a winter hike when I met with DeLuca.

Those attempts to shame and humiliate me into backing down backfired, and my attorney and I were able to show that numerous details in DeLuca’s account were demonstrably untrue. Yet even after his actions and attempts to cover them up were exposed, the company continued to negotiate for him to remain as its president. I was assured he been stripped of his role in recruiting and interviewing and was no longer allowed to meet alone with women in or outside the office.

Even after they finally committed to removing him, I had serious reservations about signing a non-disclosure agreement. It seemed unlikely that a senior executive woke up one day, tossed aside the feminist sensibilities he had espoused to me—including claiming to be close to Hillary Clinton and her campaign and feeling a driving need to attend the Women’s March after her loss—and began hunting job applicants as sexual prey.

Before I agreed to sign, I received multiple assurances that the company had made a thorough investigation that identified no other victims, and that changes were being made to reduce the future risk to women at the company.

In the end, the settlement I signed included a non-disclosure agreement – with a guarantee of the president’s departure from the company and a prohibition against his return in any capacity.

***

As I had feared, I learned after signing the settlement that I was not the only woman he had harmed while working there.

Several days after receiving Alison’s message, we met at a coffee shop with the understanding that, because of my NDA, I could listen but there was little I could say. My stomach lurched as she described her experience, the particular language he used, the pattern he followed, the frightening disorientation she experienced as he became a different person, transforming into an unprovoked and unwelcome sexual aggressor. He even excused his behavior with her with the same phrase he’d told me: “I’m Italian, you know.”

When people who know Craig DeLuca have said to me that they can’t imagine him doing these things, my response is that neither could I. I blinked back tears as I listened to her recount detail after detail of her experience with him—tears for her and for me, too, because much of her story had also happened to me. My heart sunk further when I realized that Alison and I are both single mothers who he understood to be dependent on our incomes to support our families. We shared a perceived vulnerability.

Alison did not learn about my experience and my sexual harassment claim against DeLuca as part of the company’s investigation. Although the CEO was aware that DeLuca had been meeting with Alison about similar work and during a time period that overlapped with his contact with me, she says that no representative from the company ever reached out to her in the course of its investigation of my case. She described learning about my case only after it had been settled and my NDA had been signed—when an Inntopia employee disclosed my name as the person who had settled a complaint against the company.

In fact, Alison has now said publicly that DeLuca’s harassment of her began before my own experience with him—and continued for several months after I had come forward to the company with my claim. DeLuca kept up his attempts to lure her back to his office and meet with her alone even after I had reported what he had done to me to Inntopia.

After signing my NDA, I honored the required silence and turned my energies toward efforts I hoped would advance conversations and policies related to safety, dignity, and economic opportunity and security for women. I was appointed by Governor Phil Scott to the Vermont Commission on Women. I have written and spoken on issues of sexual harassment and assault, the silencing of women, and economic inequality and abuse. I launched The Maren Group, a female majority-owned company that works with women, businesses, and investors to reduce the risk and incidence of workplace sexual harassment, assault, and other economic abuse faced predominantly by women. We also work to affect public policy and I had the great fortune to work on and testify in support of Vermont’s sweeping new sexual harassment law — signed by the governor at the end of May! — as it wound its way through our State House.

***

Despite those positive steps, it was devastating to realize that signing an NDA now made me, however unwittingly, complicit. Despite what I had learned about DeLuca and my belief that the company had been deceptive in our negotiations about the extent of their investigation, my NDA remained in place. I could not reach out to any additional women who might already have been harmed by DeLuca to let them know that they were not alone, or warn other women about him.

Earlier this month, Alison filed a lawsuit against our predator and the company, detailing in terms I am all too familiar with how he brought her in under the guise of a  job-related conversation, closed and locked his door and then asked: “How adventurous are you?” He pressed her to begin, immediately, a “friends with benefits” relationship as he dangled needed work before her. DeLuca continued luring Alison in for additional meetings even after management had been informed of his behavior and after “confirming related behaviors by him,” she says in her suit, as “Inntopia maintained and promoted a culture  in which DeLuca’s outrageous sexual harassment… was implicitly or explicitly condoned, supported, tolerated, forgiven and/or hidden from public view.”

The suit refers to another “Female job seeker.”

That “female job seeker” has a name. My name. Today, my silence ends.

NDAs were created to guard intellectual property and trade secrets. Somewhere along the way, they became instruments to hide the misdeeds of harassers and the companies that shelter and enable them. Despite the writing and speaking I have done, I have said nothing until now that would identify my predator and the company that employed him. It has become clear in this past year that they did not feel I deserved that same discretion.

***

It’s not unusual for companies and corporate actors to express shock and concern when sexual harassment allegations become public, although often what’s really shocking and concerning to them is that a woman had the courage to speak. Donald Trump, Harvey Weinstein, Bill O’Reilly, Bill Cosby and so many others have called women who come forward liars. The confidence of such men often rests on their belief that women must and will not be talking.

Still, my settlement agreement includes an NDA and there is no existing law that protects me from being sued even if breaking my silence is meant to warn other potential targets, even as my predator and his former company have breached our NDA many times.

Multiple friends told me that they learned that I made a sexual harassment claim against DeLuca and Inntopia, and described details of negotiations that could have only come from the company; other friends learned of my case and Alison’s (prior to the filing of her lawsuit) when Crist was venting his frustrations about both of our complaints over drinks; and DeLuca has continued to tell people that what he did to me was consensual.

DeLuca—who told the Stowe Reporter last month that the claims in Alison’s suit are false and that he intends to fight them—said “I’m sorry, I’m not talking,” when contacted by a Daily Beast reporter.

Alison’s lawsuit claims that, subsequent to locking her in an office and pressing her to have sex with him then and there, DeLuca continued to send her sexually suggestive emails and texts for months. In these messages, her suit asserts, DeLuca attempted to set up meetings where they would be alone — also mentioning the possibility of work.

“The alleged behavior as described (in Alison’s suit)  is troubling, and is counter to everything the company stands for,”  Crist said in an email after a Daily Beast reporter asked if he had mentioned me since the NDA was signed. “Neither I nor the company would ever condone the type of behavior described in the complaint. Such behavior is an affront to our company values.”

Asked if he’d mentioned me since last May, when the NDA was signed, Crist wrote “Lisa is an active and vocal member of our small, tight knit community. So there very well may have been occasions where her name has come up.”

Six months after our settlement was signed, I was contacted by a friend who is also the leader of a foundation I have donated to and asked not to attend a fundraising event that she was co-hosting. I had already RSVP’d to the foundation as instructed in the invitation, sent in a donation, and received a lovely thank you phone call from another member of the foundation’s leadership. We spoke briefly and he indicated that he was looking forward to us meeting at the event. The disinvitation was shocking. The foundation leader explained in an email that Crist had asked that I not be there, and specifically stated that it was because of what I have said happened to me at the company he leads. Later I received a thank you letter from the foundation with a handwritten note from the same person who had passed on Crist’s disinvitation thanking me for my “amazing donation” and assuring me that things would get “easier for me.”

Asked by a Daily Beast reporter if he had asked the foundation “to disinvite Lisa Senecal from a fundraising event, or otherwise mentioned her to them,” Crist replied:

“Absolutely not. For clarification, the party I’m assuming you are referring to was a small private party I co-hosted and helped organize to raise money for the… Foundation, which I have supported for several years. It was not organized by the… Foundation, and the invite list was exclusively friends of the hosts.  She was not on the invite list.”

Earlier this month, following a story in our weekly paper about Alison’s lawsuit, I learned that the paper had been contacted with a complaint and given my name as the other “female job seeker.” The person who revealed my name was angry that the paper reprinted a Daily Beast piece I had written on sexual harassment. It appeared in the same edition as the paper’s story on the lawsuit.

Setting aside the existence of the NDA, it’s a special kind of moral lapse to disclose the name of a survivor without her consent — and even more so to disclose it to the media in an attempt to harm her. Because of these and other breaches by the company, it’s unclear if I’m breaking my NDA, but I am most certainly breaking my silence.

In doing so, I face the risk that the company can and will file suit against me.

Inntopia can sue me, and I'll sue them, or they can simply do the right thing and apologize — something which neither the company, nor any individual involved in this case has been able to bring himself to do — even after a second woman came forward with a remarkably similar account.

If it does come down to lawsuits, some good might come from that as well and we can all find out what the value of silence is, on both sides.

I will not stand silently on the sidelines while a courageous woman’s integrity and my own are called into question.

***

Even without an NDA, the pressures to remain silent in a small town are tremendous.

Our little town of about 4,000 souls — including me, Alison, DeLuca and Crist, and where Inntopia is headquartered — has three coffee shops, three markets, two main streets and one intersection. As Crist said, it is a “small, tight knit community.”

Alison and I were both looking for a job, not a cause. We wanted to make meaningful contributions to a business and support our families.

There are some in Stowe who learned the details of what happened to me prior to the settlement being signed. I have been heartened by the support of those I already held dear and of those who did not know me so well but stepped up to stand beside me. Some of those people sacrificed long-term friendships to do what was right.

It’s also true that I have been heartbroken when some people I could never have imagined walking away from a woman in my situation distanced themselves or remained silent.

From my own experience I know that staying silent can seem easier — and that it is corrosive. I saw how this company proceeded after they knew what happened to me, and how they’d relied on my silence. It’s appalling, it’s wrong, and it’s time to speak about it.

Now every time Alison or I leave our homes, we encounter community members who will be touched by this story becoming public.

I have spent many hours wondering how the many people who currently greet me warmly will react now that my silence is broken. When #MeToo becomes #HereToo, who will stand by the same convictions they professed when the perpetrators and businesses were abstract and somewhere else?

There are millions of women in small towns across the country who face similar situations, pressures, and choices — and whose communities are put to the test by their responses to those women.

When standing up against sexual harassment or assault is no longer a theoretical construct, what will you do? Will you stand firm in your convictions or choose the temporary safety of silence and complicity, hoping someone else will take on the hard work of creating the culture we want our children to inherit?

My choice is to steel myself against the whispers and the looks, and break my own silence and work to give a voice to the many women for whom the risk of speaking out remains too great.