When Barack Obama signed the Dodd-Frank financial reform bill five years ago, on July 21, 2010, he looked extremely pleased with himself. It had been a tough fight, he said: “We had to overcome the furious lobbying of an array of powerful interest groups and a partisan minority determined to block change.” But now, Obama proclaimed, the bill’s reforms “will become the law of the land.”
HA HA PSYCH.
The reality of U.S. politics is that good ideas don’t win and take effect just because they’ve “become the law.” Yes, to get even that far, they have to have somehow threaded their way through a campaign system ruled by money instead of people; passed a House of Representatives overflowing with members from bizarrely gerrymandered districts; and made it past a filibuster in the anti-democratic Senate. But that is often just the start of the truly bloody trench warfare.
One case study is Dodd-Frank’s Section 1504. Congress, on July 21, 2010, gave the Securities and Exchange Commission 270 days to issue a rule on how exactly to implement it. Today, 1,821 days later, there still is no rule.
Section 1504 is intended to address a terrible problem, one so common it has two names: “the paradox of plenty” and “the resource curse.” Countries with lots of oil, gas and mineral wealth are, oddly enough, very frequently poor, corrupt and polluted.
What happens is that big multinational corporations have enormous incentives to bribe government officials so they can get the right to extract and sell the country’s natural resources. That, in turn, leads those government officials to spirit away vast sums of money that rightfully belong to the people to London or Zurich. Not only do ordinary citizens miss out on the looting, but they tend to suffer from the ancillary corruption, wasteful spending, military adventurism and instability.
Section 1504 requires corporations traded on U.S. stock exchanges to publicly disclose the payments they make to governments for natural resources on all of their projects around the world.
People in, say, Angola would learn exactly how much money their government has received from big oil companies, making it harder for their leaders to hide and pocket as much of it.
Meanwhile, knowing what kind of a deal Angola struck, other governments could use that information to drive harder bargains.
The SEC did finally issue a rule for Section 1504 in August 2012, after a lawsuit by Oxfam America. But then the American Petroleum Institute, the main trade group for the oil industry, challenged the rules, and they were vacated by a U.S. District Court. Now the SEC claims it will issue a “proposed rule” — only the first step in the process — in April 2016.
Meanwhile, during the past five years, the API and Section 1504’s other major natural enemies, the U.S. Chamber of Commerce and the National Foreign Trade Council, have collectively spent $896 million lobbying (not just on this one section of Dodd-Frank, of course).
Oxfam America estimates that if developing countries had reasonable deals with oil multinationals, they should have received about $1.5 trillion for oil pumped during the five years of Section 1504’s non-enforcement.
But did they get reasonable deals? And of that potential $1.5 trillion, how much actually went to the countries’ real needs, and how much was spent by the president’s son on Michael Jackson’s glove? Thanks to the endless veto points in our system, where good ideas have to win every time and money only has to win once, we just don’t know.