Report: US-Initiated WTO Rules Could Undermine Regulatory Overhaul of Global Finance

www.democracynow.org

JUAN GONZALEZ: Lori, I’d like to ask you about the role of Treasury Secretary Tim Geithner. Here in the United States, he’s supposed—he’s leading the efforts now to increase regulation over the financial sector. But he played a previous role under the Clinton administration in what was happening at the WTO in terms of financial deregulation. Could you talk about that?

LORI WALLACH: Yeah. This is actually a serious problem. So, most people don’t even realize that the World Trade Organization has an agreement called the Financial Services Agreement that explicitly applies to over a hundred countries and mandates major deregulation.

Just for instance, it has a rule that you cannot have a domestic law, even if it applies equally to foreign and domestic companies, that limits the size of a financial service firm—insurance, banking, securities. So when everyone talks about putting into place rules about “too big to fail,” there’s a WTO dictate that says you can’t do that. A lot of other really extreme deregulation rules. That agreement was never brought to a vote in Congress, so a lot of members of Congress have no idea it’s there.

One interesting fact we found was, although Daddy Bush started negotiation, Clinton is the one who locked it up. And it was actually Geithner, when he was in the Treasury Department working for Robert Rubin during the Clinton administration, who was the lead Clinton administration Treasury Department negotiator. So he is, in a way, the guy who closed the deal. And so, he knows about it. He has to know about the existing agreements. And so, theoretically, he should be the guy who’s most aware of the perils, in the sense that he was part of the whole Clinton-era deregulation, including domestically.