Would you like to make Wall Street pay? I would. The average Wall Street salary was over $140,000 last year, according to The Wall Street Journal (and they should know). Damn good pay in my opinion, for moving money from Point A to B to C and back again.
Like many other citizens, I want to make Wall Street pay another way — but one that does not involve my getting pepper-sprayed on the streets of Manhattan. The current protests about corporate greed and financial accountability in New York and other cities share the same weakness as Tea Party angerfests — they express a mood rather than an imperative. Both movements serve mainly to air the principles and prejudices already held by their adherents. In terms of making Wall Street pay, they have brought little new to the table.
Luckily for us, I have an idea, and it would be very simple to implement. First, some facts. On a typical day, about 8 billion shares of stock are bought and sold on the three major New York stock exchanges, with a dollar volume of $27 billion give or take. On each trade, the Securities and Exchange Commission (SEC) charges a fee of $19.20 per million dollars to help pay operating costs of the SEC. So, if you buy 100 shares of AT&T for $30 a share, you pay the SEC (through your broker) a fee of 5.8 cents. This is a piddling amount, but if you are a speculator trading millions of shares a day, it could add up.
On May 2, 2011, the SEC announced that the fee rate for most securities transactions will decrease from $19.20 to $15.10 per million dollars in fiscal year 2012. If we want to make Wall Street pay, this is heading in the wrong direction. Instead, I would raise the SEC fee to 75 cents per $1000 traded, or $750 per million dollars. Even if trading volume fell to $20 billion a day as a result of the higher fee, the SEC would still rake in $3.75 billion a year on our behalf. Billions more could be realized if this fee also applied to trades in derivatives and futures. In 50 years, we might finally get back what we poured into AIG to keep it (and the rest of Wall Street) from going down the tubes and sucking us along with it.
A higher SEC fee could also curb some of the speculative excess causing the wild gyrations on our stock markets. High-frequency traders (and computer programs) would have less incentive to buy a million shares of a stock at $20.10 a share only to resell them at $20.11, if there were less profit in these small-spread trades. Just maybe, real investors could regain control of the market from the minute-to-minute speculators, and bring an end to things like the “flash crashes” that infect the current system.
Folks can march down Wall Street all they want, but meanwhile the banksters are laughing all the way to where they go to work. They make a generous living from fees they charge for financial transactions. It’s time for us to join them.