Skip to main content

Celebrating Financial Reform in the U.S. – An Advance for Social Justice

Resource type: News

Vivien Labaton |

Vivien Labaton, Director of Strategic Programme Initiatives at The Atlantic Philanthropies, reflects on the recent passage of financial reform in the United States and the activities of Atlantic grantees to help bring it about.  

Citizens take on Wall Street to demand reforms in the U.S. financial system.The recent passage of the financial reform law—the Dodd-Frank Wall Street Reform and Consumer Protection Act—in the United States is a victory for social justice and the protection of disadvantaged and vulnerable Americans.

The financial collapse in late 2008 that sent the U.S. economy into a tailspin exposed insufficient regulation and widespread risky banking and financial practices, many of which preyed on low-income people and people of colour.Atlantic set aside some funds in late 2008 to take advantage of special opportunities for social justice reforms presented by the new U.S. administration.  Among these top policy priorities were health care, which Atlantic invested in before a Presidential candidate was known and which was passed this March, and financial reform, since it affected all of the communities in which Atlantic works.  On a third key priority, comprehensive immigration reform, much work remains to be done.

The financial crisis had a cascading effect and led to enormous numbers of home foreclosures, the highest U.S. unemployment rates in decades and tightened credit, among other things. Many people lost unprecedented wealth and are still struggling to recover today.

The crisis hit virtually everyone hard, but had disproportionately negative effects in communities of colour and low-income communities. Prior to the crisis, the number of high-cost or subprime mortgages banks made available to people who could have qualified for prime mortgages proliferated.  As Harvard Law Professor Elizabeth Warren – who is credited with developing the idea of the Consumer Financial Protection Bureau that was included in the final financial reform legislation – has often noted, as many as half of those with subprime loans would have qualified for prime mortgages, but were instead steered toward high-cost mortgages. And, communities of colour were especially impacted by these high-cost mortgages. Nationwide, African-American borrowers making more than $100,000 were charged higher rates on mortgages more often than white borrowers making less than $40,000. National People’s Action, a grantee, found that among low and moderate income borrowers, 48 per cent of all Wells Fargo loans to African-Americans were high-cost loans, as compared to 20 per cent of the loans to white borrowers in the same income bracket.

Of course subprime mortgages were just one piece of the highly complex puzzle that created the financial crisis, but the crisis itself demonstrated clearly that the U.S. financial regulatory system was inadequate to protect consumers, workers and the overall economy, and that those already most vulnerable were left particularly exposed.

Atlantic felt that sound financial reform could help stem the ever‐widening gap between the rich and poor by putting in place oversight mechanisms and regulations to protect consumers and to limit the extent to which large financial institutions could engage in, and profit from, excessively risky behaviour while passing those risks on to everyday citizens and taxpayers. The frustration generated in the aftermath of the bank bailouts created an opportunity to push for a coherent set of financial sector reforms that would stabilise the economy, protect the public from the likelihood of such a crisis happening again, and protect everyday consumers. Any reforms were sure to have consequences for years to come, and we wanted to make certain that the perspectives of the communities on which Atlantic is focused influenced reform efforts.

Atlantic made a handful of grants totalling about $2 million to organisations working on financial reform.  Though our grant dollars were small relative to the estimated $600 million that the financial sector spent on lobbying efforts to weaken the bill, this investment made Atlantic among the largest funders of reform efforts.  Grantees included organisations working with leading scholars, economists and advocates, as well as organisations that work with communities that were hardest hit by job losses and the housing crash. Collectively they employed a range of strategies, including policy research, communications, advocacy and grassroots organising.  They were:


  • Americans for Financial Reform (AFR)— The only broad-based, progressive coalition advocating for financial reform, AFR is composed of more than 250 national, state and local consumer, labour, investor, civil rights, community, religious, small business and  senior citizen organisations as well as economists.  While AFR engaged policymakers in the administration and in Congress as legislation developed, it focused on pressuring key Congressional members and communicating with bill supporters.
  • Campaign for America’s Future (CAF)CAF, a convener and coordinator of the progressive movement, focuses on using the bipartisan Financial Crisis Inquiry Commission established by President Obama to expose the conditions and behaviours that led to the financial crisis and help push for reform.  The Commission presents an opportunity to expose practices and incentives that led institutions to make bad loans and highly risky decisions.  CAF will draw attention to and track the various hearings to ensure that they, and the larger issues the Commission is interrogating, receive attention throughout the blogosphere and mainstream media.
  • The Center for Economic and Policy Research (CEPR)— As the economy collapsed in the fall of 2008, CEPR quickly emerged as a leading advocate for comprehensive financial reform.  As one of the few economists to publicly predict the burst of the housing bubble and the economic meltdown, Co-Director Dean Baker has been recognised as a credible expert on the issue by the progressive community, Congress and the mainstream media. With Atlantic support, CEPR expanded its outreach activities with both policymakers and advocacy groups, and enhanced and updated its web presence to provide for easier stakeholder access.  CEPR was at the centre of financial reform policy efforts, and played an important role in providing economic research and analysis to various organisations and efforts pushing for reform.
  • The Roosevelt Institute Led by Nobel Prize Economist Joseph Stiglitz and Rob Johnson, the Roosevelt Institute’s Financial Reform and Economic Initiative brought together some of the country’s top economic and finance policy experts, including Professor Warren, and other thought leaders from a range of disciplines, and worked to promote their ideas and position them as leading voices in the debate around financial reform.  The Institute influenced the financial reform debate using its Web site, personalised media training for advocates, New York and Washington, D.C.-based conferences, and public “road show” events planned in conjunction with community organising networks such as National People’s Action and AFR.
  • National People’s Action (NPA)NPA, formerly the National Training and Information Center, conducted grassroots mobilisations, research, media efforts and direct engagement of policymakers and public officials to push for sound financial reform.  NPA worked to engage the broader public in efforts to push for reform. It organised a number of public actions in conjunction with PICO national network of faith-based community organisations, SEIU (Service Employees International Union), the AFL-CIO union movement and others to draw attention to the impacts of the financial crisis on everyday Americans and push for needed reforms, particularly around consumer protections, fair mortgage lending practices, and increased federal oversight of the financial sector. It also organised a listening tour for the Federal Reserve to hear about the impact of the financial crisis on everyday citizens from NPA members and others.

With President Obama’s signature on 21 July, consumer protections were established and strengthened regulations were put in place that will provide increased oversight and transparency of the financial sector as a whole.  Our grantees made sure that the interests of those most impacted by the financial crisis were among those that shaped the financial reform bill, and that their needs were addressed in the final legislation.  “Despite all the millions spent and armies of lobbyists deployed to kill this reform, Main Street has come out ahead because people organised, protested and raised their voices…,” said Heather Booth, Director of Americans for Financial Reform.  But, she added, “There is no question that the big banks and their high priced lobbyists will continue to work to weaken or gut reforms.”  It will be necessary for all progressive organisations who sought to bring about reform and who seek to bring about social justice to remain vigilant in order to ensure that the new law is implemented in the strongest way possible.