The Origins of Occupy Wall Street

The Occupy Wall Street movement means many things to many people.  To some, this movement is about the increasing disparity of wealth in this country.  To others, it’s about the extraordinary privileges and bailouts given to major multinational financial institutions which, in large part, caused the “Great Recession”.

But no one can say our society wasn’t forewarned about the financial crisis which came to a head in October 2008.  Prior to the real estate bubble bursting and the sub-sequent financial crisis, economists and responsible investment houses were raising red flags regarding systemic risk posed by mortgage-backed securities backed by derivatives.  In addition they warned that the consolidation of assets into a handful of U.S. banks was rife with conflicts of interests and the potential for financial collapse.

“99% of us should be upset.  Irresponsible risks taken by “too-big-to-fail” firms had a huge effect on the entire economy,” said Michael Smith, a member of the Progressive Asset Management (PAM) Group, the socially responsible investment division of Financial West Group with an office in Newfields, New Hampshire.  The PAM Group warned of corporate abuses and excessive risks in the run-up to the financial crisis and has since advocated for meaningful reform which would give shareholders of public companies more influence in the behavior of the companies in which they are invested.

“We’ve been advocating all along that shareholders should have more say over company behavior, including demanding more corporate social responsibility and accountability from senior management and boards of directors,” noted Smith. “We risk running into the same problems again if we continue to allow significant economic influence to be consolidated into fewer and fewer hands, particularly when these same companies have proven they can’t be trusted.” 

The Progressive Asset Management Group members support several measures to restore more checks and balances to corporate governance, including:

• “Say on Pay” to give shareholders advisory votes on executive pay
• Majority voting initiatives which give shareowners voting rights on the election of board members
•  “Clawback Provisions” which enable shareholders to reclaim compensation from executives in cases of fraud or financial inaccuracies

The Progressive Asset Management Group members also support the ten principles of the United Nations’ Global Compact, which requires signatories to be accountable for human rights, labor standards and environmental responsibility.

Fittingly, public companies with strong corporate governance often provide better investment options than those whose executives earn extravagant compensation.  “That’s not surprising as excessive pay packages often incentivize the type of extreme risk, unsustainable behaviors which brought our financial system to the brink of collapse, throwing millions out of work and threatening the financial well being of most Americans,” said Smith.  “And it was the collapse of these types of companies, like Lehman Brothers and AIG, in the Fall of 2008 which initiated the economic crisis and gave birth to the current Occupy Wall Street demonstrations.”

At the core of the protestors’ grievances is a sense of unfairness and injustice of many things, including the incomprehensible, taxpayer-funded bailouts of the companies at the heart of the financial destruction.  And critics of the movement seem both muted and foolish as the shift of financial liability from private to public balance sheets continues unabated, including Bank of America’s recent transfer of billions from its own balance sheet to its FDIC-insured division, putting taxpayers again on the hook to cover extraordinary losses.

To help people make their investments match their values, Michael Smith is also a member of the Green Alliance, which connects conscientious consumers and investors with socially and environmentally sustainable businesses.  Green Alliance members receive a complimentary portfolio review with the Progressive Asset Management Group’s Newfields office, as well as a $50 gift certificate good at one of ninety other Green Alliance member companies when they open an account with Financial West Group through the Progressive Asset Management Group’s Newfields office.

As for the Occupy Wall Street movement – now entering its fourth month – Smith sympathizes with protestors, as well as investors searching for investments which follow their values in the wake of the 2008 financial crisis.

“Let’s be clear.  This elite culture of greed cripples our economy and endangers our democracy.  The widening disparity of wealth and income between narrow elites and the rest of America threatens the fabric of our democracy and our free enterprise system,” says Smith.  “All of us should be mad at what’s happened as it could have been avoided.  And if we let it, it will happen again.”

For more information:

Mike Smith can be reached at msmith@fwg.com or 603-418-8662.  Mike Smith is a registered representative offering securities through Financial West Group, member FINRA/SIPC.  Progressive Asset Management Inc. (PAMI) and FWG are affiliated entities.

Progressive Asset Management:  www.progressive-asset.com

Green Alliance: www.greenalliance.biz