Unfortunately, the theme of deregulating Wall Street comes up time and time again and this election cycle has been no exception. That’s a very irresponsible attitude when Americans are still struggling from the impacts of the Great Recession. We need more financial protections, not less.

Image via Flickr user Russ Allison Loar.

Image via Flickr user Russ Allison Loar.

Public Citizen fought alongside Senator Elizabeth Warren and our partners across the country to enact Wall Street reform legislation but it fell short and left out some key changes to rein-in harmful financial practices, like high-speed trading on the stock market. Now is the time to push for change that can stop the reckless activities of Wall Street traders.

That’s why Public Citizen supports the Wall Street Speculation Tax. Originally introduced in the U.S. in 1914, the tax was doubled as a way to speed economic recovery after the Great Depression, Public Citizen wants the United States to rejoin the around 40 countries that currently have some form of taxes on financial transactions like Wall Street trades.

As a member of the Take on Wall Street campaign, Public Citizen continues to call on Congress to make policy changes that will help cut back on some of the worst of Wall Street’s greed and excesses. Reinstating a tax on Wall Street trades is an essential part of the prescription to making the market work for Main Street and average investors. And, with the Wall Street Speculation Tax, the traders responsible for the 2008 crash would begin to repay their debt to society.

What is the Wall Street Speculation Tax?

Also known as a financial transaction tax or Robin Hood tax, the Wall Street Speculation Tax would add a fee to Wall Street trades such as stocks, bonds, and other financial instruments. Legislative proposals vary, but typically the fee would equal a few cents per hundred dollars traded, but would raise tens billions of dollars per year of revenue that could be spent on education and create jobs while reducing dangerous financial market speculation.

Who supports the Wall Street Speculation Tax?

Business leaders and financial industry professionals like Bill Gates, Warren Buffett, former Federal Deposit Insurance Corp. chair Sheila Bair and Vanguard founder John Bogle have all given their support to the Wall Street Speculation Tax. Labor unions like the Communications Workers of America and the AFL­CIO and environmental and faith groups like Friends of the Earth and NETWORK (the “Nuns on the Bus” group) have also added their voices to the growing number of organizations and individuals seeking to curb reckless Wall Street speculation.

What can I do?

Take action at TakeOnWallSt.com to sign a petition to tell Congress to reform our markets, including by passing a Wall Street Speculation Tax. Or, you can like the campaign on Facebook.

We hope that you’ll join with Public Citizen and our partners in this next phase of Wall Street reform!

Post by recently matriculated Public Citizen intern Amanda Bragg. Thanks, Amanda!

noripoffclause-longYesterday marked the end of the public comment period on the CFPB’s proposed rule to restrict forced arbitration – a tactic that allows Wall Street banks and predatory lenders to block consumers from challenging illegal behavior in court.

Over the last three months, the rule has generated at least 100,000 supportive comments from individual consumers across the country, as well as strong endorsements from major groups and leaders. Here are some excerpts from a selection of notable comment letters, statements of key leaders, and major editorials supporting the Bureau’s proposal.

Notable Comment Letters

281 consumer, civil rights, labor, and small business groups strongly support the rule

“The CFPB rule, which will restore consumers’ ability to band together in court to pursue claims, is a significant step forward in the ongoing fight to curb predatory practices in consumer financial products and services and to make these markets fairer and safer…

“Because forced arbitration undermines compliance with laws and creates an uneven playing field between corporations that use forced arbitration and those that allow for greater consumer choice in dispute resolution, it is in the public interest and in the interest of consumer protection to prohibit or strictly curtail the use of forced arbitration clauses in consumer financial contracts.”

38 U.S. Senators commend CFPB for proposed rule, led by Minority Leader Reid and Senators Franken, Brown, and Leahy

“Recognizing the urgent need to address these troubling practices, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) in 2010 to improve accountability, strengthen the financial system, and establish the CFPB. Dodd-Frank included several restrictions on the use of forced arbitration, including a mandate for the CFPB to take action on arbitration. Under Section 1028 of Dodd-Frank, Congress specifically directed the CFPB to study the use of forced arbitration in connection with the offering of consumer financial products and services, and authorized it to ‘prohibit or impose conditions or limitations on the use of’ such agreements based on the study results.”

65 members of the U.S. House of Representatives praise rule, led by Reps. Waters, Conyers, and Johnson

“Consistent with the Bureau’s exhaustive study on forced arbitration, which found that forced arbitration restricts consumers’ access to relief in disputes with financial service providers by limiting class actions, the proposed rule is a critical step to protect the public interest by ensuring that consumers receive redress for systemic unlawful conduct.

“There is overwhelming evidence that class-action waivers in financial products and services agreements undermine the public interest. Originally used primarily in commercial settings, forced arbitration clauses have proliferated in everyday consumer contracts, and are now prevalent in financial services agreements.”

18 state attorneys general support action to extend reach of state enforcement efforts

“Although we believe consumers will be best served by the total prohibition of mandatory, pre-dispute clauses in consumer financial contracts and we encourage the Bureau to consider regulations to that effect, the Proposed Rules provide a substantial benefit to consumers by restoring their fundamental right to join together to be heard in court when common disputes arise in the commercial marketplace. Many of our respective consumer protection laws include private right of action provisions, the purpose of which is to complement and extend the reach of our state enforcement efforts.”

210 law professors and scholars “heartily endorse” the proposed rule

“We believe that the proposed regulations are critically important to protect consumers and serve the interests of the American public… to the extent we allow financial services companies to use arbitration to eradicate consumer class actions, we are allowing these companies to insulate themselves from enforcement of our laws. This harms not only individual consumers but also the public at large.”

 

Support from Key Leaders

The White House: Three Big Reasons You Should be Fired Up About Today’s Announcement to Protect Consumers
“Actions like today’s are why the President fought so hard to create the CFPB through Wall Street reform. And there are major, tangible signs it’s working—with stronger protections in mortgage markets, student loans, and credit cards. Tens of millions more Americans would be protected by today’s proposal. And CFPB has recovered nearly $11 billion for more than 25 million consumers through enforcement actions.
“Given how many millions of Americans are being protected by the CFPB rules already in place and the importance of the work ahead, it’s appalling that Republicans are trying to repeal CFPB in its entirety. In this year’s House Republican Budget plan, they proposed getting rid of the CFPB. That’s completely unacceptable.” 

Hillary Clinton Supports Ending Forced Arbitration ׀ Time
“‘With today’s proposal, the Consumer Financial Protection Bureau takes aim at yet another unfair practice on Wall Street,’ Clinton said. ‘Mandatory arbitration clauses buried deep in contracts for credit cards, student loans, and more prevent American consumers from having their day in court when they’ve been harmed.’”

 

Major Editorial Endorsements

Consumers have a right to go to court ׀ Boston Globe

“The firms have all but blocked the path to class-action lawsuits. That is a moneymaker for them. Route consumers into arbitration, and they essentially are on their own, each to fend against a powerful financial house. No surprise that few consumers take up the expensive fight.

“… If arbitration has been rendered ineffective through the structure of contracts, consumers lack tools to check corporate excesses. Arbitration clauses typically have carried provisions barring consumers from even talking about their claims.

“That factor of secrecy reinforces how the option of a class-action lawsuit becomes necessary to deter deceitful practices and ensure accountability.”

 

Bank customers get a fighting chance  ׀The New York Times
“Justice demands no less. A series of articles in The Times last year found that prohibiting class-action lawsuits typically results in consumers simply giving up in cases of overcharging. Private arbitration is no alternative to a day in court, because corporations effectively control the process, including the choice of the arbitrator and the rules of evidence.

“…That insult is a sign that opponents have no good arguments. The ban on class-action lawsuits is a hallmark of the anti-regulatory, anything-goes era that culminated in the financial crisis. Changing entrenched attitudes and practices has been a slow process, but the proposed new rules represent progress. Mr. Cordray and the consumer bureau are serving the public as the law requires.”

 

A fair shake for consumers ׀ San Francisco Chronicle

“Few customers read the fine print on credit card and bank agreements when it comes to settling disputes. If consumers want a loan or card, they have to agree to take their claims to an arbitrator, a path that sidesteps the courts and class action lawsuits that might cost Wall Street billions.

“…The real purpose of the small-type agreements is to save banks and lenders from a challenge brought by pools of unhappy customers filing class action suits in the name of broad ranks of gouged consumers. If successful, such lawsuits can run into millions, instead of the paltry sums doled out by arbitration.”

For more information, contact Amanda Werner, awerner@ourfinancialsecurity.org, (202) 973-8004.

By Anisha Sehgal

Both consumers and healthcare payers are struggling with the rising price of drugs. Unless meaningful reforms are enacted, this problem will only get larger and patients will continue to face crippling out-of-pocket costs in order to care for themselves and their loved ones. The Medicare Part B demonstration is an example of such a reform and would begin to repair the dysfunctional way that we pay for prescription drugs. Unfortunately for patients, the pharmaceutical industry has mounted considerable opposition to this reform and it is not alone. Politicians and organizations such as patients’ groups have also voiced their objection. However, the majority of these individuals and groups have received industry funding.

A recent Public Citizen report revealed that of the 147 patients’ groups who have signed letters objecting to the Medicare Part B demonstration at least 110 (75%) received funding from pharmaceutical or medical device corporations. Since patients’ groups are not required to disclose their funding sources there may be even more than the 110 groups identified by the report that received money from pharma.

The letter organized by the Community Oncology Alliance was sent to congressional leadership while the letter organized by the Partnership to Improve Patient Care was sent to the Center for Medicare and Medicaid Services (CMS). Along with the 147 patients’ groups, 241 doctors’ groups and pharmaceutical industry groups — both of which benefit from the maintaining the status quo of the current reimbursement method — signed either of the two letters opposing the reform. The letters’ combination of patients’ groups as well as industry groups, such as local Biotechnology Innovation Organization (BIO) affiliates, demonstrates the close ties patients’ groups have with the pharmaceutical industry.

In 2015, Part B spending reached $22 billion, double the amount it was in 2007. A reform such as this is necessary in order to remedy Medicare Part B’s unsustainable spending trend. The Medicare Part B demonstration, which is supported by numerous consumer interest groups including Public Citizen, aims to remove incentives for doctors to unnecessarily prescribe higher priced medicines when effective and affordable alternatives are available. Currently a physician who administers a drug under Medicare Part B will be reimbursed for the average sales price plus six percent. The demonstration proposes changing the reimbursement to the average sales price plus 2.5 percent and a flat dollar amount.

The pharmaceutical industry is strongly opposed to this reform because a decrease in the prescription of higher-priced drugs means a decrease in the industry’s profits. In fact, the industry has already spent more than $9 million in campaign funding for members of Congress, which is strongly correlated with lawmakers’ stances on the issue, as revealed by another recent Public Citizen report.

The pharmaceutical industry’s troubling pattern of influence raises questions about the independence of this reform’s opponents. Patients’ groups should reconsider their stance on this issue and realize that in this debate pharma is only looking out for itself, not for the deserving patients of this country.

Our nation’s tax authority, the Internal Revenue Service (IRS) and its Commissioner , seem to be under constant attack from some members of Congress. That’s why it’s more important than ever for us to remember the agency’s role is simply to enforce the tax code that Congress enacted in the first place. Lawmakers appear happy to leave the IRS on the hook to interpret vague legislative language while concurrently trying to stop it from doing that very thing.

It’s obvious that the IRS should do its part to make sure the tax code is clear but it’s equally clear that Congress should not get in the agency’s way when it attempts to do just that. Yet, that’s exactly what happened when Congress stopped the agency from working to clarify the all-too-confusing rules regarding political activity of nonprofits. This is a shame because clearer, better tax rules help everybody, not just nonprofits.

That’s why I was pleased to have recently been given the opportunity to testify before the House Small Business Committee Subcommittee on Economic Growth, Tax, and Capital Access. I was able to make the case for clearer rules—to benefit everyone. Below are some snippets from my testimony; I hope you find it interesting!

I do not need to tell this committee how important small business is to our economy and our society. Protecting small business owners and employees is a paramount goal of our government. Congress can and should protect small businesses by ensuring a clear, predictable framework of rules and regulations. Easy to follow and enforce rules allow small businesses to thrive while minimizing opportunities to abuse the tax system. And the IRS should be doing more to ensure that small businesses can easily comply with the regulations already in existence, and work to improve its ability to provide accurate and timely guidance.

At the same time, it is important to recognize that rules intended to protect small businesses can have unintended effects.  Laws that are intended to help small businesses, such as the RFA [Regulatory Flexibility Act] and SBREFA [Small Business Regulatory Enforcement Fairness Act], in practice can allow large corporations to delay important regulations and thus harm small businesses rather than help them.

Finally, while fair enforcement of regulations is critical for small business success, it is also important that we ensure that the tax code itself provides a level playing field for small business. Currently, loopholes in the tax code allow large entities advantages that smaller players do not have, and prevent small businesses from being fully competitive in the marketplace. These loopholes allow tax-avoidance by large corporations, and small entities that would rather spend their resources on building their business than on elaborate avoidance schemes cannot take advantage of them. For example, reforming the code to disallow complex corporate tax-avoidance schemes like inversions would help small businesses by leveling the playing field, so that small businesses can compete more fairly with big businesses.

In the full version of the testimony, I go into more detail on how regulations help small businesses and our society. I also discuss how certain specific laws operate to delay regulations and make them harder for regulated entities to follow and predict. I discuss how Congress’s failure to fully fund the IRS hurts small business, and I talk about how the tax code is stacked against small business.

The testimony concludes:

It is in our nation’s interest that small businesses are able to grow and thrive in a society that protects health and safety and ensures that the market operates fairly to businesses of all sizes. Small changes to SBREFA, fully funding the IRS, and closing unfair loopholes will ensure that the playing field is level for small businesses.

My full testimony can be read or watched on the Committee’s website.

This article was originally posted on Public Citizen’s Bright Lines Project blog.

By Taylor Lincoln and Michael Tanglis

The center-right American Action Forum (AAF) attacked the study we recently published showing that regulations completed during transition periods have been longer in development than those finished at other times. This finding rebutted alarmist claims about “midnight regulations.”

The crux of AAF’s critique of us centered on how we calculated the length of rulemakings. We do not agree with the group’s quibbles. However, even if we followed AAF’s recommended methodologies, doing so would affect all rulemaking lengths – both transition period and non-transition period rules. As a result, the conclusions of our study would be the same: that rulemakings finalized in presidential transition periods took longer, on average, than those completed at other times.

Today, we issued a response to AAF. We stand by our study’s methods, findings and conclusions.

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