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Tax watchers and nonprofits have been waiting to hear four little words from IRS Commissioner John Koskinen … and they may have just heard them.

Those words? “[A]nd other (c) organizations,” spoken last Friday in an interview with Tax Analysts Magazine. In that interview,Commissioner Koskinen said for the first time that a new definition of political activity will apply beyond just 501(c)(4) social welfare organizations.

Why are those words so critical? Nonprofits organized under section 501(c) of the tax code are allowed to do some political activity without disclosing the source of their funding. Those groups have poured more than $100 million into our elections just this cycle, all without having to tell voters who is buying the ads they’re seeing. The IRS is currently working on new rules that could clarify the definition of political activity and drive political spending to groups that do disclose their donors.

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Hey shareholders, want some alarmist conspiracy theories from a newspaper editorial that conveniently ignores facts in order to make a tortured argument sound plausible? That’s the Wall Street Journal’s latest take on a new index designed to encourage transparent, open elections.

At issue is the CPA-Zicklin Index, which ranks companies’ political spending disclosure policies based on factors like whether a company discloses contributions to candidates, parties, dark money groups, etc.

If the Journal wasn’t so busy packing red meat into their editorial on the index (Unions! Soros!) it would have likely noted that corporate political spending disclosure lags woefully behind union political spending disclosure. It probably also would have noted that support for shareholder resolutions calling on companies to disclose political spending has been steadily increasing over the years since the Supreme Court’s disastrous Citizens United ruling.

While many companies have commendably decided to be more transparent about how they work to influence elections, inaction by the Securities and Exchange Commission (SEC) has left plenty of wide open avenues for dark money.

In other words, even for companies that rank well on the index, there is room for improvement.

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The Roman army responded to desertion by randomly executing a tenth of those soldiers remaining. They called it decimation, derived from the Latin word for “tenth.” This discipline, of course, prompted all soldiers to police against desertion so as to save their own skins.

New York Federal Reserve Bank President William Dudley seems to have borrowed a piece of this incentive structure for a current financial situation. In a speech on October 20, this key regulator of the nation’s largest banks proposed that a major chunk of pay for all senior executives at a particular bank be forfeited when the bank violates the law.

Specifically, Dudley proposes that part of senior bankers’ pay be sequestered in a “performance bond.” If the bank must pay a large fine, this bond is forfeited and paid as part of the fine. “This would increase the financial incentive of those individuals who are best placed to identify bad activities at an early stage, or prevent them from occurring in the first place.”

Making bankers pay for fraud may stifle a replay of one of the glaring judicial miscarriages following the response to the financial crisis of 2008. Despite the massive frauds subsequently documented by the Department of Justice, no senior executives faced penalties. The billion-dollar fines meted out by the DOJ were, in fact, borne by shareholders innocent of any conspiracy.

Prosecutors have offered varying reasons for this indefensible result, including the recent excuse offered by James Cole, who just retired as deputy attorney general at the DOJ: the fraudsters were “rocket scientists” who simply outsmarted the prosecutors. Under the Dudley scheme, even if the DOJ failed to track down some of the guilty individuals, all the senior bankers at a firm would nevertheless suffer at least some financial pain.

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The bank gambling trade association and its regulators are giving each other high-fives over an agreement that supposedly makes it easier to bail out a failed mega-bank. Progress? If viewed from the vantage of an average taxpayer who finances bank bailouts, the progress is miniscule. And the circumstances that put this agreement barely into the “progress” column beg for far more ambitious reform.

Specifically, 18 of the largest global banks just agreed to wait about a day when one of them fails before pocketing the winnings from bets made with each other. Exactly how long the waiting period will be isn’t clear. These bets are called swaps. The agreement about how bets are settled is governed by a master contract of the International Swaps and Derivatives Association (ISDA), which is the industry trade association.

Originally conceived as hedges (the way farmers lock in a price for commodities such as corn that hasn’t yet been grown, harvested and sold) swaps have now been perverted into a $700 trillion racket largely patronized by banks. This high-stakes game primarily plays out in what’s called the over-the-counter (OTC) market. Ninety percent of the OTC bets are between banks themselves. In fact, four banks account for most of the bets in the US banking industry. Real economy companies such as airlines or car manufacturers account for only about 10 percent of the OTC casino. Even mega-bank Wells Fargo, currently the most valuable bank on the US stock market, doesn’t gamble nearly at the scale of its peers JPMorgan Chase, Citigroup and Bank of America.

In other words, if swaps are so useful to the economy, why doesn’t Main Street account for most of them? And how can Wells Fargo be so successful a bank without a swaps portfolio that matches Citi’s?

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If punishment is meant to deter crime, then perhaps the reason Wall Street seems undeterred from committing crimes is the fact that it doesn’t face punishment.

Earlier this year, Credit Suisse pleaded guilty to a decades-long scheme to help Americans escape income taxes; but it has been a pain-free guilty plea. In fact, the government fine was borne by shareholders innocent of the conspiracy. When Attorney General Eric Holder announced the guilty plea, he stated that the business of the bank itself wouldn’t be interrupted and it could “move forward.” And the Department of Labor (DOL) recently proposed to exempt Credit Suisse from an otherwise mandatory penalty involving the firm’s pension fund management business.

The DOL oversees pension fund managers through a law approved in 1974 as a result of notorious swindles. Generally, the law requires fund managers to avoid complex, risky investments, and it provides that such investments only be offered if the manager is sophisticated and squeaky clean. A criminal record anywhere at the fund manager’s firm means those risky investment strategies must be examined with greater care. That requires more effort by Credit Suisse — a little pain. And that’s appropriate. Crimes are supposed to be punished. Yet the DOL proposes to let Credit Suisse retain its status as trustworthy for complex, high risk investments.

Before the DOL excuses Credit Suisse from this mandatory penalty, it asks for public comment. Public Citizen has written the DOL outlining our objections, and we call for a hearing. “Pension fund beneficiaries are especially vulnerable to Wall Street abuse because their savings may be managed by firms they do not even choose, let alone control.” Three members of Congress also call for a hearing: California’s Rep. Maxine Waters, the ranking Democrat on the House financial services committee, California’s George Miller, ranking Democrat on the House education and workforce committee, and Rep. Stephen Lynch (D-Mass). “The American public has grown increasingly frustrated about the lack of accountability in our financial system.” They pointed out that “regulators are not using the full arsenal of tools available to them to protect the public.” In fact, every commenter urged the DOL to enforce the law, and not grant Credit Suisse an exemption, with one exception: Credit Suisse. The Credit Suisse letter actually asks for even greater latitude in pension management. In the face of this comment record, bolstered by letters from senior members of Congress from committees responsible for banking and pension fund oversight, it will be a miscarriage of the regulatory process if the DOL grants Credit Suisse a pass from this penalty without a hearing. Unfortunately, the DOL habitually grants such exemptions – 23 straight times in previous cases. We hope the comment record changes this streak.

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