During last week’s Republican debate on FOX Business, an ad paid for by the American Action Network (AAN) depicted Consumer Financial Protection Bureau (CFPB) workers robotically denying personal loans to needy individuals.

AAN paid $500,000 to run the ad seven times during the debate, attacking the agency and its champions – Senator Elizabeth Warren and CFPB Director Richard Cordray.

The ad’s dismal, Soviet-inspired concept sets the scene for misleading accusations of injustice against consumers. Warren and Cordray are portrayed on red banners as dictators while the assembly line rubber-stamps personal loan denials – a far cry from the work the CFPB actually does, such as providing ways for ripped-off consumers to hold banks accountable and reining in “payday” lenders that prey on military families.

However, beyond its sham portrayal of the bureau’s work, the ad is a symptom of a bigger problem: A concerted push to stop or delay the successful work of the agency that has returned over $11 billion dollars to harmed consumers. The real worry about the ad should be with the huge sums of money being funneled into the larger effort to thwart the agency.

A timely example of these efforts to block the CFPB’s work are right-wing lawmakers’ concurrent attempts to insert riders—or unrelated policy proposals—into the federal spending bills in order to weaken consumer financial protections issued by the CFPB, as well as undermine the structure and set-up of the Bureau.

By attacking the agency created to look out for consumer interests in the financial market, these corporate players are in-effect attacking consumers themselves.

So why is the CFPB under attack?

Follow the money. Two American Action Network board members lobby on behalf of Navient, a student loan provider currently under investigation by the CFPB (and several other regulatory authorities) for allegedly overcharging and mistreating borrowers. And another board member lobbies on behalf of both student loan and payday lending clients, practices also under examination by the CFPB. This lobbying seems to be paying off.

Policy riders that would cripple the CFPB’s ability to do its job are leaching through the appropriations process, piggybacking on budget bills. Here’s what the anti-CFPB and anti-financial reform riders would do:

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RobertWeissman1Statement of Robert Weissman, President, Public Citizen

Public Citizen applauds the House Judiciary Committee for taking on the urgent problem of overcriminalization and overincarceration. The lives and well-being of too many young men of color, too many families and too many communities have been devastated by a wrongheaded experiment in throwing massive numbers of people in jail for long sentences for low-level crimes, especially nonviolent and victimless ones. It’s past time to remedy this injustice, and it’s inspiring to see bipartisan commitment to doing so.

But it appears that corporate interests are aiming to hijack the process, under the cover of bipartisan comity, to sneak in measures that would seriously undermine corporate crime prosecution. The House-proposed legislation contains “mens rea” (state of mind) provisions that would make it much harder for prosecutors to criminally prosecute companies that swindle the public, endanger their workers, poison the environment or otherwise imperil consumers.

Most egregiously, the House language violates the basic precept that “ignorance of the law is no defense” and may offer corporations and company executives an “ignorance of the law” defense. Under Section 11(2), prosecutors must affirmatively show that a defendant knew the state of the law, or at least that a reasonable person would have known. This will create enormous problems of proof for prosecutors who choose to bring cases; however, given the challenges that already burden corporate criminal prosecution, in many instances, they will just give up and not prosecute in the first place.

Simply put, the mens rea provision in the House legislation aims to solve a problem that doesn’t exist, in a vehicle where it doesn’t belong.

In fact, issues related to corporate crime are 180 degrees different from those related to street crime.

First, there are far too few, not too many, corporate criminal prosecutions, evidenced most dramatically by the utter failure to prosecute anyone on Wall Street, or any of the financial giants, for the wrongdoing that led to the 2008 crash and ensuing Great Recession. To a considerable extent, deferred prosecutions – in which the Justice Department agrees not to prosecute in exchange for a promise by corporate defendants not to violate the law in the future – have replaced actual prosecutions, undermining any kind of deterrent effect. GM is only the latest, egregious such example.

Second, where nonviolent and victimless crimes don’t directly hurt anyone other than the perpetrator, corporate crime exacts a massive, often violent, toll in lives lost, injuries inflicted, destruction of the environment, consumers ripped off and much more.

Third, unlike street criminals, corporate criminal defendants are powerful and well-resourced. Prosecutors identify with white-collar criminals and generally are reluctant, not over-eager, to prosecute. They fear the collateral consequences of prosecution, such as the impact on jobs and the economy. By contrast, impacts on family and loved ones are rarely a factor in consideration of street crime prosecution. Corporate criminal defendants are typically very able to defend themselves with the best legal counsel that meets or exceeds resources available to prosecutors. And in sharpest contrast to street criminals, corporate criminals are able to shape the criminal law itself, through lobbying, campaign contributions and other activities that influence the establishment of criminal regulatory standards.

Lastly, corporate criminals are the utmost rational actors. Weak enforcement and lax standards, as we have seen over and over, will invite more corporate crime and wrongdoing. Tougher standards with meaningful enforcement will deter corporate criminals. It’s that simple.

These are not esoteric matters. Corporate crime and violence inflicts a horrific toll on our society. There is absolutely no reason for the otherwise laudable criminal justice reform bill to contain any measure to weaken already feeble standards for corporate criminal prosecution.

Photo by BlackburnPhoto via flickr

Photo by BlackburnPhoto via flickr

The fossil fuel industry and Big Pharma are the darlings of Corporate Congress next week.

Clean Power Plan
Lawmakers in both the U.S. Senate and U.S. House of Representatives will move forward with Congressional Review Act (CRA) resolutions to disapprove of two key rules designed to curb climate change. One is the Clean Power Plan, which would curb emissions from existing power plants. The other rule addresses emissions from new power plants.

Lawmakers are pushing these despite the fact that the rules are commonsense safeguards against carbon pollution, with significant public health and economic benefits. The more controversial of the two rules, the Clean Power Plan, would benefit consumers by lowering their electricity bills. (On Monday, Public Citizen will release a report with state-by-state information about this.)

The Clean Power Plan will save thousands of lives and reduce asthma attacks by the hundreds of thousands. It gives states the flexibility to develop their own plans to meet pollution reduction targets.

In the Senate, lawmakers will take a floor vote on the disapproval resolutions. In the House, the resolutions will be considered by the House Energy and Commerce Committee.

FDA Commissioner
Also next week, lawmakers will consider the nomination of Dr. Robert Califf – who has a well-documented and cozy relationship with pharmaceutical and medical device companies – for U.S. Food and Drug Administration commissioner. That agency oversees the industries Califf is cozy with. Because of the conflicts of interest, Public Citizen has called on President Barack Obama to withdraw Califf’s nomination.

It is rumored that by Nov. 20, appropriations subcommittees will complete their work on the budget and will forward the work to the full committees.

Public Citizen and a coalition of nearly 200 groups are working to block ideological policy riders that corporate-backed lawmakers couldn’t get passed otherwise. We’re talking about policies that deny women access to the health care provider of their choice; block safeguards that protect our homes, pocketbooks and workplaces; lower standards that keep our food, air and water safe; and more.

At a recent event, Senator Elizabeth Warren described postal banking as a triple win for the government, public and postal service. For the public it could be an essential new route to provide basic banking services to rural areas and inner cities.

One in four households are estimated to be underbanked – with high proportions of those under the age of 25 and in black or Hispanic communities. Basic banking services like ATM access, check-cashing, and small-scale lending could save these underbanked households $2,412 each year.

The underbanked are also most vulnerable to the practices of predatory financial service providers – nearly half of Americans would have to borrow money should they have a financial emergency that cost over $400. That’s the equivalent of an emergency room visit or a car accident. This has led to fringe lenders in the U.S. outnumbering McDonalds and Starbucks.

The poorest American families have been faced with exacerbated charges on their earned income while the majority of bank closures happen in the areas they live, the areas that are the most in need.

Even community banks and (in some cases) credit unions, which once existed to serve the underbanked, can be bogged down with account fees and the cost of staying open that make it impossible for lower income clients to continue banking there.

Postal banking is a rational solution to the many problems faced by the chronically underbanked, according to the book How the Other Half Banks, by Mehrsa Baradaran, who also spoke at the event.

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Securities and Exchange Commission Chair Mary Jo White will face questions from the House financial services committee on Wednesday, November 18, 2015. An Obama appointee, she’s nevertheless drawn sharp criticism from Democrats as well as Republicans. Public Citizen also challenges her stewardship. Here are questions we hope committee members will ask. We also take the liberty of proposing an ideal answer, and then the answer that we expect.

Banker pay: Dangerous pay structures helped cause the Wall Street bubble that burst in 2008. Congress approved a law requiring you to reform those structures and set a deadline: May 2011. When will you propose a good rule?

Ideal answer: There’s no excuse for taking more than five years on this. We’ve completed more complicated rules (including multi-agency rules) in less time. I’ve directed my staff to bring a proposal before commission vote by December.

Expected answer: This is a multi-agency rule that requires a great deal of cooperation. I assure you, we are working diligently. But I can’t give you any date because these are all difficult issues.

Political spending: More than 1.2 million investors have petitioned the SEC to draft rules requiring firms to disclose all their political spending. What is the timeline for moving forward on the rulemaking?

Ideal answer: While this is a political hot potato, shareholders deserve to know where corporations spend their money, especially if it involves public policy which could have a reputational impact on their invested monies.

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