Archive for the ‘Congress’ Category

Last week, the Consumer Financial Protection Bureau (CFPB) fined Wells Fargo $185 million for the astounding abuse of opening more than two million unauthorized deposit and credit card accounts.

Now, Senate Majority Leader Mitch McConnell (R-Ky.) is employing a rarely used procedure to force a rushed vote on a bill to defang the CFPB.

Ok, now here’s a quiz. Can you guess which member of Congress with his wife holds more Wells Fargo stock than any other, at least according to the most recently available financial disclosure forms?

You guessed right! Mitch McConnell.

Let’s walk this through in more detail.

On Friday, the CFPB announced $185 million in fines and penalties against Wells Fargo for the jaw-dropping, illegal practice of opening deposit and credit card accounts for consumers who did not request them and did not know they existed. Not just a few such accounts — 2 million of them. According to Wells Fargo, more than 5,000 employees were involved in setting up the sham accounts.

One hundred million of that total penalty was imposed by the CFPB; $35 million goes to the Office of the Comptroller of the Currency, and $50 million to Los Angeles. The $100 million fine is the largest ever imposed by the CFPB.

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Enter Mitch McConnell.

This week, he announced plans to rush to the Senate floor S. 3318, “A bill to amend the Consumer Financial Protection Act of 2010 to subject the Bureau of Consumer Financial Protection to the regular appropriations process, and for other purposes,” introduced by Georgia Republican Senator David Perdue.

You might be curious to read the bill.

Too bad.

It was just introduced on Monday, and the text does not yet appear oncongress.gov, the website where proposed bills are posted.

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But the title tells you what you need to know. When the CFPB was created, Congress gave it budget autonomy — it is funded by transfers from the Federal Reserve system, and its budget is set at 12 percent of Federal Reserve operating expenses. The CFPB creators built in this feature because they knew that otherwise the Big Banks could destroy the consumer bureau by stripping its funding. This isn’t unique among banking regulators — the Fed, the OCC, the FDIC and others all share this autonomy, as it has long been recognized that our cops on the financial beat should not be subject to appropriations while policing Wall Street. Since then, the Big Banks have lobbied hard to subject the CFPB to congressional appropriations, almost explicitly for the purpose of slashing its funding and stopping it from doing its job.

S. 3318 is not following the traditional pathway to the floor of the Senate. It has not yet been debated and voted on in committee. Instead, using a special procedure, Majority Leader McConnell is taking it straight the Senate floor.

Which raises the question: Senator, what’s the rush?

Well, it just may be that Mitch McConnell brings a special passion to the issue, in the wake of the CFPB penalty on Wells Fargo.

In his 2015 financial disclosure form, McConnell reports between $1,000,001 and $5,000,000 in deferred compensation for his wife, Elaine Chao, from Wells Fargo. Chao, the former Secretary of Labor, serves on Wells Fargo’s board of directors.

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The bank paid her a not inconsiderable $291,027 in 2015 for her board service.

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Quite something, right?

We cannot assume that McConnell is acting just to punish the CFPB for imposing a modest fine on Wells Fargo for its systematic misdeeds.

It’s entirely possible — arguably more likely — that McConnell is acting to please his Wall Street paymasters, more than out of pique in response to the CFPB penalizing a megabank to which he’s unusually close.

It’s true that that can pass as a kind of ethics defense in Washington, D.C. (see theongoing case of Rep. Roger Williams, R-Texas, also an auto dealer, who is defending himself against charges of wrongdoing related to the introduction of an amendment to benefit auto dealers on the grounds that he was not trying to benefit himself but was instead doing a favor for a lobbyist for the National Automobile Dealers Association). But it doesn’t wash among Americans uncontaminated by Washington corruption.

It’s clear that Americans want transparency when it comes to how companies spend in politics.

Courtesy Flickr/Almond Butterscotch.

Courtesy Flickr/Almond Butterscotch.

The next administration and the U.S. Securities and Exchange Commission (SEC) must address secret corporate political spending because it poses a great threat to democracy and investor confidence, says a new report by Public Citizen. The report, highlighting the historic campaign for an SEC rule requiring publicly held corporations to disclose their political spending, comes in advance of a Sept. 20 event on the state of corporate disclosure and as Public Citizen and its partners in the Corporate Reform Coalition (CRC) review and plan ahead for a new administration and new SEC priorities.

The Sept. 20 event is organized by Public Citizen, the AFL-CIO, Americans for Financial Reform, Ceres the Financial Accountability & Corporate Transparency (FACT) Coalition, the International Corporate Accountability Roundtable (ICAR), Patriotic Millionaires and SIF: The Forum for Sustainable and Responsible Investment, and hosted by the Center for American Progress. It will explore the SEC’s recent “Disclosure Effectiveness” review, which is evaluating corporate disclosure requirements, and the role of environmental, social and governance disclosures in promoting a sustainable economy.

The report details how a five-year campaign has driven 1.2 million comments to the SEC in support of a disclosure rule – the most in the agency’s history. The campaign also has garnered more than 500 stories in local and national press, and brought together powerful champions on Capitol Hill who are working to ensure that an SEC rulemaking on disclosure is not obstructed by congressional Republicans’ insertion of a harmful policy rider into the appropriations process that would stop the SEC from finalizing the rule. In addition, another 20,000 comments supporting political spending disclosure have come into the agency as comments to its “Disclosure Effectiveness” review process and to the agency’s Regulation S-K concept release, which solicited comments on proposed changes to corporate financial statement requirements.

The campaign began in response to the disastrous 2010 U.S. Supreme Court decision in Citizens United v. FEC, which opened the floodgates for corporations to spend unlimited and undisclosed amounts to influence American politics. In 2011, a bipartisan committee of leading corporate and securities law professors filed the first petition requesting a rulemaking at the SEC requiring all public companies to disclose their political expenditures. In response, the agency began a rulemaking, then halted it.

In this election cycle, secret outside spending is the highest it has ever been, clocking in at a whopping $660 million. Americans know that corporate influences lurk behind most campaign ads. Polls show they remain frustrated by the lack of transparency around corporate political spending.

Disclosure is material to investors as they consider the risk of their investment and important to the American voters who want to know who is bankrolling their elections. The SEC needs to take a stand and move forward with this rulemaking.

village-1357192_640At a time when public approval of Congress remains near all-time lows, revisiting campaign finance laws is critical. Party officials have recommended members spend roughly twice as much time fundraising as they do on the floor or in committee. U.S. House members raise on average $2,400 every single day of their term. U.S. Senators will raise roughly twice that.

These campaign spending increases are reflected at the state and local level as well. For example, a single local school board race in California resulted in over $3.5 million in inside and outside spending. The tides may be shifting, however.

California is now poised to enact a law which would lift the state’s ban on publicly financed campaigns. SB 1107 passed with bipartisan backing last week. It gives local and state government to option stick with the current system or switch to public financing. The bill requires public financing laws have a dedicated funding source and that funds be “available to all qualified, voluntarily participating candidates for the same office without regard to incumbency or political party preference.”

Public Citizen’s members in California sent over 1,200 letters to their assembly members in the days leading up to the vote. All that’s left is for Gov. Jerry Brown to sign the bill.  You can contact his office at (916) 445-2841 and ask him to sign SB 1107.

Voters in California will have further opportunity to express their frustration with the current system when Proposition 59 appears on their ballots this November. It is a resolution that calls on California legislators to do everything they can to overturn Citizens United v. Federal Election Commission. Yesterday, the Sacramento Bee endorsed the measure, which is backed by groups such as California Common Cause, calPIRG, Courage Campaign and others.

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!

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.

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