Archive for the ‘Consumer Protection’ Category

Photo of Public Citizen financial policy council Micah HauptmanWhen the Consumer Financial Protection Bureau (CFPB) wanted to hear from the public about private student loan affordability, Public Citizen’s members and supporters responded in full force!

More than 18,000 Public Citizen activists sent comments, decrying Wall Street’s over-financialization of our educational system and calling out the corporate predators that have trapped students in cycles of debt to reap millions of dollars in ill-gotten gains. Many commented specifically on forced arbitration clauses and class-action bans that lenders stick into the fine-print language of student loan contracts, which prevent borrowers from going to court to hold their lenders accountable for predatory lending and other harmful industry practices.

Here are just a few of the public comments our members and supporters sent to the CFPB:

  • “I am permanently burdened, I can never stop working. I feel enslaved.”—a 71 year old woman who borrowed $40,000 in the early nineties to fund her master’s education. Since taking out her loans, the loan amount ballooned to $140,000. Now, a portion of her pay is garnished.
  • “In my 50 years as a lawyer, judge, and alternative dispute resolution provider, I am convinced that compulsory arbitration … is too often fundamentally unfair… A class action suit empowers the powerless which is precisely why the lenders want to jam arbitration and class action waivers down student throats.”

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Our Trans-Atlantic Call for Exclusion of Intellectual Property from EU-US Trade Talks

US trade policy is currently focused on the Trans-Pacific Partnership (TPP), for which President Obama hopes to complete negotiations by October. If the agreement is concluded according to plan, the TPP will include the United States, Canada, Mexico, Peru, Chile, New Zealand, Australia, Brunei, Singapore, Malaysia, and Vietnam.  Japan is signaling its interest to join and Korea would possibly follow Japan. The treaty would remain open for other countries to join as well, so long as they meet the required standards.

Meanwhile, along the Atlantic, the US is preparing to launch negotiations for a Transatlantic Free Trade Agreement (TAFTA)—or what is being touted as the Transatlantic Trade and Investment Partnership (TTIP).

The establishment of a Trans-Atlantic partnership is not a new idea; the possibility of creating a Trans-Atlantic Free Trade area had been discussed occasionally in the past, especially during the 1970s and 1980s. However, informal discussions failed to solidify into something more concrete.

The United States and the European Union have both entered into economic partnership agreements across the globe, but never before with each other. In 2011, American and European politicians keen on “shaping globalization” (i.e. setting rules for the 21st century) outside the official global forums set up the High-Level Working Group on Growth and Jobs (HLWG) to assess the feasibility of a comprehensive transatlantic trade agreement.  The deal between the world’s two most important economic powers hopes to be a “game-changer.”

The BRICS countries — Brazil, Russia, India, South Africa and perhaps most notably China – have not been invited to either negotiation. It may be the case that these deals aim to better prepare the EU and the US for an upcoming economic battle with the BRICS and other emerging powers.  The BRICS countries have a combined GDP now equivalent to that of the EU or the US.  “This is about the weight of the western, free world in world economic and political affairs,” declared EU Trade Commissioner De Gucht.

The HLWG released its interim report in 2012 identifying policies and measures to increase EU-US trade and investment. The interim report noted that, “it would not be feasible in negotiations to seek to reconcile across the board differences in the IPR obligations that each typically includes in its comprehensive trade agreements.”

However, industry groups soon realized that the so-called Trans-Atlantic Free Trade Agreement presents a perfect opportunity to set “golden standards” for IP regulation and enforcement, which emerging markets like China and India could then be pushed to accept. Groups like PhRMA urged the EU and US to include IP to further strengthen the international regime. Eventually, the HLWG changed its position and is now recommending the inclusion of an IP chapter, although a “limited” one. The Final Report issued by the HLWG recommends that TAFTA negotiations “address a limited number of significant IPR issues of interest to either side, without prejudice to the outcome.”

It is not clear what the HLWG is trying to say. The US and EU regimes are not alike. Geographical indications, for instance, continue to create a transatlantic trade conflict between the US and EU. They have fundamentally different philosophies on the issue.  The EU is committed to enhancing its vast gastronomic heritage of excellence, and pushes for more restrictive rules. The US wants to maintain the status quo to help giant companies like Kraft sell items like “parmesan” cheese around the world.

Any attempt to boost patent or copyright rules in favor of rights holders and against the interests of consumers would be a significant mistake and invite major public resistance. The defeat of ACTA in the EU and the overnight death of SOPA in the US were no accidents. They should serve as a stark reminder to policymakers on either side of the Atlantic.

It goes without saying we will not hold back from raising our voices once again in defense of our fundamental rights to free speech and health, and to uphold the benefits of an open knowledge economy.

To read the declaration of  transatlantic coalition of 45 consumer, public health and Internet freedom groups, visit http://www.citizen.org/ip-out-of-tafta.

“There are moments in our lives when we have an opportunity to ignite tremendous positive change—not just in the lives of the customers and communities we serve every day, but in our country.”

Those words, written by Starbucks CEO Howard Schultz, have never resonated more than they do right now. Shareholders at Starbucks have filed a resolution asking the company to refrain from election-related spending. That means no giving to super PACs, no checks to party committees and no money for trade associations and nonprofits that spend in politics. Schultz would be wise to consider adopting the policy because it represents a real chance to spark some much-needed positive change in the way Washington, D.C., does business.

In 2011, Schultz began researching election spending and was aghast at the ever-escalating price tag to run for office. Frustrated with partisan politics and the debt ceiling fiasco, Schultz called on his fellow CEOs to boycott campaign donations until our nation’s leaders dropped their dysfunction and got to work on the people’s agenda. The response he got was impressive: More than 50 business leaders took up his pledge to forgo giving to politicians.

Two years later, the country is still reeling from a record-breaking $7 billion election spending frenzy. Now is the time for Schultz to take the next step with his pledge and enshrine a “no political spending policy” at Starbucks. Shareholders across the country are anxious for reassurance that their money is not  going to fund sleazy attack ads, and the American people are ready for a government that actually works for them – not corporations.

For investors, the appeal of “no spending” resolutions is obvious. These policies provide the ultimate assurance that shareholder money is not being carelessly tossed into the ring or used to advance the perverse political interests of CEOs and executives. And research suggests that political donations are associated with stunted long-term growth at some firms. These reasons are precisely why shareholder resolutions calling for disclosure, lobby disclosure and refraining from spending have steadily increased every year since the U.S. Supreme Court’s Citizens United v. Federal Election Commission decision.

Of course, high-priced elections don’t just have consequences for investors. For lawmakers whose campaigns and careers rise and fall on the whims of funders, big donations can close paths to compromise before they are even considered. Being tethered to donors can limit lawmakers’ ability to ask the hard questions, propose the tough amendments and cast the critical votes often needed to create real change. Our politicians’ inability to find common ground and work for the majority of Americans stems in part from positions hardened by a system that permits unlimited campaign expenditures and makes lawmakers indebted to corporate and wealthy funders who do not reflect the diversity of average Americans. The failed attempt to stop the sequester is just the latest example that dysfunction in the nation’s capital is rampant.

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Note: Public Citizen runs U.S. Chamberwatch, a project designed to shed light on the funding and practices of the largest private interest lobbyist in America, the U.S. Chamber of Commerce."Robert Weissman" "Public Citizen president"

U.S. Chamber of Commerce President and CEO Tom Donohue today delivered his annual State of American Business address. As he paints a fantastical picture of the unfair burdens imposed on Big Business, Donohue neglects to mention a few things, most importantly, that corporate profits are at record highs.

Of course, there’s nothing surprising here, since he gives pretty much the same speech every year. Still, a few comments are in order.

First, isn’t it a bit much for the rich and powerful to endlessly call for cutbacks in the nation’s leading anti-poverty programs, Social Security, Medicare and Medicaid? If Tom Donohue is concerned about the government’s fiscal situation, perhaps he should acknowledge the unreasonably low effective tax rate on corporations. Or declare that it’s outrageous for two dozen profitable Fortune 500 companies to pay zero in federal income tax in the past four years.

Second, he whines about a “coming flood of new regulations,” even as we still suffer from the Great Recession, a direct outgrowth of too little regulation and enforcement. This complaint comes despite no evidence that regulation meaningfully impedes job growth and despite lots of evidence that regulation protects and creates new jobs (not to mention making jobs safer, better paid and equitability available).

Third, he urges more NAFTA-style trade agreements, including the Trans-Pacific Partnership, a NAFTA-on-steroids that would encumber every country on the Pacific Rim. This call will come despite an abundance of evidence that this trade model has cost jobs, lowered living standards and undermined our sovereign ability to set our own safety and health protections.

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1. The Obama administration demanded no meaningful quid pro quo from the Wall Street giants it bailed out in the wake of the 2008 financial collapse.

2. The Obama administration has chosen not to prosecute criminally any of the leading Wall Street firms in connection with the rampant abuses that led to the 2008 financial collapse and the Great Recession.

3. The Obama administration has pursued no meaningful action to moderate, let alone end, the foreclosure crisis.

4. The Obama administration has not supported – and at crucial moments has opposed – measures to break up the goliath Wall Street banks and firms.

5. The Obama administration has opposed a financial speculation tax on Wall Street.

6. Found to have facilitated money laundering by drug traffickers, HSBC was given the opportunity to avoid pleading guilty to a crime. Instead– and emblematically–HSBC was given the kid-glove treatment of a deferred prosecution agreement.

7. Regarding the above, the last thing the Obama administration needs is to continue having Wall Street insiders and fellow travelers shaping its economic policy. Unfortunately, Lew has deep Wall Street connections.  Before joining the administration he worked for both Citi Global Wealth Management and  Citi Alternative Investments.

Lew’s Citi stint was relatively short – though it involved management positions at a unit involved in aggressive, speculative betting – but there’s good reason to worry that it has helped shape his views, or, in any case, that he reflects a Wall Street perspective on key economic and policy issues. At a 2010 confirmation hearing, he told the U.S. Senate Budget Committee, that he did not believe deregulation was a proximate cause of the financial crisis.

It is imperative that the administration finally break from Wall Street on economic and regulatory policy. Jacob Lew’s nomination suggests we’re in for more of the same.

Robert Weissman is Public Citizen’s president

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