Archive for the ‘Financial Reform’ Category

While the speeches of the Democratic and Republican conventions have been dominating traditional news and social media, behind all the pageantry a slew of special interests are pulling the strings.

Photo courtesy of IIP Photo Archive/Flickr under Attribution-NonCommercial 2.0 Generic license.

Photo courtesy of IIP Photo Archive/Flickr under Attribution-NonCommercial 2.0 Generic license.

The conventions are yet another moment to highlight what is becoming an increasingly more talked- about campaign issue: special interests’ influence in politics. This year’s conventions are expected to continue to shatter spending records. The Democratic National Convention is projected to cost $65 million and the Republican National Convention is expected to cost even more, with a price tag coming in around $71 million.

Since Congress repealed public financing of conventions in 2014, with the exception of $50 million provided by Congress for each convention’s security expenses, the rest of the money will come from special interests including corporations, unions, and lobbyists looking to gain favor with the politicians attending the conventions.

This special interest money enters the equation through “host committees,” which aren’t considered political entities and therefore do not need to disclose where their unlimited contributions come from. These undisclosed special interest dollars fund events and parties surrounding the conventions.

The presence of undisclosed special interest dollars at the conventions is problematic because it makes it impossible for the public to know whether the voices they hear at the conventions really represent the candidates or whether they represent the interests of those funding the events.

The public is becoming increasingly frustrated with a system that is rigged in favor of the super wealthy and special interests, and the conventions are another moment to draw attention to the corporate money flooding into the American political process. Polls show that two-thirds of Americans are dissatisfied with the outsized influence of corporations in America and 88% of Democratic and Republican primary voters think that the U.S. Securities and Exchange Commission should require public corporations to disclose their political spending.

Facing increased frustration, some may wonder how they can participate in changing the system. One unexpected way is through their retirement investments. Americans who invest their retirement savings with major mutual fund companies are ultimately empowering major corporations who meddle in politics.

Let’s break down how this happens.

When you contribute money to your retirement account with Vanguard, for example, Vanguard then takes your money and invests it in major corporations on the stock market. Those major corporations then turn around and spend money influencing elections and policy implementation. This spending is not required to be disclosed to the general public or the corporations’ shareholders.

Shareholders at major corporations have been asking the corporations to disclose their political spending for years. Unfortunately, those shareholder proposals rarely receive majority support because the biggest mutual fund companies, like Vanguard, can own 5 percent or more of these corporations and they tend to vote against increased transparency.

Five percent may not sound like a lot, but in actuality it translates to significant voting power in corporate elections where the fates of shareholder proposals on transparency are decided. Here’s where the average American saving for retirement comes in. Americans who invest their retirement savings with major mutual fund companies like Vanguard or BlackRock should tell the companies to support political spending disclosure at the corporations where their retirement dollars are invested.

The conventions are another instance where undisclosed political contributions are running rampant and Americans don’t know whose voices they are really hearing. Until the U.S. Securities and Exchange Commission issues a rule requiring all public companies to disclose political spending, mutual fund companies can and should represent the 401Ks and other investment accounts entrusted to them, and play a pivotal role in supporting disclosure. In turn, Americans who trust major mutual fund companies with their retirement savings should tell the companies to support disclosure whenever it comes up. Transparency is good for investors and good for our democracy.

Rachel Curley is the Democracy Associate at Public Citizen’s Congress Watch. Follow more of her work at Corporate Reform Coalition

Last week at the Netroots Nation 2016 conference, Presidential candidate Hillary Clinton addressed the attendees through a pre-taped video, announcing that, if she were elected, she would propose a constitutional amendment to overturn the Citizens United v. FEC decision within the first 30 days of her administration.

“Today, I’m announcing that in my first 30 days as President, I will propose a constitutional amendment to overturn Citizens United and give the American people – all of us – the chance to reclaim our democracy,” Clinton said in the taping. “I’ll also appoint Supreme Court justices who understand that this decision was a disaster for our democracy, and I will fight for other progressive reforms including small dollar matching and disclosure requirements.  And I hope some of the brilliant minds in this room will seek out cases to challenge Citizens United in the courts.”

hillaryClinton also committed to signing an Executive Order requiring federal government contractors to fully disclose all political spending and urging the U.S. Securities and Exchange Commission (SEC) to move on the long-awaited rulemaking to require publicly traded companies to disclose all political spending to their shareholders.

These commonsense requirements for political spending disclosure have long been supported by Public Citizen.

Following the ruling in the Citizens United case, Public Citizen led the the fight to amend the Constitution to overturn the decision, working across the nation. At this point, 17 states from New York to Oregon have passed resolutions in support of an amendment to the constitution to overturn Citizens United.

More than 1.2 million investors and members of the public have already submitted comments to the SEC calling for a rule requiring the disclosure of corporate political spending, including major institutional investors, Secretaries of State, State Treasurers, former SEC Commissioners and Chairs, Senators and more. In addition, another million plus Americans have weighed in on the executive action on disclosure of secret contractor spending, and in December, Public Citizen worked with other progressive organizations to bring those million-plus signatures to President Obama to urge him to take action and curb dark money.

You too can show your support for getting money out of politics by signing a petition to overturn Citizens United here and sending a comment to the SEC regarding disclosure here.

Bart Naylor at Too Big launchOn June 22, Public Citizen was joined by U.S. Senator Jeff Merkley from Oregon, former congressman Brad Miller of North Carolina, MIT Professor Simon Johnson, University of Maryland Professor Rena Steinzor, and Marcus Stanley of Americans for Financial Reform to celebrate the release of Public Citizen’s latest publication. Too Big: The Mega-Banks Are Too Big to Fail, Too Big to Jail, and Too Big to Manage lays out the reasons why the current regulatory system has allowed mega-banks to remain too large.

Too Big immediately pinpoints the threat to American citizens’ interests as big banks continue to operate without adequate regulation:

“Americans suffered from the financial crisis of the 2008. Adding insult to injury, Americans were compelled to finance bailouts of banks responsible for the crash on the theory that permitting any to fail would cause a cascade of bankruptcies and inflict cataclysmic damage to the economy.

Yet today, the largest banks are even bigger than they were then.”

The book, by Bart Naylor, Public Citizen’s Congress Watch division’s financial policy advocate, focuses on commonsense solutions, in the form of regulatory and legislative reforms, to stem the unencumbered power and greed of the mega-banks.

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Public Citizen has been working to combat Wall Street recklessness alongside Senator Elizabeth Warren since the 2008 financial collapse, including as a leader of the Americans for Financial Reform coalition. We fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act, which went a long way toward better protecting consumers from the sorts of risky banking practices that caused the economic meltdown. However, Dodd-Frank did not go nearly far enough.

kindergartenv2That’s why last week Public Citizen joined Sen. Warren and more than three dozen other organizations to launch the Take on Wall Street campaign.

The campaign is calling on Congress to make five policy changes that will help rein in some of the worst of Wall Street’s greed and excesses. We plan to highlight each of these planks in turn.

Today, we highlight one of the proposals that would put Wall Street on a more level playing field with  the American taxpayers that have shouldered the burden for the industry’s past mistakes — closing the “carried interest” loophole.

What is the carried interest loophole?

Money you are paid for the work you do and money you earn from investments are taxed differently. This should not be the case when the work being done is managing investments. However, some wealthy investment bankers have figured out they can nearly cut their tax bill in half by getting paid through investment income, rather than their taxed salaries — leaving average Americans to take up the slack. This loophole in our tax code is called “carried interest.”

How big of a problem is this?

According to one expert, closing this loophole could mean up to $180 billion over the next decade.

That’s real money that can be used to help families still struggling to recover from the recession caused by Wall Street recklessness. Even conservative estimates say it would mean at least $1.5 billion a year, which would be paid by those who could most easily afford it.

What can I do?

Take action at TakeOnWallSt.com to support closing the carried interest tax loophole. While you’re at it, you’ll also have the opportunity to sign up for campaign updates and you can find a printable one pager on the carried interest loophole and other resources to get engaged in this important campaign.

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

Bret Thompson is the online director of Public Citizen’s Congress Watch division.

As improbable as it may seem, the nation’s largest banks are even larger now than they were before the 2008 financial crisis, meaning they are still a “too big to fail” risk for our economy. Income inequality is growing with hedge fund managers and corporate CEOs abusing loopholes in our tax code to further enrich themselves. Funding for government services is being slashed when sources of revenue are going untapped like taxing Wall Street trades. Some communities lack even access to basic banking services, leaving them to rely on predatory, high-fee financial services like check cashers.

popeAgainst this backdrop, Sen. Elizabeth Warren (D-Mass.), Rep. Nydia Velázquez (D-NY), and Rep. Keith Ellison (DFL-MN) led the launch of the Take on Wall Street campaign on Tuesday.

Nearly 40 organizations including Public Citizen, Americans for Financial Reform, the AFL-CIO and Communications Workers of America  have signed on to the new campaign, which seeks to bring much-needed reforms to Wall Street’s seemingly unchecked power and greed.

The five point plan at the center of the campaign would, in the words of AFL-CIO President Richard Trumka, “Make Wall Street work for Main Street, instead of the other way around.”

Here are the proposed reforms:

  1. Close the carried interest loophole that lets billionaire Wall Street money managers pay lower tax rates than nurses or construction workers.
  2. Create a Wall Street speculation tax that would discourage short-term bets and generate billions in new revenue to make college affordable, invest in our infrastructure, and create jobs in our cities.
  3. End “Too Big to Fail” by breaking up the big banks – making them smaller, simpler, and safer.
  4. Stop subsidizing million dollar CEO bonuses by ending the CEO pay tax loophole.
  5. End predatory lending and also expand access to fair consumer banking services through a public option for financial services like postal banking.

The financial sector spends around $1.5 million a day on lobbying and contributions to congressional candidates.

Rep. Ellison recognized this in his remarks, saying, “We are the many and they are the money. We are going to win this fight if we stick to it.”

Join the fight—you can help us take on Wall Street and WIN!

Bret Thompson is the online director of Public Citizen’s Congress Watch division.

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