Archive for the ‘Financial Reform’ Category

Every year at tax time, as we all do our civic duty by submitting our federal, state and local taxes, we should all be thinking about the many multinational businesses that are not pulling their weight because they have successfully avoided paying corporate taxes.

The key to progressive taxation is placing the greatest obligation of a tax on those who can pay the most. Certainly we are facing huge pushback to this idea from the super rich and Wall Street.

The truth is, corporations are paying less and less of their share of taxes. In 2014, corporations paid taxes equal to less than two percent of the Gross Domestic Product (GDP). In 1950s the corporate share was double that, at more than 4 percent share of the GDP. Meanwhile, individuals’ tax payments in 2014 equaled more than 8 percent of the GDP — four times the corporate share for the same year.

Loopholes in our tax code, passed at the behest of the multinational corporations they benefit, have shifted the lion’s share of tax responsibilities onto American small businesses and average taxpayers. Studies show each small business in the U.S. pays an average of more than $3,200 in taxes to cover the cost of taxes avoided by multinational corporations.

Armies of lobbyists and tax lawyers have made Big Business complicit in shrinking our nation’s revenue stream, even as they take full advantage of government largesse. We must correct this systemic unfairness, which exacerbates the economic inequality that holds so many back from achieving the American Dream.

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On March 12, Securities and Exchange Commission (SEC) Chair Mary Jo White publicly returned fire for the first time on the charge from outsiders and two of her fellow commissioners that her agency is soft on Wall Street.

Cut through her rhetoric, however, and what she seems to be implying is: “The SEC trusts Wall Street.”

Here’s the background. The Department of Justice has fined major Wall Street firms for serious violations. The firms have settled by paying billions of shareholder funds in penalties. These infractions trigger other sanctions, including the loss of certain privileges at the SEC. But the SEC has generally waived these sanctions. Commissioners Kara Stein and Luis Aguilar have in several cases voted against these waivers, arguing, among other reasons, that waivers dilute the deterrence effect of the automatic sanctions. Stein, Aguilar and White are three of the five commissioners of the SEC.

In a speech at Georgetown University on March 12, Chair White drew a line in the sand. These sanctions should not be viewed as deterrence. She explained: “It must be emphasized, however, that it would not be an appropriate exercise of our authority to deny a waiver to further punish an entity for its misconduct or history of misconduct, or in an effort to deter it or others from possible future misconduct, by letting stand an automatic disqualification where the circumstances do not warrant it.”

White undoubtedly penned these remarks well before the eve of the speech and advantaged the prodigious talent on the SEC staff to buttress her legal case. In the written speech the assertion just quoted contains a footnote to a rule the SEC approved in July 2013. White joined her four commissioners to approve this rule. In fact, however, the SEC’s explanation of its rule contradicts her point.

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The Seventh Amendment to the United States Constitution states, “In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved …”

Even though we are all granted the right to a trial by jury in the U.S. Constitution, Big Banks and corporations regularly use fine print in contracts to trick consumers out of their right to a day in court. Forced arbitration means that if consumers are ripped off or otherwise harmed, they must use private arbitration proceedings to air their grievances.

If you’re already angry about forced arbitration and you want to do something to get these predatory terms out of financial products, skip to the end of this post for ways to get involved.

There’s plenty to be mad about. These expensive arbitration “tribunals” have no judge or jury. They are overseen by paid arbitration providers who are selected by the companies. Arbitration firms have a very good reason to guarantee repeat business for themselves by finding in favor of the corporations over the consumers. The findings of arbitration decisions are not public and the appeals process is very limited. Most likely, you will also be required to go to arbitration in another state!

If consumers were interested in choosing arbitration, they would enter into the decision after some harm has come to them. It would need to be an informed decision where they did so with a full understanding of the consequences of their choice to not go to court.

But that’s not how we’re all roped into signing (or even clicking) away our rights. It has been proven that consumers rarely understand that their contracts contain arbitration clauses and have little idea of the repercussions of having their complaints heard in a non-court venue.

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It is the best of times if you’re a crook at a mega-bank. It is the worst of times if you’re in debt and dare to omit information on your bankruptcy declaration. Consider two federal cases dealing with perjury during bankruptcy.

In case one, Dallas woman Estela Martinez, 54, filed for bankruptcy but omitted her Social Security number and the previous times she’d filed for bankruptcy on the form. That’s perjury under federal law. She was arrested at her home on July 10, 2014. On July 18, 2014, she was sentenced to 366 days in prison on one count of perjury.

In case two, JPMorgan Chase admitted that it filed forms in bankruptcy court signed “under penalty of perjury” by “persons who had not reviewed the accuracy” of the forms. It did this not five times, nor 50 times, nor 500 times, but 50,000 times. Not one person at JPMorgan was sentenced to prison.

Why not? It’s not that the Department of Justice considers JPMorgan’s actions simply an accident, a foot fault as it were. “It is shocking that the conduct admitted to by Chase in this settlement, including the filing of tens of thousands of documents in court that never had been reviewed by the people who attested to their accuracy, continued as long as it did,” said Acting Associate Attorney General Stuart F. Delery. “Such unlawful and abusive banking practices can deprive American homeowners of a fair chance in the bankruptcy system, and we will not tolerate them.”

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With help from our friends at The Other 98% (and an activist marching band), we made the petition delivery to Citigroup’s Wall Street headquarters into a spectacle the banksters won’t soon forget.

And a special thanks to our friends at Americans for Financial Reform, the National Association of Consumer Advocates, the American Association for Justice, Consumer Action and the National Consumer Law Center for joining us to gather signatures for this campaign.

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