Archive for the ‘Regulation’ Category

May17

New U.S. Chamber attacks on corporate political spending disclosure are a good sign

By: Jake Parent

How can you tell that momentum is building for change?

Well, one good sign is that the opposition starts getting nervous about your progress.

That’s why we took it as a positive sign that the U.S. Chamber of Commerce recently stepped up attacks on shareholders who attempt to make companies disclose political spending.

Earlier this month, I attended an almost comical presentation at the U.S. Chamber headquarters where speakers spent most of a four hour event attacking political spending disclosure resolutions as being bad for business.

I say ‘almost’ comical because, while much of the information is laughably wrong, the subject matter is far too important to joke about.

There are a number of things wrong with what I heard at this event, but I’d like to focus on two disturbing claims in particular.

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Posted in: Activism, Campaign Finance, Consumer Protection, Regulation, Social Justice0 comments

May3

New details on JPMorgan’s electricity manipulation prompt renewed call for key executive’s termination

By: Tyson Slocum

"Tyson Slocum" "Public Citizen"In July 2012, Public Citizen stated that Blythe Masters, head of JPMorgan’s Global Commodities group, should be fired if allegations about her involvement in electricity market manipulation schemes proved true. Today, The New York Times reports, based on its review of a non-public investigative document, that staff at the Federal Energy Regulatory Commission (FERC) claim that Ms. Masters was aware of the company’s manipulation strategies, helped to conceal the schemes and lied to state and federal officials when confronted about the company’s manipulation strategies. If FERC’s reported findings prove true, JPMorgan should terminate Ms. Masters and rescind all bonuses and any other compensation it can claw back under her contract from the time the alleged manipulation and lying occurred.

In addition, if the allegations described in The New York Times article prove to be true, Ms. Masters should face criminal charges for lying under oath, and FERC should permanently revoke the company’s market-based rate authority.

In November 2012, FERC revoked JPMorgan’s market-based rate authority for six months beginning April 1, 2013, because the company provided false information in connection with the investigation into manipulation of the California electricity market. If lying is grounds for a temporary market-based rate revocation, then a finding of guilt on the underlying manipulation scheme should be grounds to permanently ban the company.

Posted in: Energy, Financial Reform, Regulation0 comments

May1

JPMorgan cheating on the stress test: Exhibit 46

By: Bartlett Naylor

"Bart Naylor" "Financial policy reform"JPMorgan’s “London Whale” episode may boil down to a few senior executives attempting to increase their personal compensation.

The London Whale episode was a trading travesty in April and May of 2012 during which JPMorgan lost about $6 billion on bets it made with some $300 billion in depositor funds.

The losses spurred congressional action, culminating in the Senate’s Permanent Subcommittee on Investigations’ release of a 300-page report and 500 pages of exhibits showing a widespread miscarriage of bank management, bank supervision and integrity.

Examine what’s labeled as “Exhibit 46” in the 500 pages of subcommittee exhibits. On December 22, 2012, JPMorgan Chief Investment Officer Ina Drew directed subordinates to implement a plan to enable the bank to buy back stock.  But carrying out the plan was dependent on convincing regulators that such a step would be financially prudent. In a series of emails  about the whale trades, Ina Drew states that she is “trying to work with CCAR submission for firm that is acceptable for an increased buyback plan.”

In conventional terms, the committee report alleges that JPMorgan sought to manipulate how the whale trade would appear to regulators so that JPMorgan could buy back stock – an action which typically boosts a share price and thus leads to higher executive compensation.

Let’s unpack this logic with some care.

CCAR is the Federal Reserve’s Comprehensive Capital Analysis and Review, more commonly known as the “stress test.” Banks much show regulators that they have enough capital in case bad things happen.

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Posted in: Financial Reform, Regulation0 comments

April18

Texas refinery explosion draws attention to limited OSHA resources as factor preceding tragedy

By: Keith Wrightson

The West Fertilizer Company facility that exploded in a deadly blast Wednesday evening had not been inspected by the federal Occupational Safety and Health Administration (OSHA) in at least 10 years. While we leave it to investigators to determine what exactly happened, we already know that this facility and ones like it operate with very little oversight, and that this is a problem.

Records show that the facility in West, Texas, owned by Adair Grain Incorporated, has not been inspected by OSHA in the past 10 years.

In the past five years, only two Texas facilities in the same classification – that produce fertilizer using ammonia – have been inspected by OSHA, records show. The agency, with a budget of roughly $568 million, lacks the resources to regularly inspect these types of facilities, including the many with high danger levels. Often facilities do not see an inspector for decades at a time.

While OSHA’s budget had increased slightly in the past several years, it was recently reduced yet again by budget sequestration, which means fewer inspectors to monitor facilities like the West Fertilizer Company. Small budgets also make it even harder for the agency to issue new safety standards. The agency’s budget is similar to what it was several decades ago, but the size of the economy – and the number and complexity of workplaces to inspect – has grown tremendously.

Though total occupational deaths are far lower today than they were decades ago, more than 4,000 workers still die every year on the job in the United States, most in incidents that could have been prevented. Last night’s tragic explosion in Texas is a reminder of the work still ahead to make our nation’s workplaces safer.

Devoting only a miniscule portion of our budget to protecting workers is a policy choice – and it’s the wrong one.

Keith Wrightson is Public Citizen’s workplace safety expert. Keep up with Public Citizen’s workplace health and safety work by following @SafeWorkers on Twitter.

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Posted in: Regulation, Social Justice, Workplace Health & Safety2 comments

April12

Barofsky, Born and Miller’s bombshells (video and notable quotes on “too big to fail”)

By: Rick Claypool

“Too big to fail” banks not only leave the country at risk of another crippling financial crisis, but also are holding the country’s political processes hostage because of the outsized power they wield.

That was the consensus among speakers at the release of Reality Check, a book by Public Citizen’s Taylor Lincoln that seeks to remind the public that deregulation caused the economic downturn and to counter the myths that have been propagated about regulations in recent years.

Watch the video (also embedded above) featuring highlights of the discussion.

Speakers included Neil Barofsky, the former inspector general of the Troubled Asset Relief Program, former Commodity Futures Trading Commission (CFTC) Chairperson Brooksley Born, and former Rep. Brad Miller (D-N.C.).

These three former public officials are among the best equipped to evaluate risks to the economy from insufficient regulation. Barofsky went toe-to-toe with the other financial regulators in pursuit of standards to prevent fraud and steps to ensure that loan restructuring programs perform their stated purpose of helping people avoid foreclosure rather than softening the blow to the banks’ balance sheets. Born warned about the risks of financial derivatives in the 1990s, a decade before they nearly brought down the financial system. Miller sought to police subprime lending abuses long before they were widely recognized and was an outspoken champion of the creation of the Consumer Financial Protection Bureau in the 2010 Dodd-Frank Wall Street reform bill.

The panelists’ discussion about the influence of too-big-to-fail banks and the force that industry wields through its ability to offer future employment to agency and congressional staffers was packed with eye-opening – and often appalling – observations.

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Posted in: Congress, Congress Watch Column, Consumer Protection, Financial Reform, Regulation0 comments

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