Archive for the ‘Regulation’ Category

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!

noripoffclause-longYesterday marked the end of the public comment period on the CFPB’s proposed rule to restrict forced arbitration – a tactic that allows Wall Street banks and predatory lenders to block consumers from challenging illegal behavior in court.

Over the last three months, the rule has generated at least 100,000 supportive comments from individual consumers across the country, as well as strong endorsements from major groups and leaders. Here are some excerpts from a selection of notable comment letters, statements of key leaders, and major editorials supporting the Bureau’s proposal.

Notable Comment Letters

281 consumer, civil rights, labor, and small business groups strongly support the rule

“The CFPB rule, which will restore consumers’ ability to band together in court to pursue claims, is a significant step forward in the ongoing fight to curb predatory practices in consumer financial products and services and to make these markets fairer and safer…

“Because forced arbitration undermines compliance with laws and creates an uneven playing field between corporations that use forced arbitration and those that allow for greater consumer choice in dispute resolution, it is in the public interest and in the interest of consumer protection to prohibit or strictly curtail the use of forced arbitration clauses in consumer financial contracts.”

38 U.S. Senators commend CFPB for proposed rule, led by Minority Leader Reid and Senators Franken, Brown, and Leahy

“Recognizing the urgent need to address these troubling practices, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) in 2010 to improve accountability, strengthen the financial system, and establish the CFPB. Dodd-Frank included several restrictions on the use of forced arbitration, including a mandate for the CFPB to take action on arbitration. Under Section 1028 of Dodd-Frank, Congress specifically directed the CFPB to study the use of forced arbitration in connection with the offering of consumer financial products and services, and authorized it to ‘prohibit or impose conditions or limitations on the use of’ such agreements based on the study results.”

65 members of the U.S. House of Representatives praise rule, led by Reps. Waters, Conyers, and Johnson

“Consistent with the Bureau’s exhaustive study on forced arbitration, which found that forced arbitration restricts consumers’ access to relief in disputes with financial service providers by limiting class actions, the proposed rule is a critical step to protect the public interest by ensuring that consumers receive redress for systemic unlawful conduct.

“There is overwhelming evidence that class-action waivers in financial products and services agreements undermine the public interest. Originally used primarily in commercial settings, forced arbitration clauses have proliferated in everyday consumer contracts, and are now prevalent in financial services agreements.”

18 state attorneys general support action to extend reach of state enforcement efforts

“Although we believe consumers will be best served by the total prohibition of mandatory, pre-dispute clauses in consumer financial contracts and we encourage the Bureau to consider regulations to that effect, the Proposed Rules provide a substantial benefit to consumers by restoring their fundamental right to join together to be heard in court when common disputes arise in the commercial marketplace. Many of our respective consumer protection laws include private right of action provisions, the purpose of which is to complement and extend the reach of our state enforcement efforts.”

210 law professors and scholars “heartily endorse” the proposed rule

“We believe that the proposed regulations are critically important to protect consumers and serve the interests of the American public… to the extent we allow financial services companies to use arbitration to eradicate consumer class actions, we are allowing these companies to insulate themselves from enforcement of our laws. This harms not only individual consumers but also the public at large.”

 

Support from Key Leaders

The White House: Three Big Reasons You Should be Fired Up About Today’s Announcement to Protect Consumers
“Actions like today’s are why the President fought so hard to create the CFPB through Wall Street reform. And there are major, tangible signs it’s working—with stronger protections in mortgage markets, student loans, and credit cards. Tens of millions more Americans would be protected by today’s proposal. And CFPB has recovered nearly $11 billion for more than 25 million consumers through enforcement actions.
“Given how many millions of Americans are being protected by the CFPB rules already in place and the importance of the work ahead, it’s appalling that Republicans are trying to repeal CFPB in its entirety. In this year’s House Republican Budget plan, they proposed getting rid of the CFPB. That’s completely unacceptable.” 

Hillary Clinton Supports Ending Forced Arbitration ׀ Time
“‘With today’s proposal, the Consumer Financial Protection Bureau takes aim at yet another unfair practice on Wall Street,’ Clinton said. ‘Mandatory arbitration clauses buried deep in contracts for credit cards, student loans, and more prevent American consumers from having their day in court when they’ve been harmed.’”

 

Major Editorial Endorsements

Consumers have a right to go to court ׀ Boston Globe

“The firms have all but blocked the path to class-action lawsuits. That is a moneymaker for them. Route consumers into arbitration, and they essentially are on their own, each to fend against a powerful financial house. No surprise that few consumers take up the expensive fight.

“… If arbitration has been rendered ineffective through the structure of contracts, consumers lack tools to check corporate excesses. Arbitration clauses typically have carried provisions barring consumers from even talking about their claims.

“That factor of secrecy reinforces how the option of a class-action lawsuit becomes necessary to deter deceitful practices and ensure accountability.”

 

Bank customers get a fighting chance  ׀The New York Times
“Justice demands no less. A series of articles in The Times last year found that prohibiting class-action lawsuits typically results in consumers simply giving up in cases of overcharging. Private arbitration is no alternative to a day in court, because corporations effectively control the process, including the choice of the arbitrator and the rules of evidence.

“…That insult is a sign that opponents have no good arguments. The ban on class-action lawsuits is a hallmark of the anti-regulatory, anything-goes era that culminated in the financial crisis. Changing entrenched attitudes and practices has been a slow process, but the proposed new rules represent progress. Mr. Cordray and the consumer bureau are serving the public as the law requires.”

 

A fair shake for consumers ׀ San Francisco Chronicle

“Few customers read the fine print on credit card and bank agreements when it comes to settling disputes. If consumers want a loan or card, they have to agree to take their claims to an arbitrator, a path that sidesteps the courts and class action lawsuits that might cost Wall Street billions.

“…The real purpose of the small-type agreements is to save banks and lenders from a challenge brought by pools of unhappy customers filing class action suits in the name of broad ranks of gouged consumers. If successful, such lawsuits can run into millions, instead of the paltry sums doled out by arbitration.”

For more information, contact Amanda Werner, awerner@ourfinancialsecurity.org, (202) 973-8004.

By Taylor Lincoln and Michael Tanglis

The center-right American Action Forum (AAF) attacked the study we recently published showing that regulations completed during transition periods have been longer in development than those finished at other times. This finding rebutted alarmist claims about “midnight regulations.”

The crux of AAF’s critique of us centered on how we calculated the length of rulemakings. We do not agree with the group’s quibbles. However, even if we followed AAF’s recommended methodologies, doing so would affect all rulemaking lengths – both transition period and non-transition period rules. As a result, the conclusions of our study would be the same: that rulemakings finalized in presidential transition periods took longer, on average, than those completed at other times.

Today, we issued a response to AAF. We stand by our study’s methods, findings and conclusions.

Besides using their normal tools to attack life-saving public protections, Republicans have once again chosen to exploit the budget process. Instead of relying on anti-regulatory bills and (at times theatrical) Congressional hearings, the majority party in the House has decided to go down the path of inserting poison pill riders into the budget appropriations process.

Poison pill riders are preventing the U.S. Fish and Wildlife Service from fulfilling its obligations under the Endangered Species Act.

From attacking science-based safeguards in a full frontal manner to using attempted stealth maneuvers to further delay an already bogged down rulemaking system, Republicans have not let up. Nearly all of the House appropriation bills currently up for debate or voted on contain regulatory assaults:

  • Killing specific final safeguards by blocking funding for the implementation, administration or enforcement – ex. Department of Labor’s fiduciary and overtime rules, preventing the enforcement of the Environmental Protection Agency’s (EPA) rules to limit exposure to lead paint and the Bureau of Safety & Environmental Enforcement Well Control rule which provide commonsense protection against devastating offshore blowouts like Deepwater Horizon.

By also using stealthier methods and not just attacking specific protections, proposed standards or specific agencies, Republicans are further exploiting appropriation funding bills by adding poison pill riders to shut down the rulemaking system entirely. Since each funding bill covers multiple agencies and different areas, all-encompassing riders have the most devastating impact.

  • Repeat riders have emerged in various bills to shut down any rulemakings the bill would have funded – ex. the House Financial Services & General Government (FSGG) bill included a rider to prohibit the funding of all regulatory actions until January 21, 2017, and the same rider materialized in the House Interior bill.
  • In some cases, Republicans repeated the above riders but with a timeline attached – ex. a so-called midnight rules prevention rider surfaced in the House Energy & Water bill would eliminate funding for all rules with an economic impact of $100 million or more if finalized between November 8, 2016 and January 20, 2017.
  • As another stealth maneuver, Republicans in the House FSGG bill voted to add a piece of legislation to the mix, H.R. 427, the Regulations From the Executive in Need of Scrutiny Act (REINS). Putting the ill-advised REINS Act into law would require Congressional approval before enacting major regulations – allowing the majority party a golden opportunity to kill the most life-saving public protections.

There’s a reason lawmakers sneak poison pill policy riders into must-pass spending bills to avoid a real debate: these provisions could not become law on their own merits. Many of them are wildly unpopular, damaging to the public and deeply controversial with voters in both parties — and they have nothing to do with funding our government.

That’s why Congress needs to pass clean spending bills with no poison pill riders and Republicans need to stop their assault on life-saving public protections.

Michell K. McIntyre is Coalition Manager at the Coalition for Sensible Safeguards.

Because civic participation is vital and should be protected, we’ve asked the Treasury Department to issue new guidance on the political activity of nonprofit groups organized under section 501(c)(3) of the tax code and put an end to the confusion stemming from the current confusing rules.

In a letter submitted Monday as a comment to the Treasury’s self-imposed to-do list, called the Priority Guidance Plan, we point out that 501(c)(3) organizations are uniquely vulnerable to unclear rules, since doing any political activity, defined by the murky “facts and circumstances” standard, puts their tax-exempt status at risk.

501(c)(3) groups, like churches and charities, end up being prevented from doing political activity because the current vague definition of political activity acts like a speed limit sign that says “don’t go too fast.” Some bad actors will push the boundary, but most careful organizations won’t do things they otherwise could because they’re too afraid of “going too fast.”

“Offering 501(c)(3)s guidance on the rules that apply to them will create a more workable regulatory regime, deter bad actors, and empower well-meaning organizations to engage in the political system in the permissible ways that Congress intended,” says the letter.

The letter points out that while a provision in the 2016 Consolidated Appropriations Act prevents Treasury and the Internal Revenue Service (IRS) from improving the definition as it relates to 501(c)(4) groups, the path for a new definition for (c)(3)s is clear.

The current rules are so unworkable that risk-averse (c)(3)s don’t engage in the kinds of nonpartisan activities they are allowed to do, says the letter. Particularly in an election year, having unclear rules chills the speech of law-abiding organizations while encouraging abuses from those willing to flout the rules.

Charities should be encouraging civic participation; it’s one of their most vital roles. Nonpartisan engagement with our democracy should be easy for nonprofits, but the rules as they stand make it hard. Treasury can take a small step toward clearer rules by putting a fix for (c)(3)s on their to-do list NOW!

This article was originally posted on Public Citizen’s Bright Lines Project blog.

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