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Thousands of Americans may be unwittingly donating to political causes and candidates they do not support in the 2012 election. It’s not an elaborate scam; it’s a consequence of the Supreme Court’s Citizens United decision which gave the green light for corporations to make unlimited political contributions. The decision was based on the court’s alternate reality where unlimited cash (so long as it isn’t “coordinated” with campaigns or candidates), does not corrupt, and as Jon Stewart and Stephen Colbert proved, the term “coordinated” actually means whatever you want it to mean.

Flickr photo by watchingfrogsboil

So how are Americans getting duped?

When publicly traded companies spend directly from their treasuries, they are not spending their own money, they’re spending shareholders’ money. And since more than half of American households own stock, chances are high that this election season, a lot of Americans will be supporting causes and candidates they haven’t even heard of, let alone want to support with a political contribution.

For instance, take 3M Corp., a company famous in Minnesota and nation-wide for scotch tape, sandpaper, and Post-its. 3M does not disclose contributions to trade organizations or faux nonprofit organizations like Crossroads GPS that play in elections. In 2010 3M contributed $100,000 from its treasury to MN Forward, a group supporting a candidate for governor who held controversial views on social issues.

Whether or not you agree with those views, corporations are organized to create profit, not to choose governors. Shareholders can choose on their own whether to spend money to support political candidates, but corporations should not be using their money to make the decision for them.

Thankfully, shareholders are rallying around the country to demand transparency from corporations that spend money in politics. Socially responsible investment groups have filed resolutions at hundreds of companies asking them to disclose the money they are spending to influence elections. Investors are gathering at shareholder meetings to support the cause, and in some cases asking companies to go a step further and refrain from spending money altogether.

Furthermore, a proposed SEC rulemaking requiring corporations to disclose political expenditures to shareholders has logged more than 260,000 comments supporting the measure. That’s more than any other SEC rulemaking has ever received.

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As corporate money continues to flood our democracy in the form of negative campaign ads and robo calls, people are getting mad and are taking action. This week, corporate CEOs are being put on notice as rallies and other actions are planned in relationship to first-time shareholder resolutions being put forth at 3M and Bank of America’s annual shareholder meetings.

The 99% Power coalition, which is playing a key role in this week’s activities, has taken on the outsized corporate influence in America and welded together many different movements calling on corporations to be more accountable to the public and their owners, the shareholders. This very likely means you; if you’ve ever had a pension, attempted to save for your retirement or have a 401K through your employer—you’re a shareholder.

One component of the 99% Power movement is the work that the Corporate Reform Coalition, made up of good-government groups like Public Citizen, institutional investors, academics and others, is doing to expose the high levels of corporate influence in our elections and to foster accountability of corporate political spending.

In conjunction with 99% Power, the Corporate Reform Coalition is supporting first-time ever “political spending” resolutions filed at 3M and Bank of America by helping to organize rallies at 3M’s annual shareholder meeting today and Bank of America’s meeting on Wednesday, May 9. On June 14, the coalition will do the same at Target Corporation’s annual shareholder meeting.

HELP SPREAD THE WORD: !

These rallies are designed to highlight an appalling problem: Thanks to the 2010 U.S. Supreme Court ruling Citizens United v. Federal Election Commission, any CEO at a major company has free rein to pick up the corporate checkbook and spend, spend, spend to elect the candidate of their choosing. In 2010, for example, 3M gave $100,000 to MN Forward, a group that supported an anti-LGBT gubernatorial candidate, and their company’s political spending didn’t stop there.

The worst part of this newly enabled practice is that the shareholders of the corporations aren’t offered any input in – or even informed of – the political causes that their own money goes to influence. Again, the bulk of Americans are shareholders. Everyone who has a pension or investments in the stock market may be having their investments put into corporation’s secret political war chests—and they are powerless to stop it because they have no voice in the process.

Companies should get out of the political spending game and focus on doing what they were created to do: make a profit for their shareholders. And if they refuse to concede to their investors’ demands to stop spending money in politics, then at the very least, they should disclose their spending so that shareholders can make informed decisions.

What information we have about 3M and Bank of America’s spending is bad enough; what we don’t know but should is an outrage. Last week, this type of outrage set records at the Securities and Exchange Commission (SEC), the agency charged with protecting shareholder interests. To date, more than 260,000 people have submitted comments to the SEC demanding that it require corporations to disclosure their political spending. So whether it’s through the SEC or through the sheer determination of shareholders, corporate CEOs are not getting off the hook. The message of the 99% will be heard: It’s our democracy. It’s our money. And we will have the last word.

Lisa Gilbert is Public Citizen Congress Watch deputy director. Follow @CorporateReform for the latest on #corporat3Money.

Judging the most frightening part of the new Frontline documentary “Money, Power and Wall Street,” available anytime online proves to be an alarming contest.
Is it when Nicholas Dunbar, a physicist who now studies derivatives, observes that these instruments grew so complex that even the bankers peddling them to unsuspecting clients didn’t understand the danger. Parents instruct children not to play with matches. The flame may fascinate, but the kids may unwittingly burn down the house, a lesson apparently lost in the banking sector.
Or is it when Bill Winter, former co-chief executive of JP Morgan Chase confesses that profiting from laxly regulated derivatives markets allowed firms to abuse their customers. “The incentive to cheat is very high.”
Or is it the chilling conclusion of the four-hour program, namely that Wall Street lobbyists are today gutting key sections of the 2010 reform law on derivatives. Even as the first of the four parts of the Frontline documentary aired April 24, the House of Representatives approved a bill that allows firms that deal in as much as $200 billion worth of derivatives to evade prudential safeguards. Frank Partnoy, a former derivatives expert at Morgan Stanley and now a law professor at the University of San Diego, tells Frontline that the Wall Street lobby proves so formidable that it might require a few more financial crises to achieve sound reform.
Frontline’s sprawling documentary draws on numerous insiders and other experts.. Industry can’t claim they’re underrepresented; the most stern indictments come from former bankers. For example, we hear the confessions of JP Morgan bankers who developed the credit default swap at a boozy retreat. Failure to regulate those derivatives led to the largest single bailout, namely, the $180 billion check from taxpayers for AIG’s failure. Now a little older, these bankers lament that some derivatives grew too risky even for them.
Frontline dives usefully into the big money world of derivatives. Created by mathematicians (who might otherwise work in the computer industry), we learn that some derivatives are sold by agents known as “F9 Monkeys”. An F9 monkey was “somebody who was simply pricing these structures,” explains Desiree Fixler, a former JP Morgan executive. “You just had to put in a few inputs and press F9 and determine the price of the instruments.” With this infirm grip on their own product, bankers traversed the globe hunting for dupes, a.k.a.customers. We visit tiny Casino, Italy, where bankers convince the local government to purchase complex instruments with the promise that it might relieve money problems. The village lost millions in a derivatives bet with the bankers. Bankers sold a thousand other European municipalities similarly dubious deals. And Frontline takes us to Jefferson County, Alabama to dissect another corrupt derivative deal, which led to the nation’s largest municipal bankruptcy in history.
Frontline covers more subjects than Academy Award winning documentary “Inside Job,” and naturally includes fresher material. Where “Inside Job” focused on the politically corrupting influence of Wall Street lobbyists, Frontline explores the perversion of complexity. Regulators didn’t understand the risks. Financial Crisis Inquiry Commission leader Phil Angelides concludes, “The people that were charged with overseeing our financial system really didn’t have a sense of the risk that were embedded in the system. They didn’t see the fundamental rotting in the system that had manifested itself for years.” But neither did the bankers, as Dunbar notes. Mathematicians assert that certain derivatives are actually too complex to understand.
Certainly, the FDA wouldn’t approve a drug where the manufacturer acknowledged it didn’t understand all the side effects. Yet products with unknowable risks serve at the core at what generates the largest profit for Wall Street. So despite the ongoing wreckage from the financial crash, Wall Street continues to lobby. As Public Citizen fights efforts to dilute Wall Street reform, Frontline helps replace amnesia with nightmare. Not a happy experience, but unfortunately necessary. It should be must-online TV for all Congressional members and staff—and their constituents.

House Republicans in two different committees yesterday approved a malpractice liability bill, H.R. 5 – again. H.R. 5, a proposal that aims to limit the liability of the health industry and leave injured patients without an adequate avenue for redress, previously passed the full House in March.  This time, lawmakers on the House Energy & Commerce and Judiciary Committees presented the proposal as a fix to the nation’s budget.  Nothing could be further from the truth.

The bill, as we’ve repeatedly said, remains an expensive proposal that will cost lives and money while shielding the entire medical industry – drug and device manufacturers, hospitals, doctors, and nursing homes – from its own reckless conduct.

By restricting patients’ access to court, H.R. 5 will force medical malpractice victims and their families to turn to public, taxpayer-funded programs such as Medicare and Medicaid, and disability benefits for medical care and other financial assistance, because the negligent wrongdoers would be shielded from liability.

This unintended consequence would increase health care costs.

If nothing else, the House majority should pay attention to the money wasted when patients are unnecessarily injured by egregious medical errors or defective medical products. The Department of Health and Human Services pays $4.4 billion a year for the consequences of medical errors.

Some conservatives have even cautioned lawmakers about the bill’s effect on state laws. For decades, states have written their own laws for deciding negligence cases, including medical malpractice claims. A one-size-fits-all-policy on a traditionally state matter would wreak havoc on state laws.

Despite the numerous concerns and calls to drop this bill, the House majority’s ill-conceived and inaptly-named proposal – the Help Efficient, Accessible, Low-Cost, Timely, Healthcare Act – is expected to go up for another House floor vote. (You may wonder why there would be a second House vote on the same bill; this time, it is included in the FY2013 budget reconciliation recommendations, which it what both committees marked up yesterday.)

Indeed, it may fly through the House yet again, but we will have to rally the Senate to turn its back on this shameless and dangerous gift to industry.

Christine Hines is Public Citizen’s consumer and civil justice legal counsel.

Friday marks the anniversary of a Supreme Court decision that you are probably unaware of, but will be forced to live with if you end up in a dispute with a corporation.

One year after a U.S. Supreme Court decision gave corporations free rein to block class action lawsuits, judges have used the decision in blocking at least 76 potential class action suits from going forward, a new report by Public Citizen and the National Association of Consumer Advocates has found.

The report, Justice Denied, tracks the anti-consumer effects of AT&T Mobility v. Concepcion, in which the Supreme Court ruled that corporations could block consumers’ rights to sue collectively—even in the 19 states that have laws protecting such rights.

What began as a dispute over $30 between Vincent and Liza Concepcion and AT&T has turned into a legal monster worth millions of dollars to corporate bottom lines. The corporate lawyers and Court put profits before people, and a year later we are seeing the ripple effects, as people seeking fairness are losing their legal rights.

The report details three cases in which consumers have felt the direct impact of the ruling.

  • Class Actions Against Career Education Corporation (CEC). Before Concepcion, thousands of students collectively sued Career Education Corp., a company that owns a chain of for-profit culinary schools, for misrepresenting the potential earning power its graduates. The misleading numbers enticed many students to enroll and thus take on debilitating student loans to finance their education. According to the lawsuits, students attending the schools typically emerged with debts in excess of $40,000 and were not able to obtain jobs that paid enough to provide a reasonable chance of repaying their loans. At the time of the lawsuits, CEC did not include a class action ban in its contracts with students. The collective cases proceeded in court and resulted in payments of up to $20,000 per student. While these cases, filed before Concepcion, achieved a meaningful settlement, other cases are still pending. In a post-Concepcion era, however, students with similar collective claims may not be able to pursue redress because it would be too difficult to overcome the class action ban the
    company is now including in its contracts.
  • Putative Class Action Against Nissan. Matthew Wolf, a member of the Army reserves, returned an automobile before the expiration of his lease because he was deployed overseas. The Servicemembers Civil Relief Act (SCRA) clearly permits service members to terminate car leases without penalty and to recoup the pro-rated share of payments they have made in advance. But Nissan refused to reimburse the prepaid amount to the reservist. He sought a class-action lawsuit on behalf of an estimated 1,000 service members in similar situations. But, citing Concepcion, a judge ruled that he could only pursue redress for himself, not on behalf of a class.
  • Putative Class Action Against T-Mobile. Trent Alvarez’s frequent use of his so-called “unlimited” data plan triggered T-Mobile to slow down his service. T-Mobile had inserted a forced arbitration agreement into the contract when Alvarez signed for the phone, but he said he never saw it and filed a class-action complaint against T-Mobile in 2009. The company convinced the judge to suspend the case until Concepcion was decided; the court then rejected Alvarez’s argument that the class-action ban in the arbitration agreement was unenforceable.

These examples are among the dozens of instances documented in the report by Public Citizen and the National Association of Consumer Advocates (NACA), revealing that the decision has already left consumers worse off. Other areas where class action suits have been restricted include cases against payday lenders, debt collectors and banking institutions.

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