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Statement of Robert Weissman, President, Public Citizen

Attorney General Eric Holder’s record was badly blemished by his nearly overwhelming failure to hold corporate criminals accountable.

Holder came into office in the immediate aftermath of a devastating financial crisis caused by an epidemic of corporate crime and wrongdoing. Five years later, he has failed utterly to hold the perpetrators of the crisis accountable. “Too big to jail” became de facto policy, as the U.S. Department of Justice declined to prosecute or even seriously investigate the Wall Street banks or their CEOs who crashed our economy and devastated communities across the country.

Indeed, even when Holder’s Department of Justice uncovered evidence of large financial institutions such as HSBC engaging in money laundering on behalf of narcotraffickers and countries the United States considers terrorists, it failed to criminally prosecute the corporations – let alone the responsible executives. Only under public pressure did the department change its stance and begin exacting criminal pleas, as in the case of BNP Paribas.

Of course, there have been important exceptions to the corporate crime-coddling at the Department of Justice, notably in the case of BP, where Holder’s department deserves plaudits for its effort to impose meaningful sanctions on the company whose recklessness led to the death of 11 workers and an environmental disaster.

As President Obama considers candidates to replace Eric Holder, he should apply this litmus test: Will the new attorney general hold accountable the institutions and individuals on Wall Street who devastated Main Street? Will the new attorney general abandon the “too big to jail” prosecution policy and move toward a regime of transparency and real penalties for criminal mega-banks?

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It’s been a big week for climate change. Here’s a roundup of the news in case you’ve had trouble keeping up:

Yesterday, UN Secretary General Ban Ki-moon hosted a UN Summit on climate change in New York, convening leaders in government, business, finance and civil society to “galvanize and catalyze climate action.” The idea was that world leaders would announce major new initiatives. To some extent it was a success, although it didn’t prompt major announcements from the U.S. or China, the 800-pound carbon emitters in the room.

President Barack Obama spoke at the summit, urging aggressive action, particularly from China. He announced an executive order requiring federal agencies to “factor climate resilience” into foreign aid and development decisions. Regarding major actions on climate change, he simply referred to the EPA’s proposed rule to curb carbon emissions 30 percent from 2005 levels by 2030, which Public Citizen strongly supports and seeks to strengthen. He also noted that the U.S. is on target to meet its pledge to cut emissions 17 percent from 2005 levels by 2020. For its part, China said it would try to peak its carbon emissions “as early as possible.”

Just last week, the U.S. made two other announcements:

  • The Department of Energy proposed a rule that would require hotels to use more efficient heating and cooling equipment. The rule could reduce carbon emissions by 11.29 metric tons, which is like taking 2.3 million cars off the road. It’s also another example of how climate change policy makes good economic sense. DOE estimates that the rule would cost businesses up to $9.39 million per year but save them up to $13.1 million per in energy costs. Those benefits are in addition to $7.2 million annual savings from reduced carbon emissions.
  • The White House announced that it secured voluntary commitments from some large chemical manufacturers and retailers to phase out hydrofluorocarbons, or HFCs, more quickly than the law requires. This is an important development, as HFCs are 10,000 times more potent than carbon dioxide in causing climate change.

There were several other important developments around the summit as well:

  • The Global Commission on the Economy and Climate issued a blockbuster report concluding that stopping climate change might not cost us anything. The crux of the analysis: Over the next 15 years, we’ll spend $90 trillion on new infrastructure world-wide anyway. Ambitious measures to combat climate change would add just 5% to that figure. When you factor in the benefits – like better public health from reduce air pollution – the measures will likely be net-positive for the economy.
  • New York City announced a major plan to increase the energy efficiency of buildings, which will set the city on target to curb its greenhouse gas emissions by 80 percent by 2050 from 2005 levels. That’s the reduction that the UN has said industrialized countries must make to prevent catastrophic climate change.
  • The World Bank announced that 73 countries, 22 states, and over 1,000 businesses have pledged support for putting a price on carbon. The list includes the European Union and China, but not the U.S. It doesn’t provide any specifics on what anyone will do. Nor is it legally binding. But it’s a start.
  • The Rockefeller Brothers Fund, originally launched with Standard Oil money, led 180 institutions and hundreds of individuals in announcing that they will divest $50 billion in assets from fossil fuels.
  • Over 340 institutional investors worldwide that control at least $34 trillion in assets called on governments to put a price on carbon.
  • Google announced that it would sever ties with the American Legislative Exchange Council (ALEC) because of the group’s opposition to sound climate change policy. “Everyone understands climate change is occurring and the people who oppose it are really hurting our children and our grandchildren and making the world a much worse place,” Google Executive Chairman Eric Schmidt said. “And so we should not be aligned with such people — they’re just, they’re just literally lying.” Public Citizen pointed out that by the same reasoning, Google should leave the U.S. Chamber of Commerce as well. Facebook soon announced that it too was leaving ALEC.

Ahead of the UN Summit, over 300,000 – and possibly as many as 400,000 – people joined the People’s Climate March in New York City. It was the largest climate demonstration in history, shattering the organizers’ goal of 100,000 participants. In addition to the march in New York, activists held 2,808 other events in 166 countries.

We also learned some bad news last week:

  • The Global Carbon Project reported that greenhouse emissions grew by 2.3 percent in 2013, demonstrating that we still have a long way to go in fighting climate change. We need to start moving in the opposite direction, quickly.
  • This past August was the hottest in recorded history. May and June also set new records, and April tied the record set in 2010.

So we have our work cut out for us. But we can solve this problem – and evidence is mounting that stopping climate change will benefit consumers and the economy, not hurt us. We just need to convince our governments to act. You can start by telling the EPA that you support its proposal to curb carbon pollution from existing power plants.

Congressmembers on both sides of the aisle yesterday joined forces to pass the so-called “Jobs for America Act” (H.R. 4).

In the vote, 221 Republicans and 32 Democrats matched the absurd anti-regulatory rhetoric of the U.S. Chamber of Commerce and other Big Business groups with absurd anti-regulatory policy. The bill contains provisions designed to stifle, stall, shrink and stop safeguards the public relies on and includes the text of familiar deregulatory bills like the Regulatory Accountability Act and the REINS Act (which the House already has voted on). If enacted, H.R. 4 represents a green light allowing reckless corporations to do simply whatever they want with as little oversight as possible.

Big Business groups have been making hyperbolic claims about regulations killing jobs – and the inverse claim that gutting regulation will create jobs – for decades. The predictions never come true.

Consider the following examples from Public Citizen’s recent report:

  • 1974: The Occupational Safety and Health Administration bans the carcinogen, vinyl chloride. The plastics industry claimed that the OSHA regulation would kill 2.2 million jobs. Those claims were proven completely false. A new way to manufacture vinyl chloride was developed within a year without any jobs lost.
  • 1975: The National Highway Traffic Safety Administration increases the fuel efficiency standard. Industry reports warned that 1.5 million jobs would be lost. By 1985, automakers had met the higher standard without losing any jobs.
  • 1990: The Environmental Protection Agency sets new pollution standards under the Clean Air Act. Business Groups responded with doomsday hysterics, claiming up to 2 million jobs would be lost. Those were proven entirely wrong. Instead, according to the Investor’s Business Daily, “Pollution has been falling across the board for decades, even while the nation’s population and economy have expanded.”
  • 1995: EPA removes lead from gasoline. Monsanto claimed 43 million jobs would be killed. The removal of lead is now considered one of the biggest public health success stories while gas prices did not dramatically increase and no jobs were lost.

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Statement of David Arkush, Managing Director of Public Citizen’s Climate Program

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Today, the U.S. House Committee on Science, Space, and Technology holds a hearing to criticize the U.S. Environmental Protection Agency’s (EPA) plan to curb climate-disrupting carbon pollution from power plants. The hearing will be a farce, as Chairman Lamar Smith (R-Texas) is on record denying the science of climate change, and in this Congress alone, House Republicans have voted 217 times against clean air, the environment, climate change policy and clean energy. Despite mounting evidence that climate change is harming our natural environment in disastrous ways, as well as positive news that we can respond much more cheaply than expected, their story remains the same: Deny there is a problem, and deny there are solutions.

The EPA’s proposal to curb carbon pollution is good policy on economic and consumer grounds alone. The EPA projects that its plan will boost the economy by $26 billion to $84 billion per year and lower consumers’ electric bills 9 percent by 2030. These benefits stem not just from slowing climate change, but from curbing air pollution from the dirtiest power plants, promoting energy from renewable sources and using energy more efficiently. House Republicans who deny the science of climate change should still support cleaning up the air to make Americans healthier. They should still support saving American consumers money on their utility bills. And they should support making the U.S. a leader on cleaner and cheaper energy sources rather than clinging to dirty, unhealthy and expensive energy from the past.

Contact: Angela Bradbery (202) 588-7741
Karilyn Gower (202) 588-7779

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Bankers pulled over for speeding can depend on certain government officials to try to get their tickets cleared: a set of Republicans on the House Financial Services Committee. Bankers whose business model depends on unfair, deceptive and abusive practices have found rhetorical comfort, if not actual relief, from repeated efforts by the committee to disable the Consumer Financial Protection Bureau (the hallmark creation of the Dodd-Frank reform law).

Now, another creation of this Dodd-Frank law meant to check unsafe banking has come under fire from these same Republicans: the Financial Stability Oversight Council (FSOC). On September 17, the panel’s Subcommittee on Oversight and Investigations will engage in a ritual grilling. This ritual will then likely serve to buttress legislation the House will approve on largely partisan lines to disable the FSOC. (There are some Democrats who want bankers to think they’ll try to fix their traffic tickets as well.)

What is FSOC? Why should Americans and responsible members of Congress care?

The Council is a collaboration of top financial regulators with 10 voting members, made up of the:

  1. Secretary of the Treasury (chairs the Council),
  2. Chair of the Federal Reserve,
  3. Comptroller of the Currency,
  4. Director of the Consumer Financial Protection Bureau,
  5. Chair of the U.S. Securities and Exchange Commission,
  6. Chair of the Federal Deposit Insurance Corporation,
  7. Chair of the Commodity Futures Trading Commission,
  8. Director of the Federal Housing Finance Agency,
  9. Chairman of the National Credit Union Administration Board, and
  10. an independent member (with insurance expertise) appointed by the President

These regulators meet to discuss emerging problems and recommend actions that would be taken by specific regulators.

Here are some of the benefits of FSOC:

  • Addressing fragmented supervision: There are state banks and national banks, with 50 separate regulators for the former, and a different regulator for the latter. If a bank is owned by a bank holding company, that’s under the purview of still another regulator. If the bank holding company owns a broker/dealer such as Merrill Lynch, that’s overseen by another regulator. And another regulator oversees firms that engage in commodity futures. Credit unions, of course, have their own regulator. The FSOC attempts to take a holistic view.
  • Helps address gaps: Current regulators are responsible for parts of the financial industry. But the 2008 crash demonstrated that contagion spread from one sector to another. For example, when AIG’s financial products division, supervised by the Office of Thrift Supervision, found itself unable to pay claims on credit default swaps, the problem harmed many banks and broker/dealers making those claims, which were supervised by other regulators. In conceiving the Council, the President explained that it would ‘‘bring together regulators across markets to coordinate and share information, to identify gaps in regulation, and to tackle issues that don’t fit neatly into an organizational chart.’’
  • Early warning: The FSOC must identify emerging problems. Its annual report serves as a warning discipline. In the midst of the booming market during the inflation of the house bubble, regulators were either complacent or loath to publicize potential problems. The annual report must contain areas that the Council considers concerning.
  • Helps with inter-regulator information: Financial deregulation allowed firms to engage in multiple activities that were once prohibited at a single firm. Yet the regulatory system did not change. As a consequence, one regulator might examine one business at a firm and another regulator might examine another business with little coordination or information sharing. FSOC can help address problems that arise from such parallel oversight.
  • Help combat regulatory arbitrage: Financial firms must structure their products to secure supervision from regulators believed to be less rigorous. Such arbitrage played out during the savings-and-loan crisis when developers found that the regulator relaxed standards for lending. The FSOC can recommend better regulations for certain agencies.
  • Help press regulators to reform markets? If a regulator is perceived as lax, the FSOC can make recommendations. Already, under direction from the FSOC, the Securities and Exchange Commission finalized rules to strengthen money market funds, where investor runs during the 2008 crisis led to seizure in short-term funding for business provided by these funds.
  • FSOC can break up the mega-banks: The Council plays a significant role in determining whether action should be taken to break up those firms that pose a “grave threat” to the financial stability of the United States.
  • FSOC can designate non-banks for special supervision: Some firms that fall outside of traditional banking may nevertheless contribute to financial contagion and should be subject to special supervision. Already, the FSOC has designated General Electric Capital Corp., AIG, and Prudential Financial, Inc. The Council may soon designate MetLife, Inc. The Council’s determinations follow a lengthy process involving hearings and the opportunity for a firm to appeal in court.
  • Transparency. Many of the FSOC meetings are open to the public. FSOC officials must also appear before Congress. FSOC’s explanations for designating a non-bank as systemically significant are also published.

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