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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By J. Thomas

This month, Dr. Gerald Friedman, Chair of the Department of Economics at the University of Massachusetts at Amherst, released a new study on the potential cost savings if New York state implemented a single-payer, universal health care system. In a single-payer system, every American would be guaranteed a basic level of health care, much like Medicare guarantees health coverage to American seniors.

Among the findings from Friedman’s estimates: 98 percent of New Yorkers would save money; 2 percent of New Yorkers – those making more than $436,000 annually – would pay more via increased taxes; New Yorkers would save an average of $2,200 each year; and business savings would spur the creation of 200,000 jobs. Moreover, Friedman says, “New York’s overall economic savings from a single-payer model reduces health care spending by $45 billion.”

“This detailed economic study gives us clear proof that a universal health care plan is the right move for New York,” said Assembly Health Committee chair and lead sponsor Richard Gottfried.

It’s more urgent than ever for New Yorkers to learn about the benefits of universal health care. In December, Public Citizen Health Care Advocate Vijay Das spoke before New York legislators as part of a series of historic meetings in support of the New York Health Bill, which would extend health coverage to every New Yorker.

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Business for Democracy

The Corporate Congress next week will seek to curtail consumers’ access to courts, misrepresent a modest plan to curb climate change and attack – again – the regulatory system. Here are the public interest broadsides we know about so far. Please contact us if you have questions.

• At 10 a.m. on Tuesday, March 17, the U.S. House Judiciary Committee’s Subcommittee on Constitution and Civil Justice holds a hearing on the Lawsuit Abuse Reduction Act. The bill has a deceptive name, as so many bills do. In fact, the measure would make it more difficult for consumers and employees to hold corporations accountable. The measure would slow litigation and increase costs by encouraging additional legal maneuvers and requiring unnecessary court orders. It is another backdoor tactic to harm ordinary people with valid and important claims.

• Also Tuesday, March 17, lawmakers launch another broadside against the U.S. Environmental Protection Agency’s (EPA) very modest, pro-consumer proposal to curb climate change. At 10 a.m., the House Energy and Commerce Committee’s Subcommittee on Energy and Power will hold another hearing on the EPA’s Clean Power Plan, this one to focus on “legal and cost issues.” If lawmakers look closely, they will see that for consumers, the Clean Power Plan is highly beneficial. The plan is designed to curb greenhouse gas emissions by 30 percent by 2030, states will have latitude in deciding how best to comply. The plan will save consumers money by lowering their electricity bills and boost public health by curbing other harmful air pollution.

• Two days later, at 10 a.m. on March 19, the Senate Energy and Natural Resources Committee will hold a hearing on the U.S. crude oil export policy. Big Oil wants to nullify the export ban because it can sell U.S. petroleum oversees for about $10 more per barrel, giving the industry fatter profits but raising gasoline prices for U.S. motorists.

• Of course, no week is complete in the Corporate Congress without an attack on the regulatory system. This week’s first attack comes in the guise of a hearing at 11 a.m. on March 18 by the House Small Business Committee on regulations and “small” manufacturers. The thing to remember is that often, the definition of small business is crafted in a way that includes mega-corporations. And small business owners generally support regulations because they want a level playing field with the big guns.

• Finally, at 10 a.m. on March 19, the Senate Committee on Homeland Security and Governmental Affairs’ Subcommittee on Regulatory Affairs and Federal Management will hold a hearing on the rulemaking process generally. Expect to hear complaints from various industries about rules they must comply with. But rules are crucial to keeping our air and water clean, our food safe to eat, our financial system stable and more. Consider what happens in the absence of safeguards: the Wall Street economic collapse, the oil train explosion in West Virginia, countless food and product safety recalls and environmental catastrophes such as the Dan River coal ash spill in North Carolina. Far too often, big banks, big oil companies and their CEOs prioritize their bottom lines over public safety and financial stability. Federal agencies are there to look out for the public.

Statement of Bartlett Naylor, Financial Policy Advocate, Public Citizen’s Congress Watch DivisionBart-Naylor-004-ws-300x224

Note: According to an estimate released today by New York State Comptroller Thomas DiNapoli, the average Wall Street bonus rose 2 percent in 2014 to $172,860.

Wall Street companies are paying record fines for widespread violations, but that doesn’t mean bankers themselves are sacrificing their paychecks.

The average bonus, which is in addition to base pay, is quintuple the average income of New Yorkers not working on Wall Street. These jobs require skill, but it is not rocket science. For that matter, rocket scientists don’t make anything like that, where NASA salaries plateau at $130,000.

New York Comptroller Thomas DiNapoli identified legal settlements as a prime reason overall Wall Street profits declined slightly in 2014, easing to $16 billion from $16.7 billion in 2013. In 2014, for example, Citigroup paid $7 billion to settle a case in which it sold bad mortgages.

But that didn’t mean the bonus pool declined. It rose. The bonus pool for the 167,800 workers covered by the comptroller’s report totaled $28.5 billion for 2014. In 2013, it was $27.6 billion. In 1986, when the comptroller began collecting this information, the bonus pool totaled $2 billion, for an individual average of $14,120.

Congress approved several reforms in the Dodd-Frank Wall Street Reform and Consumer Protection Act to address runaway Wall Street pay. It is beyond time for the Securities and Exchange Commission to implement the law.

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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