Category Archives: Attacks on Regulation

The Financial Services Roundtable Dangerous Policy Agenda

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The Financial Services Roundtable (FSR) “2017 Year in Review,”-an outline of their priorities and successes-is a remarkable catalogue of attacks on families’ economic security and rights, and on financial stability, in pursuit of still higher returns for the already profitable behemoths of finance. The “year in review” is full of deeply dishonest assertions that the policies they lobby for are good for the public, when they are in fact sought by the big banks, and opposed by groups representing consumers, seniors, veterans and service members, unions and communities.

FSR members include some of the biggest Wall Street banks, asset management, and credit card companies. The group was led from 2012 to 2018 by Tim Pawlenty-a former Majority Leader of the Minnesota House of Representatives and former Governor of Minnesota. FSR recently announced plans to merge with the Clearing House Association, which is owned by the world’s largest commercial banks-e.g., Bank of America, Wells Fargo, JPMorgan Chase, Deutsche, Citibank, HSBC, among others.

Here is a look at some of their highlights:

  • FSR helped lead efforts to get Congress to overturn the CFPB’s rule restoring consumers rights to take financial companies to court if they break the law. They claim that by doing so they “preserve consumer access to low-cost arbitration” that it would “ensure customers … can receive larger and quicker financial compensation from disputes with companies.”

Contrary to what they claim, the CFPB rule was designed to prohibit banks and lenders that break the law from stripping customers of their right to join together and hold them accountable in class action lawsuits. By blocking consumers from challenging illegal behavior in court, forced arbitrations impose secret proceedings in which the average consumer ends up paying the bank or lender $7,725. Moreover, without the option to join together in class actions, only 25 consumers with claims under $1,000 pursue arbitration each year. In contrast, class actions returned $2.2 billion to 34 million consumers from 2008-2012, after deducting attorneys’ fees and court costs. Restricting forced arbitration is key for individual consumers to band together and confront giant financial institutions who have cheated them. Companies like Wells Fargo or Equifax should not be above the law and consumers have a right to hold them accountable.

  • FSR advocated for the passage of comprehensive regulatory reform bills in the House and Senate. They claim “it is important to modernize financial regulations for banks of all sizes to ensure they are appropriately calibrated and are not unnecessarily holding back lending and impeding economic growth.” Specifically, the FSR advocated for, the Financial CHOICE Act, and Rep. Luetkemeyer’s regulatory modernization bill in the House-even more radical attacks on financial regulation than Chairman Crapo’s bill in the Senate (S.2155), which the FSR also endorsed.

In reality the CHOICE Act and Rep. Luetkemeyer’s bill were radical and far-reaching measures constructed out of the legislative wish lists of the biggest Wall Street banks and the worst predatory lenders as well as debt collectors and other unscrupulous financial actors. The bills the FSR pushed for harm consumers and threaten the stability of our economy in several ways, including by: repealing the Volcker Rule, which bars banks from acting like hedge funds and gambling with taxpayer-guaranteed funds; undermining the authority and funding of the Consumer Financial Protection Bureau, which has returned nearly $12 billion to 29 million people wronged by financial institutions; and by drastically weakening the oversight authority of the Federal Reserve over large banks. The bills backed by FSR also unleash predatory lending and remove mortgage-lending rules that protect homebuyers. The bills pushed by the FSR not only deregulate based on false premises but also impose numerous barriers to regulatory action that would tie the hands of regulatory agencies if they wished to take action to protect consumers and the public interest in the future.

Moreover, claiming that regulations are holding back lending is just not true. Bank credit had been continuously growing since 2010-after the passage of the Dodd-Frank Act. According to a recent FDIC quarterly banking profile, total loans and leases increased 3.5 percent for the twelve months ended September 30, 2017. While lending by community banks, the “usual victims” on FSR-style rhetoric, continued to exceed the industry average, growing at an annual rate of 7.3 percent and posting close to record-high profits.

S. 2155, the deregulatory bill just passed by the Senate, weakens rules on dozens of large banks and undermines consumer protections in numerous ways-including, exposing home buyers to financial exploitation and predatory lending, as well as enabling racial discrimination in mortgage lending. But these changes are still only a small part of the FSR massive deregulatory agenda. If the FSR has their way, S. 2155 will only be the first step in enabling the financial sector to increase its profits in ways that exploit consumers and endanger the economy.

  • FSR claims that by delaying the fiduciary rule they “continued our industry leadership to ensure consumers have access to affordable finance advice that serves their best interests.”

FSR worked to delay the Department of Labor’s (DoL) conflict of interest (or “fiduciary) rule for retirement investment advice. Without the fiduciary rule there are huge loopholes in retirement savings protections that make it easy for salesmen who present themselves as “advisers” to put maximizing their own compensation ahead of the best interests of their customers. In the absence of these protections, sellers of financial products can steer customers to investment products that pay benefits to the seller at the expense of the retirement savings of working families. This has led to some families pursuing other options to help bolster savings and ensure financial stability for years to come, such as using your property wealth or looking into different investment chances instead of a savings plan. Other families may have put aside a lot of money in their savings to make sure they can live a long and happy retirement. And to see all that money lost can be devastating. You mustn’t worry though as if you find that a similar thing has happened to you then you could be eligible for equity release to help you get some of that money back so you can spend it how you wish. Make sure you do your research before making any further decisions. For many of us, the idea of retirement may seem like a long while away, but it never hurt anyone to start saving now! Being financially stable will hopefully allow for a stress-free retirement and will be one less thing to worry about as you get older, as it is said that older folk’s wealth is hidden in their homes. This may be something worth looking into, as this can be important in many people’s lives.

If that doesn’t work as well as you’d hoped it would, then maybe you should think about making an investment with this money being used to help with your retirement amongst any other financial situations you may have. Investing in precious metals with companies like LearCapital seems to be a popular choice as the value of gold shouldn’t decline from outside factors as others do. Not only that, but it can grow your wealth in the long run. It may be the best thing that you decide to do. The Department of Labor has demonstrated that ordinary savers lose tens of billions of dollars a year due to these conflicts of interest.

  • FSR led efforts to override a Department of Labor rule to allow government-run and mandated IRA plans at the state and local levels. FSR claims those plans “weaken consumer protections and threaten the retirement security of millions of Americans” and “would have allowed these mandated state and local-run plans to operate outside of the protections afforded by the Employee Retirement Income Security Act (ERISA).”

FSRs efforts actually stopped the progress of programs that would have made retirement more secure for millions of workers. As explained in a joint letter to Congress signed by over 50 organizations, while the regulation in question includes an exemption from the ERISA standards, “state-sponsored programs do not get rid of [those] responsibilities, but rather shift them to the programs themselves. The regulations therefore preserve accountability and ensure consumer safety, while alleviating the burdens that keep small businesses from offering retirement benefits.” Actually, FSR applauded the repeal of regulations making it easier for state and local governments to extended retirement savings programs to some of the 55 million workers without employer-sponsored retirement plans. Until the repeal of the rule got in the way, five states (California, Oregon, Illinois, Connecticut, and Maryland) were in the process of establishing programs that would have extended retirement security to 13 million workers, mostly low- and middle-income earners and minorities–only three of those states (California, Oregon, and Illinois) have moved forward with their programs.

  • FSR claims to have supported “strong federal data protection and consumer breach notification legislation to help ensure consumers’ important personal and payment information is not vulnerable to cyber hackers.”

Their misleading “push” for Federal intervention on this issue is actually about “enacting a preemptive federal breach notification law … [with] language that not only preempts state breach notification laws but also prevent states from enacting any future data security or privacy laws,” as noted by Ed Mierzwinski, U.S. PIRG Consumer Program Director. FSR’s letter calls for federal regulation that seems to ignore any non-financial harms that consumers could suffer as a result of a data breach or that would not “expand the range of information protected by the law as technology develops.” Breaches cause much more than the “identity theft and financial harm” for which FSR want to provide notice. For example, it can cause emotional stress, reputational damage, and even physical harm as the personal information of domestic violence victims could be used to track them down. Enforcement of the desired regulatory framework in their letter would exempt companies complying with the Gramm-Leach-Bliley Act (GLBA), even when these companies are not required to notify breach victims ever. The GLBA exemption includes all banks and many broadly defined financial firms-including Equifax.

  • FSR supported the passage and enactment of the Tax Cuts and Jobs Act, claiming the tax overhaul will “drive more jobs and increase paychecks for hardworking Americans.”

This bill only further rigs the tax code in favor of profitable Wall Street banks and the wealthiest 1 percent. The so-called “increase in paychecks” in reality has translated into a one-time bonus while the firms benefit from permanent lower taxes going forward. Companies like AT&T, Comcast, and Walmart are quietly laying-off hundreds of employees while others are gearing up to buy back their own shares to pump up their value. In fact, the FSR pushed the tax bill because of its huge tax benefits to Wall Street and Wall Street executives and its massive gifts to households in the top one percent of the income distribution-who stand to accrue an amazing 83 percent of the total tax cut benefits by 2027. Instead of promoting policies that would directly benefit workers-e.g. a higher minimum wage, strengthening labor standards and worker’s bargaining power-FSR’s President favors a “trickledown” approach to wage growth, ignoring that the almost forty-year-long trend of wage stagnation for middle- and low-wage workers refutes such approach.

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FSR’s 2017 yearly review lays out ‘progress’ on the wish list of some of the worst actors in the financial system, many of which are directly responsible for the last financial crisis and economic recession and have a history of cheating their own employees and defrauding consumers-e.g., JPMorgan, Bank of America, Citi, Wells Fargo, Santander, First Republic. Their 2017 highlights are a direct attack on consumer protections and the financial stability of our country.

Goldman Sachs Is Riding High Over Trump

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By Carter Dougherty

Over the past month, Goldman’s share price has hovered above its previous all-time high which was set in late 2007, just before the worst financial crisis since the Great Depression hit the global economy. That’s a 42 percent increase since Trump’s election!

In fact, the stock market has been booming in recent years with more and more investors wanting a slice of the action. From investing in air nz stock to Goldman stock, prices are going up!

The business press knows why. Bloomberg News: The share price has rallied on optimism that the Trump administration “will spur trading and dealmaking, slash corporate taxes and roll back costly regulations after installing the firm’s executives in top government posts.”

Today’s news: Trump has nominated Goldman alumnus Jim Donovan to be deputy Treasury secretary.

Goldman Sachs alumni are assuming more powerful positions in Washington than ever before.

He’ll have plenty of company. There’s Gary Cohn, director of the National Economic Council in the Trump White House. And Treasury Secretary Steve Mnuchin, the former Goldman banker who lied to Congress about his role in the fraudulent processing of foreclosure documents.

Dina Powell is also in the White House, having been an adviser to Trump’s daughter, Ivanka, from her perch at Goldman. Trump’s close adviser and far-right media maven Steve Bannon also worked there. And, Trump’s nominee to run the Securities and Exchange Commission, Jay Clayton, has long been a Goldman lawyer from his perch at Sullivan & Cromwell.

“Cohn and Mnuchin are poised to preside over a rollback of financial regulations that arguably threatened Goldman more than any other top bank in the years following the financial crisis,” Bloomberg pointed out.

Even the Financial Times finds this level of self-dealing by Goldman embarrassing

“It is becoming awkward for Goldman,” writes longtime Financial Times columnist John Gapper. “Having former executives in governments and central banks around the world is useful, as is the prospect of looser regulation. Being visible at the helm is embarrassing, especially when executive power is clearly being used to Wall Street’s benefit.”

Goldman employees enjoy huge Goldman bonuses before joining government

Goldman gave Cohn a severance package of nearly $300 million when he left the firm, a huge golden parachute that makes it even cushier for executives to work in the government.

“They’re playing a game, and they’re playing a game to make this person feel beholden to Goldman Sachs,” Richard W. Painter, a professor at the University of Minnesota Law School and former Bush administration official, told The New York Times.

Appointees are involved with policy affecting Goldman, no matter the “recusals”

Cohn has let it be known through anonymous sources that he will recuse himself from anything “directly” affecting Goldman. But the comment only underscores how serious the problem is. The White House isn’t supposed to involve itself in enforcement at all, nor should it jump into the regulatory process at independent agencies. So as a matter of course he should not be involved in this kind of matter “directly” involving the company. And what does “directly” mean?

He is already deeply involved in matters bearing on Goldman’s profits. He and Treasury Secretary Mnuchin are both working, for example, on plans to roll back the Volcker Rule, a regulation that protects the economy by barring big banks from speculating with their customers’ money. It also stops Goldman from profitable activities it would love to continue.

 

After massive bank fine, Congress considers bill to gut financial reform

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Image via Brandon Doran on flickr.com

Image via Brandon Doran on flickr.com

This week, the House Financial Services Committee will consider an extraordinarily dangerous bill that takes many of the worst ideas concocted by Wall Street lobbyists and their political friends and combines them into one toxic package.

The bill, the “Financial CHOICE Act” (H.R. 5983) is authored by House Financial Services Chairman Jeb Hensarling (R-TX-5), and it not only rolls back key portions of the Dodd-Frank Act, it also guts regulations that came before it. If passed, it would make financial regulation even weaker than it was even prior to the 2008 crisis. It also eviscerates the Consumer Financial Protection Bureau (CFPB) mere days after the CFPB fined Wells Fargo $100 million for widespread unlawful sales practices and ordered Wells Fargo to issue full refunds to all scammed customers. With banks continuing to abuse their own customers we need  MORE accountability, not less.

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Dangerous House Bill to Deregulate Private Equity Could Enable New Fraud

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At a time when private equity funds are in the news and under scrutiny by the regulators, the House is set to consider a bill that rolls back the clock to a time when private fund advisers operated in the shadows, without meaningful oversight.

The Investment Advisors Modernization Act of 2016 (H.R. 5424) would allow private funds to evade SEC examinations, and to distribute misleading and even fraudulent advertising materials. The bill also allows private funds to evade SEC examinations, and to distribute misleading and even fraudulent advertising materials. In addition, it eliminates key systemic risk information for regulators by dramatically reducing the number of funds who must report complete information on their leverage and holdings on a confidential form (Form PF) used to track risks to the financial system. Finally, the bill exempts private equity firms and hedge funds from having to provide independent confirmation that they own the securities they claim to own – a change that could open the door to the next Madoff-style Ponzi schemes.

This dangerous deregulation would put at risk the retirement savings of teachers, firefighters, police officers, and other public servants who rely on the one-quarter of funding from private equity funds in public pensions. We expect this bill will be considered by the full House of Representatives this Friday, September 9th.

The SEC has found serious investor protection issues at over half of the private equity funds they have examined. And private equity funds have come under additional scrutiny by the agency in recent weeks for disclosure violations and possible illegal fee practices. Yet the H.R. 5424 seeks to take away the very tools the SEC uses to oversee these funds.

Two of the country’s largest pension funds, CalPERS and CalSTRS, oppose the bill, as does the Council of Institutional Investors, an association of corporate, public and union employee benefit funds and endowments. Americans for Financial Reform has also publicly opposed the bill, as has the AFL-CIO and UNITE HERE.

We have compiled below letters of opposition to this dangerous bill, along with recent press stories highlighting investigations into and abuses by the private equity industry.

Opposition letters and other documents discussing H.R. 5424:

Recent press coverage on investigations and abuses in the private eduqity and hedge fund industry:

Three-part NYTimes series on Private Equity:

Private Equity Tries to Chip Away at Dodd-Frank With House Bill | NYTimes | September 8, 2016

Apollo to pay SEC $52.7 million for disclosure violations | PoliticoPro | August 23, 2016

SEC Probes Silver Lake Over Fees | WSJ | August 19, 2016

Platinum [Partner]’s California Oil Fields Said to Be Subject of Probe | Bloomberg | August 11, 2016

This Is Your Life, Brought to You by Private Equity | NYTimes | August 1, 2016

Private Equity Funds Balk at Disclosure, and Public Risk Grows | NY Times (Gretchen Morgenson) | July 1, 2016

HR 5424, “Investment Advisers Modernization Act,” a “Get Out of Madoff and Other Frauds for Free” Bill, Passes Financial Services Committee | Naked Capitalism | June 17, 2016

Past AFR letters regarding abuses at private equity firms:

House Subcommittee Considers Bill to Shred the SEC’s Tires

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The many problems with the Investment Advisers Modernization Act

Shredded tires

While Americans for Financial Reform and our allies are busy campaigning for closing loopholes that are special privileges for private funds, the Majority on the Hill is proposing to do away with even the limited existing reporting requirements to protect investors and increase accountability.

On May 17th, the House Financial Services Subcommittee on Capital Markets held a hearing to discuss a bill called the Investment Advisers Modernization Act of 2016. Far from actually modernizing the industry, the bill rolls the clock back to a time when private fund advisers operated in the shadows, without meaningful oversight. The bill would enable the exploitation of investors and reduce the information available to regulators to address systemic risk by rolling back key reporting requirements, and by interfering with the Securities and Exchange Commission’s ability to investigate fraud at individual firms. (For a full breakdown of the problems with this bill, please see AFR’s opposition letter).

One of the witnesses who testified was Jennifer Taub, a Professor at Vermont Law School and author of Other People’s Houses, a book on the foreclosure crisis. Professor Taub pointed out in her written testimony that the Investment Advisers Modernization Act could not only “undermine investor protection and trust, which could inhibit or drive up the cost of capital,”  but would also “allow certain private equity advisers and other private fund advisers that have been exposed as lacking in recent SEC examinations to hide their tracks.”

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Deregulation: Bad for Cheeseburgers, Bad for Financial Markets

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Cheeseburger

Image Credit: Valerie Everett (CC BY-SA 2.0)

Yesterday in the House Financial Services Committee, a new bill was considered that would weaken a key piece of financial reform. Speaking in support of the bill, Rep. Steve Stivers (R-OH) argued that this new piece of regulation was important because of “delicious cheeseburgers.”

H.R. 4166, the “Expanding Proven Financing for American Employers Act,” would create new exemptions from the rules in Dodd-Frank that require the financiers packing up new securities to retain a stake in their new products – rules put there to ensure that they have skin in the game.

The bill would allow financial firms that package up a product known as a “collateralized loan obligation,” or CLO for short, to escape the requirement that they hold onto a piece of the CLOs risk – a requirement to hold 5% of the total risk of the CLO, to be exact.

The Ranking Member of the Committee, Rep. Maxine Waters (D-CA), made a number of points against H.R. 4166:

“I’m baffled by legislation such as this… the 2008 crisis was caused – in large part – by mortgage companies that originated loans to borrowers that had no ability to repay…To address this problematic “originate to distribute” model, Dodd-Frank included an important component known as risk retention, or “skin-in-the-game.” In essence, Congress told loan originators and securitizers to “eat their own cooking” before selling off their investments to others… H.R. 4166, takes us in the wrong direction, essentially exempting most securitizations of corporate loans from risk retention.

…CLOs are often used to finance private equity takeovers of companies through “leveraged buyouts.” The industry advocated for the exemption contemplated in this bill when they wrote letters to the regulators during the comment period.

Regulators heard their arguments, and rejected their proposal. In fact, regulators pointed out that the leveraged loan market may be getting overheated, and that “characteristics of the leveraged loan market pose potential systemic risks similar to those observed in the residential mortgage market.” …Mr. Chairman, when our banking regulators tell us there may be a bubble, I think we ought to listen.”

In response to the Ranking Member, Rep. Stivers tried out an argument…about cheeseburgers:

“Wendy’s International, a delicious food company based in my district…they have $246 million of collateralized loan obligations. Without that, they would not be able to make the delicious cheeseburgers you rely on every day.”

What Rep. Stivers doesn’t mention is that the reason Wendy’s needs so much borrowing, and is apparently pushing for weaker rules – and the reason they are already so leveraged that they wouldn’t qualify for the exemption for responsibly underwritten loans that regulators have already granted – is that they are doing a massive stock buyback which cashes out their shareholders. Although the buyback benefits current shareholders, it comes at the expense of leveraging up the company massively and threatening the future of franchisees. In other words, this borrowing isn’t for hamburgers, or even to go about Buying ETH in vast quantities, it’s to make billionaire shareholder Nelson Peltz richer to the tune of hundreds of millions of dollars. If you want to learn more about stock buybacks and the stock market in general, we suggest you need up to date with all the latest stock market news and even look at this Stash app review so you can understand trading to a better level.

As such, this may make the process of aksjehandel for nybegynnere, or stock trading for beginners, much harder to navigate, especially if these investors wanted to utilize the funds from this particular sector. If it’s only to make the billionaire shareholder even richer, is it really worth it?

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Will Congress Endorse Discrimination in Auto Lending?

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If you’re a person of color taking out a car loan, odds are you’ll pay a significantly higher interest rate than you would if you were white. Since 2013, the Consumer Bureau has begun to tackle this long-neglected, well-documented problem, both through enforcement and by issuing guidance on fair lending law compliance for lenders working with dealerships to finance auto purchases.

Those who are looking to get a loan for a car can use this calculator to estimate your car payment and use the Loan Review HQ website to see the credibility of lenders and the transparency of their practices.

Ultimately, there are lots of different reasons why someone might need to take out a loan to purchase a car. For some it is just a matter of affording the car after needing it transported to them from further afield. Some use CarsArrive Auto Relocation to achieve this, as making sure the car is in the best condition it can be can help lower maintenance costs later. Furthermore, understandably, owning a car comes with a number of unique benefits. From freedom of movement to the ability to secure a title loan, owning a car is a life step that the majority of people aim to complete. In case you were not aware, a title loan is a type of secured loan where borrowers can use their vehicle title as collateral. Consequently, if you would like to learn more about taking out a title loan, this guide to atlanta title loans might be useful.

Alternatively, there are ways to lease a car instead. It should be noted that there is a lot of legal understanding that needs to be considered first, a summary of which can be read here: https://www.swapalease.com/lease101/guide/chapters/lease-basics/.

Many Americans are unfortunately discriminated against when it comes to both of these factors, be it loans or leases, and so may seek to swap their lease or fight back against a falsely led decision. Speaking of, Congress should be praising the Bureau for its fight against auto-loan discrimination. Instead, a shameful number of members of the House voted last month to curtail the CFPB’s work in this area.

On November 18, the House passed a bill, H.R. 1737, which would invalidate the existing guidance and impose burdensome and unnecessary new procedures on any future CFPB efforts to address the issue. The final vote was 332-96, with 88 Democrats voting in favor.

AFR and our allies will do all we can to keep this bad bill from gaining traction in the Senate or being added as a policy rider to a year-end spending measure. Thus far, over 52,000 Americans have signed petitions urging Congress to reject HR 1737. (You can add your name to AFR’s petition here). And ColorOfChange, Working Families, Center for Popular Democracy and Americans for Financial Reform (AFR) delivered over 50,000 of those petitions to the offices of House Majority Leader Paul Ryan, Minority Leader Nancy Pelosi, and Representative G.K. Butterfield, chair of the Congressional Black Caucus.

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Wall Street Riders Plague Congress’ Year-End Spending Bill

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The financial industry has taken a close interest in the congressional struggle to refund the government. Where others find dysfunction, Wall Street sees opportunity.

The big banks and their lobbyists are quietly but aggressively pushing a long wish list of spending bill “riders.” These backdoor measures would roll back the reforms enacted after the 2008 financial crisis and undermine the Consumer Financial Protection Bureau, the first and only financial oversight agency with a mandate to put the interests of consumers ahead of the power and profits of the banks.

This is an industry that has never made much of a secret of its disdain for rules of fair play. Now a disturbing number of legislators have embraced the same contemptuous attitude by lining up behind the use of “must pass” bills to advance Wall Street’s agenda. To counter their effort, financial reformers will need to work hard to expose and oppose the spending riders – and the lawmakers supporting them.

The threat is serious. The rider strategy has worked for Wall Street in the past, notably at the end of 2014, when a massive spending bill turned out to include an amendment repealing a key piece of the Dodd-Frank Act – a provision requiring the riskiest derivatives trades made by bank holding companies to be conducted outside the units that hold deposits and enjoy the benefits of deposit insurance.

This time around, Wall Street has even bigger aspirations. One of the many riders it’s promoting is hundreds of pages long, with subsections that would (among other things) make it easier to issue toxic mortgages like those that helped bring on the financial crisis; force financial regulators to go through a series of new and redundant procedures before issuing rules or taking enforcement actions; and, under the guise of relief for “community banks,” deregulate a wide swath of institutions up to and including the likes of Wells Fargo.

That particular package of proposals was originally a bill authored by Senate banking committee Chairman Richard Shelby, R-Ala. Unable to convince the Senate to consider his legislation through normal channels, Shelby has now publicly stated that the appropriations process (with the implied threat of a government shutdown) offers the “best shot” of getting it enacted.

In another priority attack, the major Wall Street brokerage houses and the big insurance companies hope to derail the Department of Labor’s efforts to safeguard Americans against conflicted retirement investment advice – “advice” that costs us an estimated $17 billion a year. When people retire they want to know that they are supported and are not worrying about what will happen to them or thinking about can medicaid take your home after death? etc. so the government needs to step in and help those who are nervous about their next chapter. While it is upto the business owners to decide on their own retirement age and plan for it using business succession plans or maybe prepare for a worst case scenario by purchasing a Key man insurance for themselves – the same cannot be said for the salaried employees! The government definitely needs to understand the needs of the ones approaching their retirement age. That said, yet another spending rider would block the Department of Education from cutting off the flow of federal loan money to for-profit career colleges like Corinthian and ITT Tech, which have saddled countless students with crippling debt for worthless degrees. Still other riders would make it harder for nonprofit groups to challenge discriminatory housing and mortgage-lending practices.

A number of these proposals are squarely aimed at the Consumer Bureau. The bureau has earned the ire of Wall Street by delivering more than $11.2 billion in relief to more than 25.5 million Americans defrauded by financial companies. In response, the financial industry is working with its friends in Congress on spending riders that would bring the bureau under the congressional appropriations process and end its guaranteed funding through the Federal Reserve, while, at the same time, placing it under the thumb of a five-member commission chosen by party leaders – a proven recipe for regulatory gridlock – instead of a single director, as Dodd-Frank stipulated.

Other possible dangers are riders that would block or impede the bureau’s specific ability to act against discriminatory auto lending, triple-digit-interest payday-style loans and the financial industry’s use of take-it-or-leave-it agreements to bar consumers from joining forces over a common complaint.

A large number of businesses are dependent on loans. This is especially true in the early days of establishing a business or startup where money can be particularly hard to find. For this reason, business financing and loan experts such as Summit Financial Resources are committed to making sure companies make the right decisions where money related matters are concerned.

The industry’s agenda is far-reaching. But the riders all share a common purpose: They would make it easier for banks and financial companies to exploit us, whether by cheating consumers, engaging in reckless bets or using taxpayer subsidies to generate windfall profits for a handful of giant institutions and a narrow financial elite.

One more thing these measures have in common: Financial interests are trying to push them into the budget because they would not look good as stand-alone measures that had to be debated in the light of day. In a joint letter to Congress last week, 166 consumer, labor, civil rights, community and faith-based organizations pointed out that a large majority Americans, regardless of political party, want financial regulation to be tougher not weaker; that finding, borne out by repeated polls, was most recently confirmed by a Washington Post/ABC News survey on the presidential contest, in which 67 percent of the respondents (58 percent of Republicans, 68 percent of independents and 72 percent of Democrats) said they would back a candidate calling for stricter financial regulation, while only 24 percent said they would back a candidate opposing stricter regulation.

Congress must reject the use of budget amendments and other undemocratic tactics to advance a special-interest agenda. To make sure it does, the rest of us must convince our lawmakers that we, too, are watching.

— Jim Lardner

Originally published on USNews.com

The Real Wolves of Wall Street

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It’s hard to make a serious argument against an agency that’s returned over $11 billion to more than 25 million Americans scammed by their financial companies. Especially when that agency, the Consumer Financial Protection Bureau, enjoys broad public support across party lines for its efforts to crack down on debt-trap loans, credit card overcharges, illegal debt collection practices and discriminatory auto lending.

That’s why the big bank lobby and its allies in Congress had to contort themselves last week to justify their attempts to hamstring the bureau. Luckily for the rest of us, their farfetched talking points didn’t sway the bureau’s defenders in Congress, and their attack fell flat.

The House Financial Services Committee was considering legislation to change the way the CFPB is led, putting it under a five-member commission – a recipe for partisan gridlock and increased industry influence – instead of a single director. The White House, along with more than 75 consumer groups, spoke out against the move. The major architects of financial reform, including Sen. Chris Dodd, D-Conn., and Rep. Barney Frank, D-Mass., as well as Sen. Elizabeth Warren, also a Massachusetts Democrat, and former Rep. Brad Miller, D-N.C., made it clear that they too opposed it.

While the bill ended up passing, as expected, it did so essentially along party lines. Only two Democrats, Reps. David Scott of Georgia and Kyrsten Sinema of Arizona, voted in favor with all the committee’s Republicans – despite a major effort by Wall Street lobbyists. For weeks, they’d been telling reporters about a supposed wave of mounting support for their “bipartisan” measure, getting congressional allies like Rep. Tom Emmer, R-Minn., to spread the word in the press.

The very obvious intent of their proposal is to impede the consumer bureau’s ability to fight against abusive financial practices. To distract attention from this inconvenient truth, the bill’s defenders resorted to scaremongering. House Financial Services Committee Chairman Jeb Hensarling of Texas equated single-director leadership with North Korea, while Rep. Sean Duffy, R-Wis., called it “the Stalin model.” Both failed to mention that it was Republicans who called for a single director to head the Federal Housing Finance Agency, created in 2008, or that another bank regulator, the Office of Comptroller of the Currency, has functioned with a single director since 1863 with no calls from Congress to change it.

In the effort to gain support beyond the ranks of the usual Wall Street-friendly suspects, a few of the bill’s proponents even professed to be looking out for consumers’ interests to protect them from a hypothetical weak consumer bureau director appointed by a hypothetical future president. No actual consumer advocates have ever expressed such a concern, however: They know that an effective director some of the time is far better than a milquetoast commission all of the time.

The real impetus for this legislation comes, very obviously, from the financial industry lobby, which wants the change because it will make it easier for banks, payday lenders and debt collectors to engage in unfair, deceptive and abusive practices. And the industry is willing to spend huge amounts of campaign and lobbying money to get its way.

In 2010, Wall Street expended over $1 million a day seeking to block reforms, including the creation of the consumer bureau. That extraordinary rate of spending has continued, according to an Americans for Financial Reform report that covered the 2014 election cycle. A more recent report from the consumer advocacy organization Allied Progress shows that eight members of the House Financial Services Committee received donations from the payday lending industry within weeks of endorsing a previous attempt to subject the consumer bureau to rule by commission.

Last week, six major banking industry lobbyists did us all a favor by signing their names to a joint op-edopenly advocating for the commission bill. They claimed that they, too, were worried about what might happen, under continued single-director leadership, to “the [consumer bureau]’s work over the past four years.” Hearing that absurd argument from the leaders of trade associations that have opposed the bureau on issue after issue over the past four years made it clearer than ever that the push for a commission is just another piece of the industry’s strategy to roll back reform and revert to the unregulated havoc that brought us the financial crisis.

Warren put it best, telling The Huffington Post, “Give me a break – this is the wolves saying all they care about is Grandma.”

Of course, they won’t give us a break. The wolves of Wall Street will keep on trying to obstruct the consumer bureau’s important work in any way they think they can. But now more people will understand what’s at stake, and we can expect more people in and out of Congress to speak out and fight hard when this bill moves to the House floor and if and when it advances any further.

— Jim Lardner

Originally published on USNews.com

Backroom Maneuvering on the JOBS Act

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When does normal regulatory procedure become scandalous? When a federal agency fails to expedite the implementation of an influential congressman’s pet idea.

The congressman is Patrick McHenry (R-N.C.), and the idea is the mass marketing of private stock offerings, as authorized by the Jumpstart our Business Startups (or JOBS Act). In a November 30 letter, McHenry took outgoing SEC chairman Mary Schapiro to task for declining to institute a rule immediately and deciding to give the public a chance to comment first. McHenry’s complaint was soon picked up by the media, most notably by the Wall Street Journal, which, in a feverish editorial embracing all of McHenry’s talking points, accused Schapiro of having “blocked a rule” due to the influence of a “well-placed lobbyist” representing a “special-interest group.”

What’s wrong with this indictment? Every point in it. First, there’s the inconvenient fact that Schapiro, far from blocking a rule, was following customary rule-making procedure. Second, the “well-placed lobbyist” in question, Barbara Roper of the Consumer Federation of America, was actually one of scores of interested parties – including consumer and investor groups, state securities law regulators, and even a few hedge fund and private equity fund representatives – making the same general argument. Third and perhaps most important, the “special interest” that Schapiro was faulted for looking after – the community of investors – is the interest that her agency was created to protect.

And investors will need the SEC’s protection, for this is a case in which a carelessly drafted rule could open the door to all manner of flimflam. “Let the scams begin” is how Public Citizen summed up the danger. To compound matters, the Commission’s draft rule lumps hedge funds and private equity funds in with the conventional business startups that were the law’s intended beneficiaries. A Bloomberg editorial imagined the likely result: “Underperformers will flog their funds on the airwaves, on websites and in the pages of the financial press, aiming at unsophisticated investors eager to get the same fabulous returns as the Wall Street elite.”

Our coalition, like the CFA, strongly opposed the JOBS Act. It was rushed through Congress on the dubious premise that rolling back long-standing investor protections would promote job growth, and with disregard for the time-tested truth that, in Bloomberg’s words, “Markets benefit when smart oversight enhances transparency and promotes integrity.”

Yet it is important to note that neither Roper nor the law’s other critics now question the duty of the SEC, as the law directs, to lift the long-standing ban on the general solicitation of private offerings. AFR acknowledged as much in our October 5 comment letter, jointly submitted with the AFL-CIO. As we went on to note, however, the SEC “retains both the authority and the responsibility to craft a rule to implement that requirement that incorporates appropriate safeguards to protect investors and promote market integrity.”

That’s what we have been advocating – openly, not furtively – since the JOBS Act was enacted. The only undue influence brought to bear here was that of Representative McHenry and other legislators seeking to prod the SEC into ill-considered action. If these “well-placed lobbyists” could muster a bit of patience, the Commission could go about the task of crafting a balanced rule that follows the intent of the law while seeing to it that vulnerable investors aren’t hurt.