Category: Consumer Protection

GOP Plans To Gut Dodd-Frank

Do you trust the banks and brokerage houses to govern themselves? Do you think that reducing banking regulations will help the economy, or your personal financial situation? Before you answer:

  • Remember that the economic meltdown of 2008 was caused by overreach by the financial industry.
  • Remember that it took the next eight years to climb out of the Great Recession and return to pre-2008 employment levels.

Dave Dayen in the Fiscal Times points out that there will be a vote this week in the Congress that will say a lot about how willing the Democrats in Congress will be to fight the deregulation avalanche that’s about to come crashing down on We the People. From Dayen: (brackets and emphasis by the Wrongologist)

As early as Wednesday, the House will take up H.R. 6392, the Systemic Risk Designation Improvement Act. This bill would lift mandatory Dodd-Frank regulatory supervision for all banks with more than $50 billion in assets, meaning those financial giants would no longer be subject to blanket requirements regarding capital and leverage, public disclosures and the production of “living wills” to map out how to unwind [the bank] during a crisis.

The intent of the new regulation authored by Blaine Leutkemeyer (R-MO), isn’t about helping the biggest banks, but the relatively smaller regional players, firms like PNC Bank, Capital One and SunTrust. An estimated 28 institutions would be affected. The eight “global systemically important banks” would remain subject to the standards: Citigroup, JPMorgan Chase, Bank of America, Goldman Sachs, Wells Fargo, Bank of New York Mellon, Morgan Stanley and State Street Bank.

But the so-called regional banks are not small operations. These 28 regionals have combined assets of about $4.5 trillion. It is useful to remember that in the 2008 crisis, regional banks like Washington Mutual and Wachovia also came crashing down.

The American Banker says that the Financial Stability Oversight Council (FSOC), the new super-regulator charged with monitoring systemic risk, will be gutted by the Trump administration: (brackets and emphasis by the Wrongologist)

Because the FSOC is headed by the Treasury secretary…[a cabinet post selected]…by the White House, a Trump administration is unlikely to continue any of the council’s…priorities, including the designation of nonbanks or continued regulation of those firms already designated.

It is obvious that if this bill passes and is signed by President Trump, financial regulation will be relaxed, not by repeal, but through atrophy. Republicans want to replace any mandatory rules for regulation with discretionary ones. That way they can claim that they’re merely improving the system by putting the decisions in the hands of the experts instead of members of Congress.

A next step will be to hire regulators dedicated to turning a blind eye to what the financial industry does. The chair of FSOC is the Treasury Secretary. Trump’s candidates for Treasury Secretary include Steven Mnuchin, Trump’s national finance chair and the most likely choice for Treasury, who sits on the board of directors of CIT, a financial services company with more than $50 billion in assets. The Treasury Secretary will ensure that the rest of the FSOC board is made up of regulators and presidential appointees who share Trump’s laissez-faire philosophy.

President Obama will veto this bill if it passes the Senate before January 20th. But the Republicans plan to roll it out this week, instead of waiting for Trump to enter the Oval Office. They want to gauge just how much backbone Democrats have after their thumping in the election. More from Dayen:

This is really a moment of truth for those Democrats. If Republicans put up a big bipartisan vote in the House for this, the Senate will be more inclined to try to pass it down the road. And it will serve as a test case for Democratic resolve more generally.

Wall Street-friendly Dems have already endorsed tailoring Dodd-Frank rules to eliminate smaller regionals from the rules. This bill is a big change, and the question is whether Democrats play ball with Trump’s deregulation agenda, or will they recognize the harm it will cause?

This is an early test for those Dems whose seats are at-risk in 2018 and 2020.

Financial deregulation has rarely been a partisan political matter. Democrats and Republicans have typically worked together to roll back rules and loosen up the Wall Street casino.

HR 6392 could represent a return to those times, or it could be the moment when Democrats join together and say “no”, forcing Republicans to support the banking industry agenda on their own.

Party line resistance by Democrats could be in their longer-term best interest.

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Monday Wake Up Call – October 24, 2016

The US government had a program to pay bonuses to recruits at the height of the wars in Iraq and Afghanistan, as an incentive to get soldiers to reenlist. Now the Pentagon wants the money back from 10,000 soldiers in California. The California National Guard used the program to entice thousands of soldiers with bonuses of $15,000 or more to reenlist and go to war, more than a decade ago.

It turns out that government audits have revealed widespread overpayments by the California Guard, who handed out the money more liberally than other state Guards. As a result, nearly 10,000 soldiers, many who served multiple combat tours, have been ordered to repay their enlistment bonuses, and if they refuse, they are slapped with interest charges, wage garnishments and tax liens.

Are we missing something? These soldiers signed a legal contract with the government in order to get the re-enlistment bonuses. The soldiers certainly delivered on their end of the contract; the time they spent in the service was honorably served. So why shouldn’t the CA National Guard have to give the money back, rather than individual soldiers? They caused the problem.

Isn’t the correct pressure point Gov. Brown and the CA state legislature, rather than individual soldiers?

This is way beyond wrong. Not the soldiers’ mistake, and it shouldn’t be their problem.

The forced repayment by veterans of their enlistment bonuses to the government a decade after they were given the bonuses specifically to re-enlist is unconscionable. As a veteran of an earlier era, it makes Wrongo’s blood boil to read this piece.

Monday’s Links:

A Twitter account tracks dictators’ planes to and from Geneva. The planes are registered to or used by despots when they fly into and out of Geneva, Switzerland. The 80 or so planes being tracked, are registered to governments, or known to be used by royal families or leaders. Only 80 planes? Shouldn’t that list be expanded?

This is what work-life balance looks like at a company with 100% retention of moms. For 33 years Patagonia has had an on-site child care center that bears little resemblance to what anyone might imagine corporate on-site child care looks like. It is run by teachers, some of whom are bilingual and trained in child development. Learning takes place outdoors as much as in. Parents often eat lunch with their kids, take them to the farmer’s market or pick vegetables with them in the “secret” garden. And the worst is that this is not all that hard to do.

The White House hosts South by South Lawn (SXSL), the Obama administration’s riff on Austin’s annual multimedia showcase, South by Southwest. From poking fun at Kanye West, to curating playlists, to singing with Willie Nelson, to hosting this SXSL festival, President Obama has taken advantage of his musical know-how in ways that we will surely miss. On the mainstage, Common makes an unannounced appearance, rapping about the racial injustices of the prison system; he’s later spotted chatting with Obama senior advisor Valerie Jarrett. At sunset, the Lumineers played “Stubborn Love”—which Obama included on his 2015 summer playlist.

Feral cats are being deployed in NYC war on rats. There are a lotta rats in NYC, some of whom are in suits and office suites. The feral cat is designed to help address the brazen denizens of NYC garbage. However, in the book Coyote America: A Natural and Supernatural History by Dan Flores, we learn that there are over 5,000 coyotes living “underground” in NY City that are already on rat patrol.

Time for our Monday Wake up, and it’s the Pentagon’s turn. They should wake up and rescind those re-payments, and refund any money that they have collected from GIs who paid the price to get their enlistment bonuses.

To help the Pentagon get back on track, here are the Talking Heads with “Life During Wartime” from their 1979 album, Fear of Music. This live version comes from the 1984 movie “Stop Making Sense”, a Talking Heads concert:

https://www.youtube.com/watch?v=obAtn6I5rbY

Those who read the Wrongologist in email can view the video here.

Sample Lyrics:

Heard of a van that is loaded with weapons,
Packed up and ready to go
Heard of some grave sites, out by the highway,
A place where nobody knows

The sound of gunfire, off in the distance,
I’m getting used to it now
Lived in a brownstone, lived in a ghetto,
I’ve lived all over this town

 This ain’t no party, this ain’t no disco,
This ain’t no fooling around
No time for dancing, or lovey dovey,
I ain’t got time for that now

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Sunday Cartoon Blogging – September 18, 2016

Luckily, it only comes up every four years:

cow-cialis-election

Colin Powell’s emails were hacked, and America loved it:

cow-colin-powell

 

 

 

 

 

 

 

 

 

OTOH, Powell lied at the UN about WMDs. That helped start an unnecessary war in which many died. People have short memories. His standing should not be revived by a few blunt emails.

Hillary is back on the road. Is it too little vision, too late?

cow-fainting-spell

Dems should be ashamed, ashamed that their candidate runs so poorly with the young. That she is an ineffective campaigner. This is reminiscent of the summer of 1988, when Dukakis spent a week in August in Nantucket thinking he was ahead in the polls (Clinton spent two weeks in the Hamptons). She and her team are badly misdiagnosing what drives voters. Every response seems weak and ineffective.

Wells Fargo caught in phony account scheme:

cow-wells-fargo

Wells fired 5300 “low level” employees, roughly 1% of the workforce, for signing up customers for checking accounts and credit cards without their knowledge. About 2 million sham accounts were opened, complete with forged signatures, phony email addresses, and fake PIN numbers, created by employees who were hounded by supervisors to meet daily account quotas. But the executive at the top of this hot steaming pile, Carrie Tolstedt, left in July with a $125 million retirement package.

Trump retracts his birther scam with an untrue swipe at Hillary Clinton:

cow-trump-admits

From Mark Shields  on the NewsHour about Trump’s birther nonsense:

He wasn’t only the loudest and the highest-profile and the most persistent and the most well-publicized birther, he, Donald Trump…lied. He lied consistently and persistently.

And, today, without explanation or excuse, he just changed his position and tried to absolutely falsely shift the blame onto Hillary Clinton…he debased democracy. He debased the national debate. He appealed to that which is most ignoble or least noble in all of us.

From David Brooks on the NewsHour:

Usually, there’s some tangential relationship to the truth…But now we’re in a reverse, Orwellian inversion of the truth with this. And so we have a team of staffers and then the candidate himself who have taken the normal spin and smashed all the rules. And so we are really in Orwell land. We are in “1984.” And it’s interesting that an authoritarian personality type comes in at the same time with a complete disrespect for even tangential relationship to the truth that words are unmoored…And so what’s white is black, and what is up is down, what is down is up. And that really is something new in politics.

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Monday Wake Up Call – Rule of Law Edition

While America celebrated the Labor Day weekend, we overlooked an extremely important decision by a three-judge panel of the US Court of Appeals for the Ninth Circuit.

Last week, they issued a sweeping decision in the Federal Trade Commission v ATT, that drastically restricts the Federal Trade Commission’s (FTC) consumer protection authority over companies that offer “common carrier” services (e.g., telephone services, mobile data, and internet services) whether or not these services comprise their core business. Moreover, since no other federal agency has the necessary scope of regulatory authority over this area, if this decision stands, significant activities of such companies would become largely unregulated.

As the WaPo reports:

The ruling could wind up giving Google and Facebook — not to mention other companies across the United States — the ability to escape all consumer-protection actions from the FTC, and possibly from the rest of government, too, critics claim, unless Congress intervenes.

A little history: The FTC had brought an action against ATT over the adequacy of the company’s consumer disclosures regarding its data throttling plan, by which ATT intentionally reduced the data speed of customers to whom it had sold unlimited mobile data plans:

  • In 2007, ATT became Apple’s sole wireless provider for iPhone.
  • In 2011, ATT began reducing the speed at which unlimited data plan users received data on their smartphones.
  • Under ATTs data throttling program, unlimited data plan customers were throttled for the remainder of a billing cycle once their data usage during that cycle exceeded a certain threshold.

So the FTC filed suit against ATT. The FTC’s argument was that ATT was not providing an “unlimited” service, which is what subscribers thought they were buying. After signing up the initial subscribers, ATT changed to tiered plans, under different contracts. And ATT neglected to inform the original customers – the ones who thought they’d purchased an unlimited plan – that they weren’t getting what they paid for.

But the FTC lost. To understand the complicated legal issues and why the FTC lost, you can read all about it here.

The implications are huge. The decision means that any company that creates or purchases either a phone company or an internet service provider (ISP) can escape federal consumer protection regulations entirely. This is particularly important for individual privacy and security matters, since the FTC currently is trying to impose comprehensive privacy and data security regulations on ISPs, and this decision may hamper that effort. After all, big data has been collecting for years now and there is so much data on millions, if not billions of people, the population are starting to understand the risks of their data security with many big companies.

The court decided that the FTC lacks authority to regulate common carriers. So, no matter how egregious the company’s conduct– even for false, deceptive, misleading practices, the FTC would be unable to do anything about it. Nor, at the moment, can any other federal agency.

The ATT case concerned regulation of advertising. But, since the court’s decision rejected outright the FTC’s claim to be able to regulate any activities of companies deemed to be common carriers, it is not limited to deceptive advertising alone. Facebook and Google already gorge themselves on your personal data and the decision prevents the FTC, the agency that has a track record of regulating privacy issues, from exercising any oversight of these activities (provided that Facebook and Google make the appropriate acquisitions or otherwise position themselves to qualify as common carriers).

So it’s time to wake up America! The steady erosion of your privacy and consumer protection rights continues under the flag of “the rule of law”. In the REAL world, the wealthy and powerful are often above the law. The Wall Street banking cartels committed mortgage fraud, foreclosure fraud, and securities fraud. They laundered money for terrorists and drug cartels. They rigged interest rates. Aside from stockholders paying token fines, no human was prosecuted for these massive, organized criminal activities.

Let’s groove to “I Fought the Law”, written in 1958 by Sonny Curtis of the Crickets, and later popularized by the Bobby Fuller Four who had a top-ten hit with it in 1966. It was also recorded by the Clash in 1977, and Green Day in 2004. In 1989, during the US invasion of Panama, the US military blasted loud rock music—including the Clash’s version of “I Fought the Law“, to pressure Manuel Noriega to surrender.

The guitar riff in this Bobby Fuller version sounds positively Hollyesque:

After this decision against the FCC, maybe in 20 years, instead of saying “he got railroaded”, we’ll be saying “he got telecommed”.

For those who read the Wrongologist in email, you can view the video here.

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