Category Archives: Financial Security

The Benefits of Public Protections: Ten Rules That Save Lives and Protect the Environment

benefitsreport

Protecting the public from harmful products and services is an important role of the American government. But regulators struggle to achieve this goal as they encounter relentless push-back from industry lobbyists trying to weaken or kill rules. Most media coverage of public protections focuses on Industry complaints about the cost of new standards (without any acknowledgment of the benefits) or devastating stories of consumer deaths resulting from a lack of regulation. Without a positive narrative, we forget about the incredible quality of life that effective safeguards afford the American public.

To draw attention back to the health, environmental and worker safety benefits we reap from government safeguards, the Center for Effective Government has released a report on 10 rules that will save over 10,000 lives and prevent 300,000 cases of disease, illness or injury each year.

The rules are:
1. Occupational Exposure to Respirable Crystalline Sillica
2. Federal Motor Vehicle Safety Standards, Ejection Mitigation
3. Federal Motor Vehicle Safety Standards, Electronic Stability Control Systems for Heavy Vehicles
4. Nutrition Labeling of Single-Ingredient Products and Ground or Chopped Meat and Poultry Products
5. Prevention of Salmonella Enteritidis in Shell Eggs During Production, Storage, and Transportation
6. National Ambient Air Quality Standards for Particulate Matter
7. Mercury and Toxics Standards
8. Control of Air Pollution from Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards
9. Identification and Listing of Special Wastes; Disposal of Coal Combustion Residuals from Electric Utilities
10. Effluent Limitations Guidelines and Standards for the Steam Electric Power Generating Point Source Category

Using the traditional, regulatory methodology of benefit-cost analysis, the report shows that these 10 rules have monetary social benefits that far exceed their estimated compliance costs. In addition, three of the rules are likely to create new jobs.

This just goes to show that the sky-is-falling, anti-regulatory rhetoric of industry and its allies in Congress is false. Standards and safeguards can spur innovation and even create entire new industries. Lost consumer confidence and shaky financial markets are the real job killers. We need standards and safeguards so that families who work hard and play by the rules can build a better future for themselves and their children.

If Big Business Wrote a Letter to Santa Claus this is What It Would Say

If Big Business wrote a bill to help itself get rid of regulations it didn’t like, what would that bill look like?

We don’t have to guess anymore. This week, a group of legislators introduced the Regulatory Improvement Act, a bill designed to “improve” our nation’s regulatory system, remove “government bureaucracy and red tape,” and help businesses avoid the “burden” of complying with safeguards and standards that protect our health, safety, environment and workers. Their solution? Have politicians appoint a panel to recommend regulations for Congress to ax in a rushed process.

The bill sets up a so-called “Regulatory Improvement Commission” tasked with an already predetermined outcome. That outcome is deregulation, plain and simple. Deregulation, you probably remember, led to the financial crisis of 2008. In a time when we’ve seen so many instances of industry bad actors — including at least 13 deaths due to faulty GM ignition switches that company officials knew had problems, years of toxic air pollution and water pollution from giant companies, and financial service companies like Sallie Mae taking advantage of our veterans — should we really be thinking about how to remove vital public protections for our health, safety, environment and financial security?

The commission’s mandate would be to modify, consolidate or repeal existing regulations to reduce compliance costs for business, completely ignoring the tremendous societal benefits that standards and safeguards give to the American people.

While it takes years for a federal agency to get a final rule out the door after numerous periods of public comment and review, this commission could erase this beneficial work within months. The review process is blatantly tilted toward benefitting corporate interests rather than the public interest. The procedure for how public comments on the commission’s reports are received, and even the way the commission is tasked with writing its reports on regulations are all slanted to examining the burden on businesses, never the benefits to the public. For instance, even the “costs” associated with doing taxes counts as a burden!

Supporters argue that the commission can review only those regulations finalized more than 10 years ago. Just think of how much progress we have made in the past four decades from the Clean Air Act, Clean Water Act, Occupational Safety and Health Act, Americans with Disabilities Act and much, much more. Regulations created from these and other laws would now be at stake.

And if there is an outdated regulation that could be removed, would it be worth all of this effort? There may well be a regulation pertaining to floppy disks, fax machines or pagers—but no one uses them anymore, and those regulations aren’t costing us anything to have written down somewhere. Is it worth setting up a new commission to remove superfluous regulations like that? Besides, most agencies already look back at existing rules – in a process that is far more careful and less politicized than the one this bill proposes.

And after all this, the commission is completely unaccountable to the public. The bill expressly states that the commission is exempt from the requirements of the Federal Advisory Committee Act (which requires public accessibility to meetings, open meetings and written advanced notice of a meeting a minimum of 15 days prior). According to the Regulatory Improvement Act, if just one member of the commission objects to a meeting being public, that meeting can be held in private.

Our vision for regulatory improvement

Nowhere does the Regulatory Improvement Act provide a way to update standards, make them stronger or more effective. If we were to write our own Regulatory Improvement Act, we would call for a regulatory review process that focuses attention on the need for stronger controls on corporations and expanded protections for the public.

Just because something is repeated often does not make it true. There is not an overabundance of regulation in this country. In reality, too much of our regulatory system has today slowed to a crawl, thanks in part to Big Business pushing at every point in the process to slow or stop new standards. They lobby against new laws; they lobby against new rules that agencies write under the existing laws; and then they lobby against strong enforcement of the rules that do get through.

By updating safeguards to better protect the public and making sure corporate bad actors are held accountable, our vision of regulatory improvement will be creating a system of standards and safeguards that better protects health and safety and puts everyone on a more equal footing, creating a fair economy for all.

Happy 5th Birthday, CARD Act!

As the CARD Act of 2009 turns five, consumers benefit from protection from predatory credit card companies

Millions of credit card holders have benefited both from the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD Act), and the regulatory and enforcement authority of the Consumer Financial Protection Bureau (CFPB), which administers the law. This important safeguard, which turns 5 today, has protected and benefited consumers in significant ways.

Economists have estimated that consumers have saved $20 billion annually from the reduced fines, fees and interest rate hikes that were routinely forced on consumers before the law’s passage. The CARD Act also protects college students and teens from unfair credit card practices and sets new standards for safeguarding the value of gift cards.

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Click here to see our full infographic on the benefits of the CARD Act!

Researchers have found that the predicted costs of complying with the CARD Act were not passed on to consumers through other rate hikes or restricting access to credit, as industry groups claimed would be the case.[1]

The CFPB has a variety of tools for protecting credit card holders, including rulemaking, enforcement authority and consumer complaint submissions. In 2013, the CFPB collected some 16,600 consumer complaints against credit card companies. Importantly, CFPB’s public consumer complaint database is working. Companies are given the chance to respond to every complaint. According to the agency, 68 percent of consumers were satisfied with the response from their credit card company.[2] The CFPB has also brought enforcement actions against major credit card companies for a range of abusive practices. The result: more than $800 million in refunds to millions of Americans.[3]

The CARD Act’s success shows that good, effective regulation not only protects consumers, it also makes markets work better. A strong system of safeguards and standards helps Americans by making sure that our economy and financial marketplace is fair and working for everyone, not just bankers and big corporations, some of which participated in the Wall Street excesses that killed millions of jobs and eroded Americans’ financial security.

 

[1] http://www.businesswire.com/news/home/20130930005300/en/CARD-Act-Saving-Consumers-20.8-Billion-Year#.U3ZjPYFdXDo

[2] http://files.consumerfinance.gov/f/201403_cfpb_consumer-response-annual-report-complaints.pdf

[3] http://www.uspirg.org/news/usp/cfpb-gets-results-orders-chase-bank-repay-consumers-over-300-million-over-sale-junky-credit

Analyze Always, Regulate Never

(Cross-posted from CitizenVox, Public Citizen’s blog.)

by Amit Narang and Bartlett Naylor

After two years of studying the proposed Volcker Rule, with 20,000 comments from bankers and the public, hundreds of meetings with Wall Street lobbyists, and 18 months past the rule’s congressionally mandated deadline for enactment, we’re now being told by the American Action Forum (AAF) — a self-described “center right policy institute” — that this was a rush job. Continue reading Analyze Always, Regulate Never

Consumer Protections at Stake in Trans-Atlantic “Trade” Deal

A “trade” deal only in name, the Trans-Atlantic Free Trade Agreement (TAFTA) would require the United States and European Union (EU) to conform domestic food and product safety standards, financial regulations, climate policies, data privacy protections and other non-trade policies to TAFTA rules – rules that are being negotiated in secret.

Some products and services that do not meet U.S. health and safety standards could be allowed into our markets. State and local governments could be forced to weaken health and safety standards and give up long-standing tools for local job creation. And the U.S. could be required to conform to new standards negotiated for corporate convenience, instead of standards developed through state and national laws over decades. The goal is to finish the sweeping deal by the end of 2014.

The Coalition for Sensible Safeguards and Public Citizen have assembled a list of the 10 biggest threats that TAFTA poses to consumers, workers and the environment. See it here:

The Top Ten Threats of the Trans-Atlantic “Trade” Deal To Americans’ Daily Lives (11/07/13)

Congressional Mandates Obstructed, Public Pays the Price

On October 25, the Coalition for Sensible Safeguards co-sponsored Delayed, Diluted and Defunct: How Congressional Mandates are Thwarted by the Broken Regulatory Process, a briefing for Senate staff.

The speakers presented a series of examples of congressional mandates for public protections that were or are stalled or weakened in the rulemaking process — from food safety rules under the Food Safety Modernization Act to consumer financial protections mandated by the Dodd-Frank law and air pollution controls required by the Clean Air Act.

The speakers described the consequences of regulatory delay, such as when lives are lost while a worker safety regulation is delayed due to political interference or demands for additional analysis. They argued for transparency and de-ossifying the rulemaking process, and warned against a series of congressional bills that would make it harder for agencies to issue new protections mandated by congress.

Our thanks to the speakers: Robert Weissman, President, Public Citizen; John Walke, Director of Clean Air Program, Natural Resources Defense Council; Peg Seminario, Health and Safety Director, AFL-CIO; Caroline Smith DeWaal, Food Safety Director, Center for Science in the Public Interest; Marcus Stanley, Policy Director, Americans for Financial Reform; Katherine McFate, President, Center for Effective Government.

To the sponsoring organizations: Center for Effective Government, Center for Progressive Reform, National Consumers League, Public Citizen, and the Coalition for Sensible Safeguards

And to the host, the Senate Judiciary Subcommittee on Oversight, Federal Rights and Agency Actions.

Among the materials provided at the briefing:

Bill in Congress:

  • Decoding the Bill: Lobbying Records Show That Electric Utility Industry Dominates Push for Deregulatory ‘REINS’ Legislation (Public Citizen)
  • The Independent Agency Regulatory Analysis Act: Politicizing Independent Agencies and Putting Americans in Harm’s Way (Coalition for Sensible Safeguards)
  • The Regulatory Accountability Act of 2013: Legislation Would Override and Threaten Decades of Public Protections (Coalition for Sensible Safeguards)
  • Return of the Regulatory Accountability Act: A Veiled Threat to Public Protections (Center for Effective Government)
  • Republican Bills Would Obstruct Enforcement of Environmental Laws (NRDC)
  • The REINS Act: Why Congress Should Hold its Horses (NRDC)

Regulatory Delay:

  • Clarity on Clean Water Protection Is Coming, but How Long Will it Take? (Center for Effective Government)
  • Testimony of Peg Seminario, Director Safety and Health, AFL-CIO Before the Subcommittee on Oversight, Federal Rights, and Agency Action Senate Judiciary Committee Hearing on “Justice Delayed: The Human Cost of Regulatory Paralysis” (AFL-CIO)
  • Down the Regulatory Rabbit Hole: How Corporate Influence, Judicial Review and a Lack of Transparency Delay Crucial Rules and Harm the Public (Coalition for Sensible Safeguards)

Broken Regulatory Process:

  • Disclosure at the Office of Information and Regulatory Affairs: Written Comments and Telephone Records Suspiciously Absent (Center for Effective Government)
  • Key Recommendations for The Next Regulatory Czar’s Critical Mission: Will He Rebuild a Regulatory System that Works for the Public Interest? (Coalition for Sensible Safeguards)
  • The Perils of OIRA Regulatory Review: Reforms Needed to Address Rampant Delays and Secrecy (Public Citizen)
  • President’s Spring Agenda Signals Continued Delays on New Rules (Center for Effective Government)

The Bank Oligopoly Sucks Away Economic Value

The following post first appeared on U.S News and was written by Wallace Tuberville at Demos

Without a doubt, the big banks should be broken up; the need is even more urgent than it was in 2007 or 2008. The Federal Reserve Bank of Dallas – hardly an Occupy Wall Street affiliate – titled its 2011 Annual Report “Choosing the Road to Prosperity: Why We Must End Too Big to Fail – Now.”

In the report, Dallas Fed President Richard W. Fisher called for a drastic “downsizing” of the megabanks. Financial institutions after the crash remain “too-big-to-fail,” he argued – in fact they’re bigger than ever – guaranteeing taxpayer bailouts when the system breaks down again.

big bank money grabHe’s right, of course. Banking in the United States has become extraordinarily concentrated. Waves of change have swept over financial services throughout the era of deregulation, primarily resulting in an economy skewed toward extraction of value by financial institutions. The financial crisis was actually the culmination of the process of concentration, as Lehman evaporated and Bear Stearns and Merrill Lynch were absorbed into JP Morgan Chase and Bank of America respectively. Well over half of all bank assets are now held by just five banks.

[See a collection of political cartoons on the economy.]

However, there is another argument against the megabanks not predicated on financial crisis. In fact, it happens every day.

“When competition declines, incentives often turn perverse and self-interest turns malevolent,” wrote the report’s chief researcher, Harvey Rosenblum. What he identified were distortions in a market that is dominated by an oligopoly of banks and the damage that can be done to the economy even if these banks do not fail.

It is clear that, aside from institutions that must be bailed out if they get into trouble, the concentration of banking activity into a handful of institutions has created an oligopoly that is empowered to parasitically extract value from the rest of the economy in dangerous amounts. The financial sector share of GDP has doubled in the last 30 years. In other words, the financial sector has not just done well; it has completely outpaced the rest of the productive sectors.

[See a collection of political cartoons on the budget and deficit.]

Bank profitability, in reality, camouflages this problem. The public and the regulators are reassured when they see that bank profits are higher. Unlike with other businesses, this is not necessarily a reassuring thing. So long as banks continue to trade in risky markets, there is a very close connection between profits and risk. Traders cannot make a profit without taking risks and banks are still incentivized to make bets that can go terribly wrong. Remember that the JP Morgan Chase “London Whale” trades lost the bank $6.5 billion in 2012, a little more than a year ago.

Breaking up the banks, either by resurrecting something like the Glass-Steagall Act (as recently proposed by the unlikely duo of Sens. Elizabeth Warren, D-Mass., and John McCain, R-Ariz.) or by implementing a so-called “Volcker Rule” with real teeth, is still priority one. It turns out that preventing another bailout – by shrinking the megabanks – also eliminates a costly oligopoly that siphons off value from the capital markets every day.