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Fascism and the Dangers of Economic Concentration

Technocrats marching in support of austerity, ready to slash government spending.

A 1980 broadcast highlights economic concentration and its historical relationship to fascism. The issue of the “1%” versus the “99%” is not new.

After discussion of the American corporate connections to the Third Reich, this program concludes with analysis of the perils of the concentration of economic power.

Several minutes in length, the conclusion of that program can be accessed here: Listen.

Of paramount significance is the possibility that concentration of economic power in the United States might eventually produce for Americans what it did for Germans in  the 1930’s.

The fact that many of the most important U.S. companies and individuals were deeply involved with Nazi industry and finance informs us that such a possibility is not as remote as it  might appear at first.

(These same interests attempted to overthrow Franklin D. Roosevelt in a coup attempt in 1934, seeking to install a government modeled on Mussolini’s “corporate state.” Mussolini and his fascisti are pictured at right.)

With the very able assistance of co-host Mark Ortiz, Dave recorded the first of the archive shows, Uncle Sam and the Swastika (M11), on Memorial Day weekend of 1980 (5/23/80).

The program echoes at the distance of thirty years the warning that James Stewart Martin sounded in his 1950 book All Honorable Men. Noting how attempts at breaking up Hitler’s German economic power base had been foiled by the Germans’ powerful American business partners, Martin detailed the same pattern of concentration of economic power in the United States that had led to the rise of Nazism in Germany.

In 2005, Uncle Sam and the Swastika was distilled into For The Record #511. Since then, the American and global economies have tanked and may well get worse. The significance of an economic collapse for the implementation of a fascist cabal figures significantly in the several minutes of this excerpt.

At more than 30 years’ distance from the original recording of Uncle Sam and the Swastika, the questions raised in this broadcast loom large. Will the “calm judgement of business necessity”–fascism–that Martin foresaw in 1950 come to pass?

We should note that Mussolini termed the fascist system–which he christened–“the corporate state.” Another way of conceptualizing it would be to think of fascism as “capitalism on full auto.”

Discussion

110 comments for “Fascism and the Dangers of Economic Concentration”

  1. Posted by Pterrafractyl | October 13, 2015, 5:02 pm
  2. The New York Times has a big new piece on the 158 ultra-wealthy families that have been taking full advantage of the post-Citizens United era of unlimited secret political giving. Surprise! They mostly give to Republicans and mostly made their fortunes in the financial and energy sectors. And they really, really, really want to get rid of the regulations in those sectors.

    Plus, they’re doing all this, not for themselves, but for the little guy (LOL) so more new fortunes can be created once all those pesky regulations are done away with. Yep, they’re capturing the political system and deregulation the economy for the little people. Or at least that’s what they’re telling us. Surprise:

    The New York Times
    Buying Power

    By NICHOLAS CONFESSORE, SARAH COHEN and KAREN YOURISH
    OCT. 10, 2015

    They are overwhelmingly white, rich, older and male, in a nation that is being remade by the young, by women, and by black and brown voters. Across a sprawling country, they reside in an archipelago of wealth, exclusive neighborhoods dotting a handful of cities and towns. And in an economy that has minted billionaires in a dizzying array of industries, most made their fortunes in just two: finance and energy.

    Now they are deploying their vast wealth in the political arena, providing almost half of all the seed money raised to support Democratic and Republican presidential candidates. Just 158 families, along with companies they own or control, contributed $176 million in the first phase of the campaign, a New York Times investigation found. Not since before Watergate have so few people and businesses provided so much early money in a campaign, most of it through channels legalized by the Supreme Court’s Citizens United decision five years ago.

    These donors’ fortunes reflect the shifting composition of the country’s economic elite. Relatively few work in the traditional ranks of corporate America, or hail from dynasties of inherited wealth. Most built their own businesses, parlaying talent and an appetite for risk into huge wealth: They founded hedge funds in New York, bought up undervalued oil leases in Texas, made blockbusters in Hollywood. More than a dozen of the elite donors were born outside the United States, immigrating from countries like Cuba, the old Soviet Union, Pakistan, India and Israel.

    But regardless of industry, the families investing the most in presidential politics overwhelmingly lean right, contributing tens of millions of dollars to support Republican candidates who have pledged to pare regulations; cut taxes on income, capital gains and inheritances; and shrink entitlement programs. While such measures would help protect their own wealth, the donors describe their embrace of them more broadly, as the surest means of promoting economic growth and preserving a system that would allow others to prosper, too.

    “It’s a lot of families around the country who are self-made who feel like over-regulation puts these burdens on smaller companies,” said Doug Deason, a Dallas investor whose family put $5 million behind Gov. Rick Perry of Texas and now, after Mr. Perry’s exit, is being courted by many of the remaining candidates. “They’ve done well. They want to see other people do well.”

    In marshaling their financial resources chiefly behind Republican candidates, the donors are also serving as a kind of financial check on demographic forces that have been nudging the electorate toward support for the Democratic Party and its economic policies. Two-thirds of Americans support higher taxes on those earning $1 million or more a year, according to a June New York Times/CBS News poll, while six in 10 favor more government intervention to reduce the gap between the rich and the poor. According to the Pew Research Center, nearly seven in 10 favor preserving Social Security and Medicare benefits as they are.

    Republican candidates have struggled to improve their standing with Hispanic voters, women and African-Americans. But as the campaign unfolds, Republicans are far outpacing Democrats in exploiting the world of “super PACs,” which, unlike candidates’ own campaigns, can raise unlimited sums from any donor, and which have so far amassed the bulk of the money in the election.

    The 158 families each contributed $250,000 or more in the campaign through June 30, according to the most recent available Federal Election Commission filings and other data, while an additional 200 families gave more than $100,000. Together, the two groups contributed well over half the money in the presidential election — the vast majority of it supporting Republicans.

    “The campaign finance system is now a countervailing force to the way the actual voters of the country are evolving and the policies they want,” said Ruy Teixeira, a political and demographic expert at the left-leaning Center for American Progress.

    Like most of the ultrawealthy, the new donor elite is deeply private. Very few of those contacted were willing to speak about their contributions or their political views. Many donations were made from business addresses or post office boxes, or wound through limited liability corporations or trusts, exploiting the new avenues opened up by Citizens United, which gave corporate entities far more leeway to spend money on behalf of candidates. Some contributors, for reasons of privacy or tax planning, are not listed as the owners of the homes where they live, further obscuring the family and social ties that bind them.

    But interviews and a review of hundreds of public documents — voter registrations, business records, F.E.C. data and more — reveal a class apart, distant from much of America while geographically, socially and economically intermingling among themselves. Nearly all the neighborhoods where they live would fit within the city limits of New Orleans. But minorities make up less than one-fifth of those neighborhoods’ collective population, and virtually no one is black. Their residents make four and a half times the salary of the average American, and are twice as likely to be college educated.

    Most of the families are clustered around just nine cities. Many are neighbors, living near one another in neighborhoods like Bel Air and Brentwood in Los Angeles; River Oaks, a Houston community popular with energy executives; or Indian Creek Village, a private island near Miami that has a private security force and just 35 homes lining an 18-hole golf course.

    Sometimes, across party lines, they are patrons of the same symphonies, art museums or at-risk youth programs. They are business partners, in-laws and, on occasion, even poker buddies.

    More than 50 members of these families have made the Forbes 400 list of the country’s top billionaires, marking a scale of wealth against which even a million-dollar political contribution can seem relatively small. The Chicago hedge fund billionaire Kenneth C. Griffin, for example, earns about $68.5 million a month after taxes, according to court filings made by his wife in their divorce. He has given a total of $300,000 to groups backing Republican presidential candidates. That is a huge sum on its face, yet is the equivalent of only $21.17 for a typical American household, according to Congressional Budget Office data on after-tax income.

    The donor families’ wealth reflects, in part, the vast growth of the financial-services sector and the boom in oil and gas, which have helped transform the American economy in recent decades. They are also the beneficiaries of political and economic forces that are driving widening inequality:As the share of national wealth and income going to the middle class has shrunk, these families are among those whose share has grown.

    The accumulation of wealth has been particularly rapid at the elite levels of Wall Street, where financiers who once managed other people’s capital now, increasingly, own it themselves. Since 1979, according to one study, the one-tenth of 1 percent of American taxpayers who work in finance have roughly quintupled their share of the country’s income. Sixty-four of the families made their wealth in finance, the largest single faction among the super-donors of 2016.

    But instead of working their way up to the executive suite at Goldman Sachs or Exxon, most of these donors set out on their own, establishing privately held firms controlled individually or with partners. In finance, they started hedge funds, or formed private equity and venture capital firms, benefiting from favorable tax treatment of debt and capital gains, and more recently from a rising stock market and low interest rates. In energy, some were latter-day wildcatters, early to capitalize on the new drilling technologies and high energy prices that made it economical to exploit shale formations in North Dakota, Ohio, Pennsylvania and Texas. Others made fortunes supplying those wildcatters with pipelines, trucks and equipment for “fracking.”

    In both energy and finance, their businesses, when successful, could throw off enormous amounts of cash — unlike industries in which wealth might have been tied up in investments. Those without shareholders or boards of directors have had unusual freedom to indulge their political passions. Together, the two industries accounted for well over half of the cash contributed by the top 158 families.

    A number of the families are tied to networks of ideological donors who, on the left and the right alike, have sought to fundamentally reshape their own political parties. More than a dozen donors or members of their families have been involved with the twice-yearly seminars hosted by the Kochs, whose organizations have pressed the U.S. Chamber of Commerce and other business groups to eliminate the Export-Import Bank. They include Mr. Deason and his wife; the brokerage pioneer Charles Schwab, whose wife, Helen, is among the donors; and Karen Buchwald Wright, whose family company makes compressors used to extract and transport natural gas.

    “Most of the people at the Koch seminars are entrepreneurs who have built it from the ground up — they built it themselves,” said Mr. Deason, who said he supported eliminating corporate subsidies and welfare, including those that benefit his own investments.

    Another group of the families, including the hedge fund investor George Soros and his son Jonathan, have ties to the Democracy Alliance, a network of liberal donors who have pushed Democrats to move aggressively on climate change legislation and progressive taxation. Those donors, many of them from Hollywood or Wall Street, have put millions of dollars behind Hillary Rodham Clinton.

    The families who give do so, to some extent, because of personal, regional and professional ties to the candidates. Jeb Bush’s father made money in the oil business, while Mr. Bush himself earned millions of dollars on Wall Street. Some of the candidates most popular among ultrawealthy donors have also served in elected office in Florida and Texas, two states that are home to many of the affluent families on the list.

    But the giving, more broadly, reflects the political stakes this year for the families and businesses that have moved most aggressively to take advantage of Citizens United, particularly in the energy and finance industries.

    The Obama administration, Democrats in Congress and even Mr. Bush have argued for tax and regulatory shifts that could subject many venture capital and private equity firms to higher levels of corporate or investment taxation. Hedge funds, which historically were lightly regulated, are bound by new rules with the Dodd-Frank regulations, which several Republican candidates have pledged to roll back and which Mrs. Clinton has pledged to defend.

    Aha! So the 158 ultras-rich families (who are mostly from the energy and finance sectors, are mostly giving to Republicans, and who provided most of the seed money raised by candidates in both parties) are doing all this ‘giving’ because they feel that deregulations will make it easier for the little guys to also get wealthy. Oh how philantrophic of them:


    But regardless of industry, the families investing the most in presidential politics overwhelmingly lean right, contributing tens of millions of dollars to support Republican candidates who have pledged to pare regulations; cut taxes on income, capital gains and inheritances; and shrink entitlement programs. While such measures would help protect their own wealth, the donors describe their embrace of them more broadly, as the surest means of promoting economic growth and preserving a system that would allow others to prosper, too.

    And in addition to their drive to deregulate for the little guy *guffaw*, these families have also taken it upon themselves to provide a helpful “financial check on demographic forces that have been nudging the electorate toward support for the Democratic Party and its economic policies”:


    In marshaling their financial resources chiefly behind Republican candidates, the donors are also serving as a kind of financial check on demographic forces that have been nudging the electorate toward support for the Democratic Party and its economic policies. Two-thirds of Americans support higher taxes on those earning $1 million or more a year, according to a June New York Times/CBS News poll, while six in 10 favor more government intervention to reduce the gap between the rich and the poor. According to the Pew Research Center, nearly seven in 10 favor preserving Social Security and Medicare benefits as they are.

    Presumably they’re doing all that for the little guy too.

    So now we get to see how successful the American Oligarchy is going to be in dismantling the financial regulations that were put in place following the meltdown. And just remember, if they’re successful in turning the regulatory clock back to 2007, don’t think of it as a disaster waiting to happen. Just think of all the new family fortunes from little guys like yourself that can be made while they re-crash the financial sector:

    The New York Times
    The Conscience of a Liberal
    Angus Deaton and the Dodd-Frank Election

    Paul Krugman
    Oct 12 9:16 am

    Angus Deaton has won the Nobel, which is wonderful — dogged, careful empirical work at the micro level, tracking and making sense of individual households, their choices, and why they matter.

    Oh, and cue the usual complaints that this isn’t a “real” Nobel. Hey, this is just a prize given by a bunch of Swedes, as opposed to the other prizes, which are given out by, um, bunches of Swedes.

    Anyway, Deaton is also a fine writer with important things to say about political economy. Cardiff Garcia excerpts a passage in which he explains why we should care about the concentration of wealth at the top:

    [T]here is a danger that the rapid growth of top incomes can become self-reinforcing through the political access that money can bring. Rules are set not in the public interest but in the interest of the rich, who use those rules to become yet richer and more influential.

    To worry about these consequences of extreme inequality has nothing to do with being envious of the rich and everything to do with the fear that rapidly growing top incomes are a threat to the wellbeing of everyone else.

    As if to illustrate his point, this remarkable piece of reporting by Confessore, Cohen, and Yourish documents the remarkable fact that campaign finance this election cycle is dominated by a tiny number of extremely wealthy people — more than half the total from just 158 families. This money is overwhelmingly flowing to Republicans.

    Some analysts suggest that this is just because there’s more action on the Republican side, with the field still wide open. But I’m pretty sure that’s nothing like the whole story. The biggest piece of the super-rich-super-donor story is money from the financial sector. And there has, as the chart above shows, been a huge swing of finance capital away from Democrats to Republicans that began in the 2012 election cycle — that is, after the passage of financial reform. Basically, we’re looking at the people who brought you the financial crisis trying to buy the chance to do it all over again.

    “The biggest piece of the super-rich-super-donor story is money from the financial sector. And there has, as the chart above shows, been a huge swing of finance capital away from Democrats to Republicans that began in the 2012 election cycle — that is, after the passage of financial reform. Basically, we’re looking at the people who brought you the financial crisis trying to buy the chance to do it all over again.
    And they’re doing it all for the little guy. Yep.

    Posted by Pterrafractyl | October 13, 2015, 5:03 pm
  3. Here’s a reminder that the privatization of the US justice system hasn’t just involved privatizing prisons and policing: thanks, in part, to a 2011 Supreme Court ruling, the profit motive is increasingly getting to work its market magic during actual legal hearings too. Especially for cases that would call for a class action lawsuit in a non-privatized legal system:

    The New York Times
    In Arbitration, a ‘Privatization of the Justice System’

    JESSICA SILVER-GREENBERG and MICHAEL CORKERY
    NOV. 1, 2015

    Deborah L. Pierce, an emergency room doctor in Philadelphia, was optimistic when she brought a sex discrimination claim against the medical group that had dismissed her. Respected by colleagues, she said she had a stack of glowing evaluations and evidence that the practice had a pattern of denying women partnerships.

    She began to worry, though, once she was blocked from court and forced into private arbitration.

    Presiding over the case was not a judge but a corporate lawyer, Vasilios J. Kalogredis, who also handled arbitrations. When Ms. Pierce showed up one day for a hearing, she said she noticed Mr. Kalogredis having a friendly coffee with the head of the medical group she was suing.

    During the proceedings, the practice withheld crucial evidence, including audiotapes it destroyed, according to interviews and documents. Ms. Pierce thought things could not get any worse until a doctor reversed testimony she had given in Ms. Pierce’s favor. The reason: Male colleagues had “clarified” her memory.

    When Mr. Kalogredis ultimately ruled against Ms. Pierce, his decision contained passages pulled, verbatim, from legal briefs prepared by lawyers for the medical practice, according to documents.

    “It took away my faith in a fair and honorable legal system,” said Ms. Pierce, who is still paying off $200,000 in legal costs seven years later.

    If the case had been heard in civil court, Ms. Pierce would have been able to appeal, raising questions about testimony, destruction of evidence and potential conflicts of interest.

    But arbitration, an investigation by The New York Times has found, often bears little resemblance to court.

    Over the last 10 years, thousands of businesses across the country — from big corporations to storefront shops — have used arbitration to create an alternate system of justice. There, rules tend to favor businesses, and judges and juries have been replaced by arbitrators who commonly consider the companies their clients, The Times found.

    The change has been swift and virtually unnoticed, even though it has meant that tens of millions of Americans have lost a fundamental right: their day in court.

    “This amounts to the whole-scale privatization of the justice system,” said Myriam Gilles, a law professor at the Benjamin N. Cardozo School of Law. “Americans are actively being deprived of their rights.”

    All it took was adding simple arbitration clauses to contracts that most employees and consumers do not even read. Yet at stake are claims of medical malpractice, sexual harassment, hate crimes, discrimination, theft, fraud, elder abuse and wrongful death, records and interviews show.

    The family of a 94-year-old woman at a nursing home in Murrysville, Pa., who died from a head wound that had been left to fester, was ordered to go to arbitration. So was a woman in Jefferson, Ala., who sued Honda over injuries she said she sustained when the brakes on her car failed. When an infant was born in Tampa, Fla., with serious deformities, a lawsuit her parents brought against the obstetrician for negligence was dismissed from court because of an arbitration clause.

    Even a cruise ship employee who said she had been drugged, raped and left unconscious in her cabin by two crew members could not take her employer to civil court over negligence and an unsafe workplace.

    For companies, the allure of arbitration grew after a 2011 Supreme Court ruling cleared the way for them to use the clauses to quash class-action lawsuits. Prevented from joining together as a group in arbitration, most plaintiffs gave up entirely, records show.

    Still, there are thousands of Americans who — either out of necessity or on principle — want their grievances heard and have taken their chances in arbitration.

    Little is known about arbitration because the proceedings are confidential and the federal government does not require cases to be reported. The secretive nature of the process makes it difficult to ascertain how fairly the proceedings are conducted.

    Some plaintiffs said in interviews that arbitration had helped to resolve their disputes quickly without the bureaucratic headaches of going to court. Some said the arbitrators had acted professionally and without bias.

    But The Times, examining records from more than 25,000 arbitrations between 2010 and 2014 and interviewing hundreds of lawyers, arbitrators, plaintiffs and judges in 35 states, uncovered many troubling cases.

    Behind closed doors, proceedings can devolve into legal free-for-alls. Companies have paid employees to testify in their favor. A hearing that lasted six hours cost the plaintiff $150,000. Arbitrations have been conducted in the conference rooms of lawyers representing the companies accused of wrongdoing.

    Winners and losers are decided by a single arbitrator who is largely at liberty to determine how much evidence a plaintiff can present and how much the defense can withhold. To deliver favorable outcomes to companies, some arbitrators have twisted or outright disregarded the law, interviews and records show.

    “What rules of evidence apply?” one arbitration firm asks in the question and answer section of its website. “The short answer is none.”

    Like the arbitrator in Ms. Pierce’s case, some have no experience as a judge but wield far more power. And unlike the outcomes in civil court, arbitrators’ rulings are nearly impossible to appeal.

    When plaintiffs have asked the courts to intervene, court records show, they have almost always lost. Saying its hands were tied, one court in California said it could not overturn arbitrators’ decisions even if they caused “substantial injustice.”

    Unfettered by strict judicial rules against conflicts of interest, companies can steer cases to friendly arbitrators. In turn, interviews and records show, some arbitrators cultivate close ties with companies to get business.

    Some of the chumminess is subtler, as in the case of the arbitrator who went to a basketball game with the company’s lawyers the night before the proceedings began. (The company won.) Or that of the man overseeing an insurance case brought by Stephen R. Syson in Santa Barbara, Calif. During a break in proceedings, a dismayed Mr. Syson said he watched the arbitrator and defense lawyer return in matching silver sports cars after going to lunch together. (He lost.)

    Other potential conflicts are more explicit. Arbitration records obtained by The Times showed that 41 arbitrators each handled 10 or more cases for one company between 2010 and 2014.

    “Private judging is an oxymoron,” Anthony Kline, a California appeals court judge, said in an interview. “This is a business and arbitrators have an economic reason to decide in favor of the repeat players.”

    With so much latitude, some organizations are requiring their employees and customers to take their disputes to Christian arbitration. There, the proceedings can incorporate prayer, and arbitrators from firms like the Colorado-based Peacemaker Ministries can consider biblical scripture in determining their rulings.

    The firms that run the arbitration proceedings say the process allows plaintiffs to have a say in selecting an arbitrator who they think is most likely to render a fair ruling.

    The American Arbitration Association and JAMS, the country’s two largest arbitration firms, said in interviews that they both strived to ensure a professional process and required their arbitrators to disclose any conflicts of interest before taking a case.

    The American Arbitration Association, a nonprofit, said it allowed plaintiffs to reject arbitrators on the ground of potential bias.

    JAMS, a for-profit company, said it did the same and put extra protections in place for consumers and employees. “Their core value is neutrality — their business depends on it,” Kimberly Taylor, chief operating officer of JAMS, said of its arbitrators.

    But in interviews with The Times, more than three dozen arbitrators described how they felt beholden to companies. Beneath every decision, the arbitrators said, was the threat of losing business.

    Victoria Pynchon, an arbitrator in Los Angeles, said plaintiffs had an inherent disadvantage. “Why would an arbitrator cater to a person they will never see again?” she said.

    Arbitration proved to be devastating to Debbie Brenner of Peoria, Ariz., who believes she did not get a fair shake in her fraud case against a for-profit school chain that nearly left her bankrupt. In a rambling decision against Ms. Brenner that ran to 313 pages, the arbitrator mused on singing lessons, Jell-O and Botox.

    “It was a kangaroo court,” Ms. Brenner said. “I can’t believe this is America.”

    Companies can even specify in contracts with their customers and employees that all cases will be handled exclusively by one arbitration firm. Big law firms also bring repeat business to individual arbitrators, according to documents and interviews with arbitrators. Jackson Lewis, for example, had 40 cases with the same arbitrator in San Francisco over a five-year period.

    The JAMS arbitrator in an employment case brought by Leonard Acevedo of Pomona, Calif., against the short-term lender CashCall simultaneously had 28 other cases involving the company, according to documents disclosed by JAMS during the proceedings.

    “This whole experience burst my bubble,” said Mr. Acevedo, a 57-year-old veteran, who lost his case in October 2014. His lawyer, James Cordes, offered a more critical take. “It clearly appears that the arbitrator was working for the company,” Mr. Cordes said. “And he disregarded evidence to hand a good result to his client.”

    JAMS denied that its arbitrator had been influenced by CashCall.

    Linda S. Klibanow, an employment arbitrator in Pasadena, Calif., acknowledged the potential for conflicts of interest but said she thought most arbitrators, many of whom are retired judges, could remain fair.

    “I think that most arbitrators put themselves in the place of a jury as the fact finder and try to render a fair decision,” Ms. Klibanow said.

    Elizabeth Bartholet, an arbitrator in Boston who has handled more than 100 cases, agreed that many arbitrators had good intentions, but she said that the system made it challenging to remain unbiased. Ms. Bartholet recalled that after a company complained that she had scheduled an extra hearing for a plaintiff, the arbitration firm she was working with canceled it behind her back.

    A year later, she said, she was at an industry conference when she overheard two people talking about how an arbitrator in Boston had almost cost that firm a big client. “It was a conference on ethics, if you can believe it,” said Ms. Bartholet, a law professor at Harvard.

    That’s quite a trend to just sort of sneak up on the American public over the last decade:


    Over the last 10 years, thousands of businesses across the country — from big corporations to storefront shops — have used arbitration to create an alternate system of justice. There, rules tend to favor businesses, and judges and juries have been replaced by arbitrators who commonly consider the companies their clients, The Times found.

    The change has been swift and virtually unnoticed, even though it has meant that tens of millions of Americans have lost a fundamental right: their day in court.

    “This amounts to the whole-scale privatization of the justice system,” said Myriam Gilles, a law professor at the Benjamin N. Cardozo School of Law. “Americans are actively being deprived of their rights.”

    All it took was adding simple arbitration clauses to contracts that most employees and consumers do not even read. Yet at stake are claims of medical malpractice, sexual harassment, hate crimes, discrimination, theft, fraud, elder abuse and wrongful death, records and interviews show.

    “Private judging is an oxymoron,” Anthony Kline, a California appeals court judge, said in an interview. “This is a business and arbitrators have an economic reason to decide in favor of the repeat players.”

    All it took was adding simple arbitration clauses to contracts that most employees and consumers do not even read
    Yep, that’s all it took to basically overturn a foundation of the justice system…tricking people via the fine print. Well, that and the Supreme Court’s repeated stamps of approval.

    And in case you were curious, yes, Chief Justice John Roberts was involved with the effort to expand arbration to consumers and employees (it was originally intended just for business) back when he was a corporate lawyer. He’s building one hell of a legacy.

    Posted by Pterrafractyl | November 2, 2015, 4:03 pm
  4. You know how the Koch’s have been trying to sell themselves are friendly oligarchs with things like their advocacy for sweeping criminal justice reform. Well, while it certainly is great whenever anyone calls for sweeping reforms to a justice system that imposes incredibly harsh sentencing for low-level offenses, this is the Koch brothers we’re talking about here. So…surprise!…it’s not just the low-level offenders that the Kochs want to keep out of jail:

    The Huffington Post
    House Bill Would Make It Harder To Prosecute White-Collar Crime
    CEOs could be off the hook for even gross negligence.

    Zach Carter
    Senior Political Economy Reporter, The Huffington Post

    Posted: 11/16/2015 03:23 PM EST | Edited: 11/16/2015 03:26 PM EST

    WASHINGTON — House Republicans on Monday unveiled legislation that would decriminalize a broad swath of corporate malfeasance, a move that injects white-collar crime issues into the thus-far bipartisan agenda on criminal justice reform.

    The public debate over criminal justice reform has focused on reducing severe sentences for nonviolent drug offenses. But some influential conservative voices, including the billionaire Koch brothers and the Heritage Foundation, have quietly advocated for curbing prosecution of corporate offenses as well.

    The House bill would eliminate a host of white-collar crimes where the damaging acts are merely reckless, negligent or grossly negligent. If enacted, it would make it more difficult for federal authorities to pursue executive wrongdoing, from financial fraud to environmental pollution.

    Department of Justice spokesman Peter Carr blasted the legislation in a statement provided to HuffPost, saying it “would create confusion and needless litigation, and significantly weaken, often unintentionally, countless federal statutes,” including “those that play an important role in protecting the public welfare … protecting consumers from unsafe food and medicine.”

    The House Judiciary Committee will begin marking up its criminal justice reform package, including the latest bill, on Wednesday. Chairman Bob Goodlatte (R-Va.) and Rep. John Conyers (D-Mich.), the panel’s top-ranking Democrat, have been working on bipartisan legislation for months.

    In October, the Senate Judiciary Committee approved related reform legislation that does not include language to limit white-collar crime prosecutions, although Sen. Orrin Hatch (R-Utah) had pressed for its inclusion.

    “These are not esoteric matters,” said Robert Weissman, president of the consumer advocacy group Public Citizen. “There is absolutely no reason for the otherwise laudable criminal justice reform bill to contain any measure to weaken already feeble standards for corporate criminal prosecution.”

    Hatch and other supporters of white-collar decriminalization efforts have pushed for “mens rea” reform — a reference to the legal standard of intent which a defendant must have in order to be convicted of a crime. While current law allows corporate crime prosecutions of high-level managers based on negligent or reckless behavior, the House legislation would require many such offenses to be “knowing” crimes, in which executives were explicitly aware of the activity being conducted by other employees. In some cases, prosecutors would also have to prove that the executives knew that the activity was illegal.

    “The House language violates the basic precept that ‘ignorance of the law is no defense,'” Weissman said in a written statement.

    Large, complex corporations can diffuse responsibility for illegal activity, which can make it difficult for prosecutors to prove that executives knowingly and willfully violated the law. CEOs can also pressure lower-level employees to violate the law without explicitly telling them to do so — by, say, demanding profits or other results that are impossible to reach without breaking the law. Under current law, prosecutors can bring cases on the grounds that such behavior by executives is criminally reckless or negligent, even if they cannot prove the CEO was actually aware that underlings were breaking the law to meet impossible metrics.

    In practice, however, corporate crime prosecutions are already relatively rare and frequently skip over executives and other top managers. “When employees are charged, it’s often lower-level employees,” University of Virginia law professor Brandon Garrett told HuffPost Live in September. “More the pawns than the kingpins.”

    The Justice Department has been heavily criticized for its weak enforcement against corporate crimes during the Obama years. No Wall Street executives were charged for the misconduct that caused the 2008 financial crisis.

    “These are not esoteric matters…There is absolutely no reason for the otherwise laudable criminal justice reform bill to contain any measure to weaken already feeble standards for corporate criminal prosecution.”
    Well, there may be no good reasons for an otherwise laudable criminal justice reform bill to contain any measure to weaken already feeble standards for corporate criminal prosecution. But there are reasons. Around 900 million of them.

    Posted by Pterrafractyl | November 17, 2015, 10:04 am
  5. While it was inevitable that the privatization of workplace justice via arbitration clauses was going to grow by leaps and bounds following the Supreme Court’s 2011 ruling on the topic, as the article below points out, that the parallel growth of temp workers is only going to add a few more leaps and bounds to the privatization of workplace justice.

    The article also points out another key consideration with respect to the growth of arbitration clauses designed to replace legal recourse for employees: In terms of the public knowing about workplace abuses that the public should know about, knowledge of the abuses that get arbitrated by the privatized justice system tends to remain private too:

    Boston Globe

    More employers limiting workers’ ability to sue

    By Katie Johnston Globe Staff
    December 27, 2015

    In January of 2014, a worker at a New Bedford seafood processing plant died after becoming entangled in a shellfish-shucking machine.

    As with many workplace fatalities, the death was followed by a change in policy for the workers. But not the kind you might expect.

    The Rhode Island temporary agency that provides much of the workforce for the shellfish company asked employees to sign waivers agreeing they would not sue the plant if they were injured on the job.

    Workers are increasingly being required to sign documents like this that waive or limit their right to take legal action under certain circumstances, such as in discrimination or pay disputes, labor lawyers and advocates say.

    Some documents require them to submit instead to mandatory arbitration that keeps employees’ complaints out of court and often precludes class-action lawsuits.

    The number of companies using such agreements more than doubled between 2012 and 2014, according to a recent survey by Carlton Fields Jorden Burt, a law firm that represents management on employment issues.

    These types of job-related waivers echo the surge in contracts containing arbitration agreements that companies such as credit card issuers and cellphone providers have used to prevent consumers from suing them over billing disputes. The US Supreme Court has upheld such agreements several times in recent years, shooting down a consumer class action against DirecTV earlier this month.

    Limiting workers to arbitration is problematic, the advocates said, because that process keeps private the complaints that might otherwise have been made public in the court system. And barring class-action lawsuits prevents workers from banding together over violations that, individually, might not generate a big enough award to make a suit worthwhile.

    The Massachusetts Employment Lawyers Association said companies are also imposing other restrictions on workers, such as shortening the time they have to file a claim or moving disputes to other states — where headquarters are located, for instance — that may be more favorable to employers.

    “It’s a huge problem,” said Lori Jodoin, president of the Massachusetts Employment Lawyers Association, an organization of attorneys who represent employees. “It gives [companies] a legal loophole where they can make up their own rules.”

    Business groups say these agreements are intended to manage complaints in a timely, cost-effective manner and are not about shielding companies from lawsuits. Companies don’t always necessarily want to avoid court, added Matt Moschella, a partner at Sherin and Lodgen in Boston who represents employers.

    “There’s a deterrent effect when an employee sees another employee bring a claim and lose,” he said.

    Nonetheless, advocates say more workplace claims of discrimination, sexual harassment, and wage violations are being handled privately, or not being reported at all, which they argue means employers are held less accountable for treating workers unfairly.

    “The real concern for a lot of people is what we don’t see, and that is people who opt out of the process altogether because the procedural hurdles appear or are in fact so insurmountable that folks are deterred from exercising their rights,” said David Lopez, general counsel for the US Equal Employment Opportunity Commission, which enforces antidiscrimination laws. “You’re not really able to shine the sunshine on unlawful practices.”

    In the past, such arrangements were aimed at executives, but now they are spreading through the ranks. Low-wage workers are particularly vulnerable, lawyers and advocates say, because they tend to be more in need of work and less inclined to object.

    Even temporary workers are being targeted, such as those at the seafood processing plant in New Bedford. The plant is owned by Sea Watch International of Maryland, but many of its line workers are supplied and employed by Workforce Unlimited, a temp agency in Johnston, R.I.

    After a supervisor was killed there last year, the federal Occupational Safety and Health Administration in June 2014 fined Sea Watch and the temp agency for multiple safety violations, noting that both companies shared responsibility for the safety of the temp workers.

    Advocates say workers’ compensation payments often don’t fully cover their expenses. More to the point, they added, workers should have the right to seek damages from the company overseeing the work site if something goes wrong.

    “You’re creating an atmosphere where the people who have direct control over me don’t really have any great incentive to provide for my safety,” said Claudine Cloutier, a personal injury lawyer at Keches Law Group in Taunton.

    Workers in the on-demand economy are also being given limited access to the court system. Thousands of Uber drivers in California who signed arbitration agreements were initially excluded from a class-action lawsuit brought by Boston lawyer Shannon Liss-Riordan, over their status as independent contractors. But a federal judge in San Francisco ruled this month that the arbitration clause was not enforceable due to a technicality in California law.

    A bill in the Massachusetts Legislature, recently approved by the Labor and Workforce Development committee, would make it illegal for companies to require employees to sign arbitration clauses and waive other legal rights before a dispute arises.

    Associated Industries of Massachusetts opposes it, saying it could lead to more “drawn-out, frivolous, and full-blown court cases.”

    “All it would benefit is those attorneys who want to maximize the possibility of getting damages and attorneys’ fees,” said Joseph Ambash, an lawyer at Fisher & Phillips in Boston who represents employers.

    But worker advocates say that resolving workers’ grievances quietly without being able to hold companies publicly accountable is unjust.

    “Because no one finds out about it,” said Cambridge lawyer Tyler Fox, “what’s the incentive for it not to happen again?”

    “You’re creating an atmosphere where the people who have direct control over me don’t really have any great incentive to provide for my safety”
    That does appear to be the case.

    Of course, if you listen to the industries employing these arbitration clauses, the waivers against suing aren’t actually about preventing lawsuits. It’s just about being more efficient and cost effective! Also, despite the fact that arbitration clauses make it much less likely that the public will find out about systematic abuses, no one would benefit from restricting the widespread use of arbitration clauses other than the trial lawyers:

    Business groups say these agreements are intended to manage complaints in a timely, cost-effective manner and are not about shielding companies from lawsuits. Companies don’t always necessarily want to avoid court, added Matt Moschella, a partner at Sherin and Lodgen in Boston who represents employers.

    “There’s a deterrent effect when an employee sees another employee bring a claim and lose,” he said.

    Nonetheless, advocates say more workplace claims of discrimination, sexual harassment, and wage violations are being handled privately, or not being reported at all, which they argue means employers are held less accountable for treating workers unfairly.

    Associated Industries of Massachusetts opposes it, saying it could lead to more “drawn-out, frivolous, and full-blown court cases.”

    “All it would benefit is those attorneys who want to maximize the possibility of getting damages and attorneys’ fees,” said Joseph Ambash, an lawyer at Fisher & Phillips in Boston who represents employers.

    But worker advocates say that resolving workers’ grievances quietly without being able to hold companies publicly accountable is unjust.

    “Because no one finds out about it,” said Cambridge lawyer Tyler Fox, “what’s the incentive for it not to happen again?”

    Yes, restricting this sudden explosion of arbitration clauses for low-wage and temp workers in industries like food processing would only benefit trial lawyers. And no one else.

    Private justice. It’s an oldie but a goodie

    Posted by Pterrafractyl | December 28, 2015, 5:29 pm
  6. American workers have long been both unhappy and largely clueless about the size of the pay gap between corporate CEOs and average workers. Well, the CEO compensation information for S&P 500 CEOs is in for 2015. And unless the average worker assumes the average S&P 500 CEO got a raise worth 10 times the average employee’s annual compensation, they’re probably less unhappy than they should be but certainly more clueless:

    Associated Press

    CEO pay in 2015: When a $468,449 raise is typical

    By Stan Choe|AP May 25, 2016

    NEW YORK — CEOs at the biggest companies got a 4.5 percent pay raise last year. That’s almost double the typical American worker’s, and a lot more than investors earned from owning their stocks — a big fat zero.

    The typical chief executive in the Standard & Poor’s 500 index made $10.8 million, including bonuses, stock awards and other compensation, according to a study by executive data firm Equilar for The Associated Press. That’s up from the median of $10.3 million the same group of CEOs made a year earlier.

    The raise alone for median CEO pay last year, $468,449, is more than 10 times what the typical U.S. worker makes in a year. The median full-time worker earned $809 weekly in 2015, up from $791 in 2014.

    “With inflation running at less than 2 percent, why?” asks Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

    The answer is complicated. In some cases, CEOs got big stock or option packages after signing new employment contracts. In others, boards bumped up salaries to get closer to what their rivals pay. Some CEOs got larger bonuses for hitting profit goals or improving worker safety. CEO pay packages now hinge on multiple layers of sometimes esoteric measurements of performance. That’s a result of corporate boards attempting to respond to years of criticism about excessiveness from Main Street America, regulators and even candidates on the presidential trail this year.

    One bright spot, experts say, is the rise in the number of companies that tie CEO pay to how well their stocks perform. “There’s progress generally in aligning compensation with shareholder returns,” says Stu Dalheim, vice president of governance and advocacy at Calvert Investments, whose mutual funds look for socially and environmentally responsible companies. “But I don’t think this compensation is sustainable long term, because the U.S. population is increasingly focused and aware of the disparity.”

    PAY BREAKDOWN

    More than half the median compensation of CEO pay is coming from stock and options, rather than cash. And companies are increasingly meting out those stock and option awards based on performance.

    About a quarter of CEO incentive awards in the S&P 500 use total shareholder return as one of their measurements of performance. That’s more than double the percentage from three years earlier. Companies also use familiar measurements like revenue and wonkier ones like return on invested capital.

    The tie to shareholder return is one reason the rise in median CEO pay last year was the second-slowest in the past five years. Of the 341 executives in this year’s pay survey, the median stock returned zero in the latest fiscal year. Last year’s 4.5 percent raise for CEOs was faster than the prior year’s 0.8 percent, but well below the 8.8 percent gain of 2013.

    Even though CEO pay was up last year when stock returns were flat, big investors don’t see it as a necessarily bad thing. Many say they take a longer view, similar to how they hope to hold onto their stock investments for many years.

    Capital Group, whose American Funds family of mutual funds rank among the country’s biggest, goes back at least three years when considering CEO pay versus performance, says Anne Chapman, vice president of investment operations.

    The Standard & Poor’s 500 index returned a total of 53 percent in the three years through 2015.

    NO. 1 ON THE CHART

    The top-paid CEO in this past year’s survey, Expedia’s Dara Khosrowshahi, made $94.6 million last year. Most of that came from stock options, which came as part of a new five-and-a-half-year employment agreement and which vest over several years. He’ll get a chunk of those options, currently valued at $30.4 million, only if he’s able to push the stock up to an average of $170 in the run up to his contract’s end in September 2020. Expedia stock closed Tuesday at $113.17.

    “This is a great example of a pay-for-performance CEO compensation plan,” says Sarah Gavin, spokeswoman for Expedia. “He’s really led the company in a turnaround, and this is about him continuing to perform and return real value to customers, partners and shareholders over the next five years.”

    Expedia’s stock returned 47 percent last year.

    At Viacom, shareholders lost 42 percent in its latest fiscal year, which ended in September. That’s even though CEO Philippe Dauman made $54.1 million, a 22 percent raise from the prior year.

    Much of Dauman’s compensation was due to a contract renewal, which included stock and options that vest over several years. Without the contract renewal, his pay would have dropped 16 percent.

    Viacom declined to comment.

    THE WIDENING GAP

    Scrutiny has been increasing on CEO pay, and many Americans say they feel left behind in the economy even though the Great Recession technically ended nearly seven years ago. This recovery has meant big gains for stocks – and for CEOs – but not so much for the typical household.

    Anger is high. Nearly three quarters of Americans believe CEOs are paid an incorrect amount, relative to the average worker, according to Stanford University’s Rock Center for Corporate Governance. And that’s even though most Americans severely underestimate how much CEOs make. The typical American believes big-company CEOs average $1 million in pay.

    Starting next year, companies will have to begin showing how much more their CEOs make than their typical worker. That’s when the Securities and Exchange Commission has told public companies to start disclosing the ratio of its CEO’s compensation versus its median employee. It’s the latest move by the government to shed more light on executive pay.

    GIVING THE OK ON PAY

    While many Americans say they’re angry about how much CEOs are making, the boards of directors who set their pay aren’t. They say they’re setting pay for performance, and in line with their competitors. That culture of benchmarking compensation against peers is one reason why pay keeps escalating, says the University of Delaware’s Elson.

    “Everyone is being compared to everyone else, and everyone wants to be higher,” he says. “We have to get out of this Lake Wobegon and change channels and get back to a pay scheme that’s rationally based.”

    Most shareholders, though, seem to agree with the boards of directors. Stock holders, whether by themselves or through the mutual funds they own, get the opportunity to vote on whether they think CEO compensation is fair at companies’ annual meetings. It’s called the “say-on-pay” vote, and companies routinely get more than 70 percent of shares voting in favor of pay packages.

    Oftentimes, mutual-fund companies say they’d prefer to talk directly with board directors about changing CEO pay, rather than lodge “No” votes at the annual meeting. Many say they get better results, but critics have begun pushing mutual-fund companies and other big stock shareholders with clout to offer up more resistance as CEO pay sets records.

    UNANTICIPATED CONSEQUENCES

    Regardless of whether it’s fair for CEOs to earn such large checks, a big payday can also be a warning sign for investors. After looking at CEOs’ pay and performance from 1994 to 2011, researchers found that the highest-paid CEOs in an industry tend to lead their companies to weaker stock returns in ensuing years.

    Michael Cooper, a finance professor at the University of Utah and one of the paper’s authors, is quick to say that he can’t be sure whether the high pay caused the weaker returns, or whether they’re just correlated. But he says a likely explanation is that big paychecks can make CEOs overconfident and lead to wasteful spending decisions.

    He’s in the midst of updating the data now, to run through 2015, but the trend seems to have held up. “We’re building the tables right now,” he says. “It’s still very strong.”

    “One bright spot, experts say, is the rise in the number of companies that tie CEO pay to how well their stocks perform. “There’s progress generally in aligning compensation with shareholder returns,” says Stu Dalheim, vice president of governance and advocacy at Calvert Investments, whose mutual funds look for socially and environmentally responsible companies. “But I don’t think this compensation is sustainable long term, because the U.S. population is increasingly focused and aware of the disparity.””
    Huh. So encouraging CEOs to jack up their stock prices in order to maximize their personal compensation is seen a good thing again. That’s, uh, a bit retro. But, ok, maybe directing their corporation to buy back their own shares at record levels was the kind of innovation the US economy needed. Great job CEOs!

    And assuming wise investments like spending almost all of their profits on stock buybacks in recent years ends up being the kind of decisions that generate real wealth for the corporations, hopefully some of that can finally trickle down to the clueless workers before they finally realize just how thoroughly they’ve been scammed.

    Or maybe these innovative CEOs will prove their worth by devising schemes that actually avoid the need to raise their employees’ wages at all while simultaneously projecting a nice and caring caring. That would be kind of impressive.

    Yeah, maybe it’ll be the latter kind of innovation…

    Posted by Pterrafractyl | June 1, 2016, 2:57 pm
  7. Using the First Amendment right to free speech to justify sleazy corporate practices is unfortunately nothing new for American law. Especially for the Roberts court after Citizens United used the First Amendment to flood the US political system with unprecedented amounts of money. So, with that in mind, check out the latest sleazy attempt to misuse the First Amendment:

    In These Times

    Judge’s Ruling Re-Opens a Major Loophole that Allows Union Busters To Remain in the Shadows

    BY Moshe Z. Marvit
    Tuesday, Jul 5, 2016, 2:11 pm

    Earlier this year, the U.S. Department of Labor (DOL) passed the “persuader rule” that closed a major loophole, which has for decades allowed employers to hire attorneys and consultants to secretly assist them in what is politely referred to in the industry as “union avoidance.” The goal of this activity is to persuade and prevent workers from organizing unions.

    The new rule did not try to make the consultants’ and attorneys’ practices illegal, or regulate the types of activities that employers and consultants could engage in; it was simply intended to provide transparency to workers who are the subject of a coordinated anti-union campaign. But last week, a Texas federal district court judge issued a nationwide injunction prohibiting the DOL from implementing the rule.

    The persuader rule reinterpreted the “advice” exemption in Section 203(c) of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), which had only required disclosure when employers hired outside consultants who directly communicated with employees. Under the previous interpretation of the exemption, the vast majority of employers who hire labor consultants—sometimes referred to as “union busters”—and the consultants they hire have been able to evade their filing requirements and remain in the shadows by having these consultants work behind the scenes.

    As a result, the workers are never privy to who is coordinating the anti-union campaign or how much their employers are spending on it. It is estimated that employers in 71-87 percent of organizing drives hire one or more consultants, yet because of the massive loophole in the law, only 387 agreements were filed by employers and consultants.

    The LMRDA was passed to deal with the persistent problem of employers’ interference with workers’ rights to organize. A 1980 Congressional Sub-Committee Report described the long history of employers using

    outside assistance to combat union organizing efforts since well before federal legislation to regulate labor-management conflict was enacted. Private detectives and ”professional goons” were hired by employers, who were also assisted by law enforcement personnel. Anti-union tactics included spying, blacklisting, firing, physical intimidation, violence, and jailings.

    Twenty years earlier, in the Final Report preceding the passage of the LMRDA, Congress that the outside “spy” and “professional goons” had morphed, and “a new and more sophisticated outsider had appeared: the ‘labor relations consultant.’ ” As a result, the 1959 Act required employers and any consultants they hired to file a report if they made any arrangements or spent any money “to interfere with, restrain, or coerce employees in the exercise of the right to organize and bargain collectively through representatives of their own choosing.”

    The new persuader rule, which covers all agreements and payments after July 1, was intended to close this loophole. The rule requires employers who hire anti-union consultants (and those consultants hired) to disclose to the DOL the agreement and the amounts paid. It would not require disclosure of what the consultants said or any legal advice sought. It is akin to a requirement that political campaign ads disclose who is paying for the ad so that people know who is behind the message they are receiving.

    But now, under last week’s injunction, all of that is in jeopardy.

    “This was one of the most one-sided orders I have ever seen,” explains Seattle University School of Law Professor Charlotte Garden. “The court found every one of the theories brought by the plaintiffs likely to succeed.”

    The suit was brought by the National Federation of Independent Business, the Texas Association of Business, the Lubbock Chamber of Commerce, the National Association of Home Builders, the Texas Association of Builders, and a group of GOP-controlled states. Some of these organizations were concerned that their current activities of providing anti-union seminars and materials would require them to file reports identifying themselves as labor relations consultants.

    Perhaps the most surprising group to take a side in this case was the American Bar Association (ABA), whose mission is “To serve equally our members, our profession and the public by defending liberty and delivering justice as the national representative of the legal profession.” The ABA cited attorneys’ ethical rules for their opposition to the DOL Rule, and said, “by imposing these unfair reporting burdens on both the lawyers and the employer clients they represent, the proposed Rule could very well discourage many employers from seeking the expert legal representation they need, thereby effectively denying them their fundamental right to counsel.”

    This coalition of business and attorney groups and states brought forward a number of arguments, from the DOL lacking authority to pass the rule to the rule exceeding the DOL’s estimated compliance costs by $59.99 billion over 10 years. (The DOL estimated the rule would cost all employers and consultants a total of approximately $826,000 per year; the plaintiffs estimated it at $60 billion over 10 years.) Additionally, in line with the growing use of the First Amendment against government regulation of business, the plaintiffs argued that the rule violated the employers’, lawyers’, and consultants’ free speech, expression and association rights. The Judge concluded that some union busters may not offer their services as freely, and some attorneys may leave the field, if their identities and the terms of their arrangements were disclosed.

    There is a great dissonance to the judge’s extreme sensitivities to the rights of lawyers, union busters and employers to have their anti-union activities shrouded in complete secrecy, when the new rule was intended to protect workers’ rights. Not mentioned anywhere in the judge’s 86-page order is any discussion of workers’ rights to know who is really speaking to them when they are forced to sit in on an anti-union captive audience meeting. Further, there is no discussion of the value to workers of being able to test the employer’s claim that it does not have money to provide extra pay or benefits, when it might be spending tens or hundreds of thousands of dollars on anti-union consultants.

    “This coalition of business and attorney groups and states brought forward a number of arguments, from the DOL lacking authority to pass the rule to the rule exceeding the DOL’s estimated compliance costs by $59.99 billion over 10 years. (The DOL estimated the rule would cost all employers and consultants a total of approximately $826,000 per year; the plaintiffs estimated it at $60 billion over 10 years.) Additionally, in line with the growing use of the First Amendment against government regulation of business, the plaintiffs argued that the rule violated the employers’, lawyers’, and consultants’ free speech, expression and association rights. The Judge concluded that some union busters may not offer their services as freely, and some attorneys may leave the field, if their identities and the terms of their arrangements were disclosed.

    So if businesses are forced to disclose who they are hiring for their union busting services as the law is intended to require, this would be a violation of their free speech rights because they would presumably be too embarrassed to hold these discussions if they were forced to acknowledge them.

    Well, maybe that explains the plaintiffs’ estimates that closing this loophole would cost business $60 billion over the next 10 years (And that’s compared the Department of Labor’s estimate of less than $1 million over a decade for the entire business community). Just imagine how much money is being spent on the shadow union-busting industry. Especially with this loophole in place. What if some of these companies just couldn’t carry on in providing these services because of the damage it would do their brand image? If there was a huge shadow union-busting industry, perhaps it’s somewhat conceivable that it could cost that industry total of $60 billion over a decade.

    Although that $60 billion still seems like a gross overestimate where the lawyers were just being silly for the purpose of legalistic flair. Then again, think about all the times we never hear about companies like Walmart hiring companies like Lockheed Martin for their union-busting services. That can’t be cheap.

    Posted by Pterrafractyl | July 5, 2016, 6:00 pm
  8. One of the Democrat-appointed members of the Federal Election Commission just resigned after writing a scathing report. The report has a message to the public about the message the FEC is sending to US politicians: thanks to the systematic inaction at the FEC – due to unified opposition to meaningful FEC action by Republican appointees on the Commission – the FEC is basically telling every politician in America that the FEC isn’t going to do its job so feel free to go wild with the dark money:

    Dark Money Watch

    FEC Member Quits, Citing “Free Pass” for Campaign Finance Violators in Scathing Report

    Frank Bass
    February 19, 2017

    Major campaign finance violations “are swept under the rug and the resulting dark money has left Americans uninformed about the sources of campaign spending,” a Federal Election Commission member wrote in a scathing report released with her resignation letter.

    Ann Ravel, an FEC member appointed to the six-member regulatory panel in 2013 by former President Barack Obama, said the commission’s routine deadlocked votes are sending clear signals that campaign finance laws won’t be enforced.

    “This incredibly significant Commission is not performing the job that Congress intended, and violators of the law are given a free pass,” Ravel wrote in “Dysfunction and Deadlock,” a 25-page report released with her resignation letter to President Donald Trump. “Because of this, candidates and committees are aware that they can ignore the laws enacted to protect the integrity of our elections.”

    The report by Ravel’s office, subtitled “The Enforcement Crisis at the Federal Election Commission Reveals the Unlikelihood of Draining the Swamp,” noted that the panel’s three Republican commissioners had voted together 98 percent of the time in cases closed since 2015. The three-member GOP bloc “routinely thwarts, obstructs, and delays action on the very campaign finance laws its members were appointed to administer,” she said.

    In her resignation letter, Ravel asked Trump to live up to his campaign promises of “draining the swamp” by curbing the influence of money in politics.

    Fistful of Obstacles

    Ravel cited a handful of obstacles that have kept the commission from enforcing campaign finance laws. Under the Watergate-era reforms that created the FEC in 1975, seats on the panel are evenly divided between Republicans and Democrats.

    Republicans have opposed much of the agency’s enforcement agenda over the last decade, Ravel said, noting that White House Counsel Don McGahn admitted in 2011 that during his tenure as a member of the FEC, he was “not enforcing the law as Congress passed it.” And she observed that another Republican-appointed commissioner, Lee Goodman, said the agency was “functioning as Congress intended. The democracy isn’t collapsing around us.”

    The ideological differences have caused persistent deadlocks. A little more than 10 years ago, votes were tied in less than 3 percent of substantive votes on enforcement cases closed that year. Last year, commissioners tied in 30 percent of such votes, Ravel said. The deadlocked votes have allowed the GOP members to “delay and dismiss flagrant violations, impose significantly lower penalties, and leave major cases without resolution,” she contended.

    And in some cases, Ravel charged that the FEC hasn’t even been able to start investigations into allegations of campaign finance violations since the standard of proof needed to launch investigations has been changed by the three Republicans. “Consequently, major violators are routinely let off the hook at this early stage,” she said.

    Even when investigations are completed, the amount of money that the agency collects in fines has plummeted. Ten years ago, the FEC levied more than $5.5 million in penalties. Last year, it imposed less than $600,000 in fines, or roughly two-thirds of the amount collected by a single state — California’s Fair Political Practices Commission.

    Finally, Ravel said, the panel hasn’t acted to create regulations that would require voters to be informed about the source of campaign funds. Although the U.S. Supreme Court’s 2010 Citizens United decision opened the floodgates for an unlimited amount of money to pour into elections, the FEC could draft rules to require greater disclosure for more than $800 million in “dark money” spending by nonprofit organizations and limited liability companies.

    Reality vs. Rhetoric

    Ravel, a former U.S. Justice Department lawyer who led California’s Fair Political Practices Commission from 2011-13, reminded Trump in her resignation letter that he had described the campaign finance system as “broken” and had described super PACs as “a scam.”

    Trump, who spent more than $50 million of his own money on his successful bid for the GOP presidential nomination, campaigned as an advocate of disclosing money contributed to political candidates. “Everybody should be known,” he said at an August 2015 press conference in New Hampshire. “If somebody gives $1 million or $2 million or $5 million, it should be known.”

    Even so, Trump benefited from the flood of money into the 2016 election. The president received more than $75 million in support from independent expenditure groups, which can raise unlimited amounts of money but are prohibited from coordinating with a candidate’s campaign.

    Two of the super PACs that supported Trump were the subject of a complaint by the Campaign Legal Center, a Washington-based nonpartisan watchdog. The center claimed that one of the groups failed to follow rules designed to prevent campaign staff from immediately joining a super PAC and that another had improperly shared common vendors with the Trump campaign.

    Republicans, however, don’t appear eager to address the issue of money in politics, even though 84 percent of Americans believe it has too much influence. Earlier this month, a GOP-controlled House committee voted to end public financing of presidential campaigns, as well as eliminate the agency that ensures the integrity of U.S. elections.

    “Republicans, however, don’t appear eager to address the issue of money in politics, even though 84 percent of Americans believe it has too much influence. Earlier this month, a GOP-controlled House committee voted to end public financing of presidential campaigns, as well as eliminate the agency that ensures the integrity of U.S. elections.

    Yep, the same message that the GOP-appointed wing of the FEC is sending to politicians across the US – that the FEC has no interest in seriously enforcing campaign finance law – just happens to be the same message the GOP-controlled House is also sending to politicians across the US. Although note that the message the GOP-controlled sent was more like “feel free to violate campaign finance law and hack voting machines, we won’t really look into it.”

    And that laughably leaves Donald Trump as the only major GOPer left who has at least expressed an interest recently in getting the flood of dark money out of American politics. At least that’s what he said during the campaign. So will he follow through with pledge? Well, let’s just say that Trump appears to have ‘found Jesus’ (Republican Jesus) on the issue of campaign finance and blocking the avenues of dark money flowing into US elections. So probably not.

    Posted by Pterrafractyl | February 23, 2017, 4:37 pm
  9. Remember how the Koch brothers considered purchasing Tribune Media a few years ago but eventually dropped their bid? Well, Sinclair Broadcast Group, the right-wing media giant known for forcing local TV new broadcaster to play pre-packaged right-wing propaganda pieces across the US as part of the local new content, is poised to dramatically increase its national audience after the FCC approved its purchase of Tribune Media. And Sinclair was already the largest TV broadcaster in the US, with an estimated reach of 38 percent of US households. And now it’s going to 72 percent of US households. Oh goody.

    So what compelling argument did Sinclair use to get the FCC to five the stamp of approval? Well, there was an old loophole in the anti-monopoly regulations from back when high-frequency broadcasting of stations higher than channel 13 had poor reception and limited audiences. The rule allowed broadcasters operating on that high-frequency specrum to count only part of their market share when assessing a company’s “national reach”. And the FCC’s new GOP-appointed business-friendly chairman, Ajit Pai, decided to revive the rule and make way for Sinclair to his 72 percent “national reach”, vastly exceeding the 39 percent federal limits on media ownership. And the argument for doing that was that Sinclair is actually a “little fish” compared to the big broadcasters and needed the ability to expand to 72 percent of markets just to compete. Yes, local news needs to be owned by a national behemoth to compete in modern American according to Sinclair and the FCC appears to agree.

    Ironically, given the low-quality/high-frequency origin of the loophole, one of the other moves by the FCC is allowing TV stations the ability to offer a new transmission standard for higher-quality, over-the-air video, something Sinclair has been keenly interested in. And the company says the Tribune deal approval will help speed the rollout of those next-generation services.

    So the largest broadcaster in the US – which just happens to be a crypto-Fox News-style organization dedicated to misinforming its audience with right-wing garbage content – just successfully argued that it needed to almost double its national reach to almost 3/4 of the US in order to compete:

    Politico

    How Trump’s FCC aided Sinclair’s expansion

    Use of a regulatory loophole will allow Sinclair to reach 72 percent of U.S. households after buying Tribune’s stations.

    By MARGARET HARDING MCGILL and JOHN HENDEL

    08/06/2017 07:03 AM EDT

    Sinclair Broadcast Group is expanding its conservative-leaning television empire into nearly three-quarters of American households — but its aggressive takeover of the airwaves wouldn’t have been possible without help from President Donald Trump’s chief at the Federal Communications Commission.

    Sinclair, already the nation’s largest TV broadcaster, plans to buy 42 stations from Tribune Media in cities such as New York, Chicago and Los Angeles, on top of the more than 170 stations it already owns. It got a critical assist this spring from Republican FCC Chairman Ajit Pai, who revived a decades-old regulatory loophole that will keep Sinclair from vastly exceeding federal limits on media ownership.

    The change will allow Sinclair — a company known for injecting “must run” conservative segments into its local programming — to reach 72 percent of U.S. households after buying Tribune’s stations. That’s nearly double the congressionally imposed nationwide audience cap of 39 percent.

    The FCC and the company both say the agency wasn’t giving Sinclair any special favors by reviving the loophole, known as the “UHF discount,” which has long been considered technologically obsolete. But the Tribune deal would not have been viable if not for Pai’s intervention: Sinclair already reaches an estimated 38 percent of U.S. households without the discount, leaving it almost no room for growth.

    The loophole is a throwback to the days when the ultra-high-frequency TV spectrum — the part higher than Channel 13 — was filled with low-budget stations with often-scratchy reception over analog rabbit ears. That quality gap no longer exists in today’s world of digital television, but under the policy that Pai revived, the commission does not fully count those stations’ market size when tallying a broadcaster’s national reach.

    Critics including the FCC’s most recent former chairman, Tom Wheeler, say the change amounts to a regulatory sleight-of-hand.

    “Congress was explicit in black letter saying 39 percent viewership would be the maximum,” said Wheeler, a Democrat who got rid of the discount last year. But instead, he said, “There was funny math created to allow the count to come up to still be below 39 percent, wink wink.”

    The FCC and Sinclair say a wide array of broadcasters — not just Sinclair — pushed for the return of the UHF discount, and they say Pai has been consistent in arguing that the agency shouldn’t scrap the discount without first undertaking a broader review of media ownership limits.

    Pai, whom Trump elevated to chairman early this year, told House Democrats at a July 25 hearing that the commission didn’t single out Sinclair for special treatment. “If you look at any of our regulatory actions, they’re not designed to benefit any company or segment of the industry,” he said.

    Still, the FCC action removed the most serious obstacle for Sinclair, which has been a target for Democrats and liberal groups disturbed by reports that the company favored Trump in its election coverage. While Sinclair doesn’t spend much on traditional lobbying, it has donated generously over the years to congressional Republicans, who have shown little inclination to throw up any roadblocks to the deal.

    The Washington Post in December reported that Sinclair “gave a disproportionate amount of neutral or favorable coverage to Trump during the campaign” while airing negative stories on Hillary Clinton. That followed POLITICO’s reporting on a boast by Trump son-in-law Jared Kushner that the president’s campaign had struck a deal with the broadcast group for better media coverage. (Sinclair disputed the characterization, saying it was an arrangement for extended sit-down interviews that was offered to both candidates.) In April, Sinclair hired former White House aide Boris Epshteyn, who had organized Trump’s TV surrogates, as an on-air political analyst.

    Controversy over Sinclair’s politics predates Trump. The broadcaster came under fire in 2004 over reports it planned to air a documentary critical of then-Democratic presidential nominee John Kerry’s Vietnam-era antiwar activism, though the company instead aired a news special on some stations rather than the full documentary. But the company’s bid to get bigger via the Tribune deal has focused new attention on the company.

    The broadcaster cultivated its ties with the FCC’s Pai in the weeks after Trump’s election, when the Republican commissioner was viewed as a top contender to lead the agency. Pai addressed Sinclair’s Nov. 16 general manager summit in Baltimore, where he also met with the company’s then-CEO, David Smith, according to a copy of Pai’s calendar obtained through a Freedom of Information Act request. Pai held a second meeting with Smith and newly named Sinclair CEO Chris Ripley in Arlington, Virginia, on the day before Trump’s inauguration, the records show.

    A Sinclair spokeswoman said Pai was invited to speak at the general manager summit before the election, and noted that FCC Commissioner Mignon Clyburn, a Democrat, addressed a similar gathering in the past.

    On Pai’s first week on the job as chairman in late January, Sinclair urged the agency to reinstate the UHF discount, which allows ultra-high-frequency stations to count for only half their actual audience when calculating their national reach. Pai had dissented when the FCC’s then-Democratic majority abolished the discount in 2016, arguing that the commission should also review and adjust the national ownership cap.

    Once installed as head of the agency, Pai brought back the discount in a 2-1 party-line vote in April over the objections of Clyburn, who pointed out the irony that a chairman who has emphasized slashing outmoded regulations was reviving a “relic of a bygone era.” A little over two weeks after the FCC vote, Sinclair announced its acquisition of Tribune Media.

    The FCC said multiple broadcasters, including CBS, NBC and Univision, supported the move, and said Pai was simply acting on his long-held position. “Had the Commission teed up both the UHF discount and the national cap in 2013 as he had requested, then this entire situation could have been avoided,” an FCC spokesperson said in a statement.

    Echoing that stance, Sinclair said Pai’s call for a broad review of the entire ownership cap was well established.

    “The majority Commissioners’ positions that media ownership reform is needed has been widely known for many years,” Sinclair Senior Vice President of Strategy and Policy Rebecca Hanson said in a statement. “Therefore, any suggestion that the reinstatement was done on Sinclair’s behalf is false.”

    Pai, who is viewed as friendly to broadcasters, also moved quickly to advance TV stations’ ability to offer a new transmission standard for higher-quality, over-the-air video. That’s of particular interest to Sinclair, which has invested more than $30 million in the next-generation TV technology and says its expansion via the Tribune deal will help speed the rollout of the service.

    The FCC chairman has further proposed eliminating a rule that requires each TV station to have a main studio in or near the community it serves, arguing that modern technology allows community interaction without an in-person visit to a local studio. Critics charge that’s another handout to Sinclair, with Wheeler warning in a July blog post that “Sinclair — long known for requiring their stations to carry right-wing programs produced by headquarters — will have an open field to replace local voices with national control.”

    With the regulatory path eased for its Tribune transaction, Sinclair is looking at relatively smooth sailing in GOP-dominated Washington. Ripley, the CEO, has expressed confidence the deal will receive regulatory approval from the FCC and the Justice Department, while acknowledging that the company might still have to drop some TV stations in select markets to fully adhere to ownership rules.

    Sinclair isn’t showing signs of massively boosting its bare-bones lobbying operation in Washington, though it’s increasing its investment. The company spent roughly $60,000 on lobbying in the first half of this year, nearly the amount it spent in all of 2016, and recently brought back a second, in-house lobbyist who previously lobbied for the broadcaster. One of the lobbyists, Hanson, has mostly focused on tamping down any Democratic opposition in Congress.

    In June, Sen. Maria Cantwell (D-Wash.) led seven Democratic colleagues in calling for hearings on the deal. Sinclair’s KOMO TV station in Seattle, in Cantwell’s home state, has become a focal point for local station resistance to demands from the corporate office, according to a New York Times story in May that described how KOMO journalists would rebel against “must-run” content by airing it at times of low viewership.

    “We just want local content. We want the folks to be local — we don’t want this metroplex of content just coming in,” Cantwell said in an interview.

    “Local television broadcasters have long served the public interest. The Sinclair-Tribune merger threatens to upend this responsibility by consolidating local news into a single voice that reaches into 70 percent of American homes,” Rep. David Cicilline of Rhode Island, the top Democrat on the House Judiciary Committee’s antitrust panel, told POLITICO. “It’s no secret that Sinclair has used its large platform to push extremely conservative programming, while cutting deals with the Trump campaign to provide favorable coverage.”

    Sinclair, which says consolidation will allow it to invest more in local programming, has argued that TV broadcasters need to get bigger to survive. The largest TV broadcaster in the country is still the little guy when compared with the other companies in the media landscape with which it negotiates and competes, including Comcast-NBCU and AT&T-DirecTV, the company says.

    So far, there’s little indication Republican leadership in Congress intends to apply much scrutiny to the Tribune deal. Sinclair, which began as a family-owned TV station in Baltimore in the 1970s, has endeared itself to many Republicans with its conservative leanings — and has a long history of donating to GOP candidates over the years.

    In the 2016 election cycle, Sinclair and its executives donated nearly $300,000 to Republicans, according to the Center for Responsive Politics. The company gave to the fundraising efforts of House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell. Its vice president, Frederick Smith, gave to the pro-Trump Great America PAC as well as to Montana Republican Rep. Greg Gianforte’s campaign a day after the lawmaker was charged with assaulting a journalist this year.

    But the company and its executives have also given to Democrats, chipping in $120,000 to the party and its candidates during the 2016 cycle. One week after announcing the Tribune deal in May, former CEO Smith, now the executive chairman, cut a personal check of $30,000 for the Democratic Senatorial Campaign Committee.

    With resistance to Sinclair’s transaction muted so far in Washington, criticism is popping up outside the Beltway.

    John Oliver, host of HBO’s “Last Week Tonight,” devoted nearly 20 minutes in a July show to mocking Sinclair’s “must run” segments and warning about the potential impact of the deal. “[I]n contrast to Fox News, a conservative outlet where you basically know what you’re getting, with Sinclair, they’re injecting Fox-worthy content into the mouths of your local news anchors, the two people who you know, and who you trust, and whose on-screen chemistry can usually best be described as two people,” Oliver quipped.

    Sinclair has pushed back hard against such criticism. Epshteyn blasted Oliver’s segment, and Sinclair tripled the number of weekly segments featuring the former Trump aide’s commentary. A Sinclair executive sent a memo to station news directors defending the must-runs against what he said were irresponsible media reports.

    ———-

    “How Trump’s FCC aided Sinclair’s expansion” by MARGARET HARDING MCGILL and JOHN HENDEL; Politico; 08/06/2017

    “Sinclair, which says consolidation will allow it to invest more in local programming, has argued that TV broadcasters need to get bigger to survive. The largest TV broadcaster in the country is still the little guy when compared with the other companies in the media landscape with which it negotiates and competes, including Comcast-NBCU and AT&T-DirecTV, the company says.

    Yep, that horrible argument just won the day, thus ensuring that the mountain of horrible arguments upon which the contemporary right-wing ideology that dominates US policy-making continue to be unwittingly fed to US audiences. And also ensuring that the growing issue of the monopolization of the US economy won’t ever get the attention it deserves. It’s the contemporary ‘mainstream mediain action.

    Posted by Pterrafractyl | August 7, 2017, 2:02 pm
  10. Chapman University just released its annual survey of things Americans fear and topping the list is a fear of corrupt government officials, feared by 75 percent of respondents. It was the same top fear in 2016, but it was 60 percent last year. People are apparently significantly more fearful of corrupt government officials this year, no why might that be? And yet they were still quite fearful of them in the pre-Trump era, not without reason.

    What is without reason, however, is the reflexive response exhibited by so many Americans where fear of corrupt government officials morphs into a fear of all government and a desire to, as Steve Bannon would put it, “deconstruct the administration state”. An administrative state, i.e. government regulators, is one of the most valuable things a democracy can create for itself. Abandoning the fight to create and maintain a minimally corrupt government, even a big one, is just stupid because you’re abandoning all sorts of invaluable functions that only a government realistically provide. Functions like protecting consumers from a rapacious financial industry with a long track record of predatory behavior. The private sector isn’t the place to turn for that kind of protection.

    It’s a reminder that, while Americans should indeed fear corrupt government officials, the corrupt government officials they often need to fear the most are the officials who move to get rid of the government agencies that are there to protect people from predators. For example, the Republican Senators who just voted to block a rule from the Consumer Financial Protection Bureau (CFPB) from taking effect that would have made it easier for consumers to sue banks to counteract the widespread abuse of arbitration clauses hidden in financial contracts are indeed the kind of corrupt government officials Americans should fear, unlike the bureaucrats working for the CFPB who are just there to help you (which is why the corrupt GOPers want to thwart them):

    The Washington Post

    Congressional Republicans vote to block CFPB rule against mandatory arbitration clauses

    By Renae Merle and Tory Newmyer
    October 25 at 7:21 PM

    To secure a rare legislative victory this week, Senate Republicans turned to a strategy that has paid off for them in the recent past: killing policy rather than writing it.

    This time, Republicans took aim at a regulation giving U.S. consumers more flexibility to sue their banks and other financial institutions. The rule is widely loathed by the business community and conservative lawmakers, many of whom opposed the creation of the agency that wrote it, the Consumer Financial Protection Bureau.

    So Sen. Mike Crapo (R-Idaho) turned to an arcane legislative tool — 1996’s Congressional Review Act. The law gives legislators a limited period of time to block a new regulation before it goes into effect. Lawmakers have used the measure more than a dozen times already to roll back rules issued at the end of the Obama administration, often at the urging of the Trump administration, which has pushed to eliminate regulations it says are stifling economic growth.

    Late Tuesday evening, the Senate used it again, approving Crapo’s measure blocking the CFPB’s rule and sending the matter to President Trump, who is expected to sign it. Trump “applauds” the legislation’s passage, according to a White House statement.

    The vote was the biggest victory yet for the banking industry during the Trump administration. After years of suffering under tough regulations imposed after the global financial crisis, bankers had been giddy at the prospect of a regulatory reprieve. But many of those efforts stalled in the Senate, which has not taken up some of the more complex regulatory changes the industry has favored.

    Blocking the CFPB rule likely emboldens the agency’s critics, but it is not likely to speed other, more complicated, regulatory rollbacks, industry analysts say. “The country is still too populist and too distrustful of big banks,” Jaret Seiberg, a Cowen Washington Research Group financial services analyst, said in a report Wednesday.

    But even this legislative victory proved tricky for Republicans. Sen. Lindsey O. Graham (R-S.C.) emerged as an early “no” vote, leaving the party with little wiggle room. To win passage without Democrat support, the GOP could lose no more than two votes from members of its party.

    At issue was the fine print in many of the agreements that consumers sign when they apply for credit cards or bank accounts. These contracts typically require consumers to settle any disputes they have with the company through arbitration, in which a third party rules on the matter, rather than going to court or joining a class-action lawsuit.

    The 2010 financial reform law, known as the Dodd-Frank Act, called on the CFPB to study the use of mandatory arbitration clauses. After five years, the agency moved to ban such clauses, potentially allowing millions of Americans to file or join a lawsuit to press their complaints.

    The measure was widely disliked by banks and among many Republicans in Congress, who called it a gift to plaintiffs’ attorneys. Critics argued the rule would trigger a flood of frivolous lawsuits and drive up credit card rates. Arbitration, they argued, was a faster, cheaper way to settle disputes.

    The House passed legislation to block the rule’s implementation in July, but in the Senate the measure appeared to languish. Fearing lawmakers might not meet an early November deadline to block the rule, the U.S. Chamber of Commerce and several other business groups filed suit against the CFPB last month.

    Complicating Republican efforts was the growing unpopularity of Wells Fargo and Equifax. Wells Fargo has been under pressure since admitting last year that employees had opened millions of sham accounts customers didn’t ask for, and Equifax is struggling to recover from a massive hack that potentially exposed the data of more than 145 million people.

    Democrats and consumer groups, who had been mobilizing to defeat the bill for months, used the corporate missteps as a rallying cry against arbitration clauses. Crapo, the chair of the Senate Banking Committee, acknowledged to reporters that the Equifax breach had become “an issue” in securing enough votes to repeal the rule.

    “It didn’t help,” said one financial services lobbyist working the issue, who spoke on the condition of anonymity to discuss behind-the-scenes concerns. “It detracted from the underlying principle of why arbitration is important.”

    Meanwhile, Republicans and the banking industry were mobilizing too. Credit unions and community banks began to weigh in against the CFPB rule. While repeatedly apologizing for their companies’ misdeeds, Wells Fargo and Equifax executives refused to back away from their use of arbitration clauses in their contracts. Pressed to disavow mandatory arbitration during a Senate committee hearing this month, Wells Fargo CEO Tim Sloan said “No, I won’t, senator.”

    The rule also faced unusual resistance from other banking regulators. The Office of the Comptroller of the Currency asked the CFPB to halt the rule, arguing it was not well thought out and would raise costs for consumers. While it is not uncommon for regulators to disagree, those clashes typically don’t spill out into public view.

    This week, as both sides began to prepare for a final Senate showdown, the Treasury Department took the unusual step of criticizing the CFPB’s work, issuing an 18-page report that argued the arbitration rule “would upend a century of federal policy favoring freedom of contract to provide for low-cost dispute resolution.”

    The criticism from regulators gave Republicans more ammunition to call for the rule’s repeal, industry analysts said.

    By Tuesday evening, it appeared Republicans had secured enough support to move forward with a vote. Graham, as expected, sided with Democrats against the measure, as did Republican Sen. John Neely Kennedy of Louisiana, leaving the vote at 50 to 50 at about 10 p.m. Vice President Pence cast the deciding vote.

    The battle over the rule has laid bare lingering division between the CFPB and the White House.

    Under the Trump administration, many agencies have begun taking steps to roll back or at least slow regulations. But the CFPB, a watchdog agency established after the global financial crisis and still led by an Obama-era appointee, has continued to draw the ire of business groups with its aggressive tactics.

    The debate has often taken an unusually personal tone. After the Senate voted to overturn the rule, CFPB Director Richard Cordray said in a statement that “Wall Street won and ordinary people lost.”

    Sen. Tom Cotton (R-Ark.), a co-sponsor of the Senate repeal legislation, fired back at Cordray, who many expect to run for governor of Ohio next year. “The unelected Mr. Cordray issued yet another stupid regulation that would have hurt consumers, the people’s democratically elected representatives voted to stop the regulation, and now Mr. Cordray whines that Congress stopped his stupid regulation,” Cotton said in a statement. “It’s well past time for Mr. Cordray to resign and begin his long-expected losing campaign for Governor of Ohio. If he won’t, President Trump should fire him.”

    ———-

    “Congressional Republicans vote to block CFPB rule against mandatory arbitration clauses” by Renae Merle and Tory Newmyer; The Washington Post; 10/25/2017

    The vote was the biggest victory yet for the banking industry during the Trump administration. After years of suffering under tough regulations imposed after the global financial crisis, bankers had been giddy at the prospect of a regulatory reprieve. But many of those efforts stalled in the Senate, which has not taken up some of the more complex regulatory changes the industry has favored.”

    The biggest victory for the banking industry yet. That’s what just happened and, surprise!, Trump applauds it:


    Late Tuesday evening, the Senate used it again, approving Crapo’s measure blocking the CFPB’s rule and sending the matter to President Trump, who is expected to sign it. Trump “applauds” the legislation’s passage, according to a White House statement.

    And that means if you join the growing ranks of people wantonly screwed over by the financial industry there’s a very good chance that you get to find justice via an arbitrator hired by the institution that screwed you over. And you won’t know about this fun little surprise until you decide to sue because this will be hidden away in the maze of legal language you signed when you signed up for that credit card or bank account or whatever:


    At issue was the fine print in many of the agreements that consumers sign when they apply for credit cards or bank accounts. These contracts typically require consumers to settle any disputes they have with the company through arbitration, in which a third party rules on the matter, rather than going to court or joining a class-action lawsuit.

    The 2010 financial reform law, known as the Dodd-Frank Act, called on the CFPB to study the use of mandatory arbitration clauses. After five years, the agency moved to ban such clauses, potentially allowing millions of Americans to file or join a lawsuit to press their complaints.

    So after studying the issue for five years the CFPB moves to block these arbitration clauses only to be blocked by Trump and the GOP. Proving once again that when you put the GOP in charge of the government the government effectively becomes the Big Finance Financial Protection Bureau.

    It’s a reminder that the kind of government we should probably fear the most is the one run by the kind of people who clearly don’t understand that one of the reasons we can’t abandon the fight for good government, including good ‘big’ government when needed, is that good government is the best proven defense for average people against the kind of predators that trick the public into tearing down the government so everyone is easier to prey upon.

    Posted by Pterrafractyl | October 25, 2017, 11:01 pm

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