“What if we tell House Republicans and Democrats that North Korea wanted to close schools, take our healthcare away and pump CO2 into our air—we could suddenly, magically find $700 billion dollars for all of it.”
“This is a massive cash cow for weapons companies, nothing more,” writes Alex Emmons of The Intercept. (Photo: mariordo59/Flickr/cc)
In a bipartisan show of support for endless war and out-of-control military spending, the House of Representatives on Tuesday overwhelmingly approved the nearly $700 billion National Defense Authorization Act of 2018 that aims to boost war outlays by $80 billion—an amount that critics noted would easily cover the costs of free public college tuition and other initiatives that are frequently dismissed as too expensive.
The final vote tally was 357-70, with 127 Democrats throwing their support behind the bill. Sixty-seven Democrats—including Reps. Barbara Lee of California, Keith Ellison of Minnesota, and John Conyers of Michigan—voted against the legislation. Continue reading →
Following the release of a slew of analyses showing that the GOP tax plan would raise taxes on many middle class families—despite repeated promises to the contrary by the Trump administration and Republican lawmakers—Senate Majority Leader Mitch McConnell (R-Ky.) conceded in an interview with the New York Times Friday that he “misspoke” when he declared last week that “nobody in the middle class is going to get a tax increase.”
“I misspoke on that,” McConnell toldTimes reporter Sheryl Gay Stolberg. “You can’t guarantee that absolutely no one sees a tax increase, but what we are doing is targeting levels of income and looking at the average in those levels and the average will be tax relief for the average taxpayer in each of those segments.” Continue reading →
As Common Dreams reported Tuesday, Rep. Chris Collins (R-N.Y.) has made a similar remark, complaining that his donors are pressuring him to pass enormous tax cuts or “don’t ever call me again.” (Photo: Gage Skidmore/flickr/cc)
Sen. Lindsey Graham (R-S.C.) on Thursday became the latest Republican to admit the GOP is trying to ram through massive tax cuts for the rich to satisfy its wealthy donors, telling a journalist that if the party’s tax push fails, “the financial contributions will stop.”
Lindsey Graham says “the financial contributions will stop” if tax reform fails.
For months Republicans and President Donald Trump have worked to convince Americans that massive tax cuts for the top one percent and the largest corporations would somehow primarily benefit the working class, but a new Washington Post/ABC News poll published Friday finds that the public isn’t buying the GOP’s “propaganda.”
Despite House Speaker Paul Ryan’s (R-Wis.) insistence on Thursday that his party’s proposals are geared toward helping “the middle class families in this country who deserve a break,” only 17 percent of Americans believe the GOP tax plan “mainly favors” the middle class, while 60 percent believe their plan would primarily benefit the wealthiest. Continue reading →
So what would you miss if the agency suddenly disappeared or got gutted?
In short, a lot. We base this conclusion on the work the three of us have done in recent decades. One of us (Sovern) has been writing about consumer law for more than 30 years, while the other two of us direct a legal clinic that represents elderly consumers. We’ve seen the worst of what financial companies can do, and we’ve also witnessed how the CFPB has begun to reverse the tide.
Life before CFPB
If you are one of the more than 29 million consumers who have collectively received nearly US$12 billion back from misbehaving financial institutions because of the CFPB’s efforts, you already know its value. But even if you are not, you have probably benefited from the bureau’s existence.
Before Congress created the bureau, there was no federal agency that made consumer financial protection its sole mission. Rather, consumer protection was rolled into the missions of a bunch of different agencies. And, as we saw during the financial crisis, regulators often gave it a back seat.
The Office of the Comptroller of the Currency regulates banks but was so preoccupied with ensuring lenders were safe that it failed to protect consumers from their predatory subprime mortgages – so much so that it prevented states from doing so too. And now President Trump has put a former bank lawyer in charge of it. The Federal Trade Commission, which is tasked with fighting deceptive business practices, lacked the power to prevent such dangerous lending.
This meant consumer protection on financial matters fell through the cracks.
But as early as 2010, before the CFPB was set up, regulators at the OCC were increasingly aware of what was happening at Wells Fargo thanks to hundreds of whistleblower complaints. The OCC even confronted the bank, yet failed to take any action despite many red flags, according to an internal audit.
Besides protecting consumers, however, Congress had a second motive in creating the bureau: to help prevent the kind of mortgage lending that helped cause the Great Recession.
To that end, the bureau has adopted rules that help consumers to understand their mortgages – something that often wasn’t possible under the previously misleading mortgage disclosures. It also issued regulations to prevent consumers from taking out mortgages that they couldn’t repay. And after borrowers take out a mortgage, CFPB servicing rules establish the procedures servicers must follow when communicating with borrowers, correcting errors, providing information and dealing with loan modification requests.
Two of us have personal experience with one of the bureau’s new mortgage rules, which powerfully illustrates the value of the CFPB.
In 2014, Alice, a client of our law school clinic, was struggling to pay the mortgage on her home – which she had refinanced a few years earlier – after a stroke forced her into retirement. Our clinic helped her apply for a modification of her loan.
But within weeks, instead of acknowledging Alice’s application, the loan servicer summoned her to court to begin foreclosure proceedings in violation of CFPB servicing rules. Fortunately, our clinic was able to rely on those rules in getting the foreclosure action dismissed. Alice got her loan modified and remains in her home.
Protecting the vulnerable
This reveals how the bureau is particularly important to protect vulnerable consumers, like the elderly, who are frequently targeted by fraudsters and predatory lenders because of their cognitive and other impairments and because they often have accumulated substantial assets. The CFPB is the only federal agency with an office specifically dedicated to protecting the financial well-being of older adults.
The House of Representatives has passed a bill that would cripple the CFPB by, for example, taking away the power it used to fine Wells Fargo for opening illegal accounts and concealing its complaint database from public view. In other words, it would force the bureau to sit idly by as financial institutions lie to consumers. Even if the bureau survives, it may be less protective of consumers when its current director, Richard Cordray, leaves. His term expires next summer, and he may step down even sooner. Then we might see a former banker or bank lawyer put in charge, just as has happened at the Treasury Department and comptroller’s office.
Nearly every American has or will have a loan or bank account, a prepaid card, credit card, a credit report or some combination of those, and so has dealings with a financial institution policed by the CFPB. But few of us read the fine print governing these things or can understand it when we do. That gives the companies that write these agreements the ability to draft them to suit their own interests at the expense of consumers.
Similarly, we do not always know when a financial institution takes advantage of us, just as Wells Fargo customers did not always know that it had opened unauthorized accounts that lowered their credit scores.
Consumers need protection from misbehaving companies. If the bureau is eliminated, significantly weakened or starts protecting banks rather than consumers, all consumers will suffer.
This is an updated version of an article originally published on July 10, 2017.
Along with three co-authors, Jeff Sovern received a $29,510 grant from the American Association for Justice Robert L. Habush Endowment and by a grant from the St. John’s University School of Law Hugh L. Carey Center for Dispute Resolution in 2014 to study arbitration. It resulted in an article. Along with Professor Kate Walton, he received a grant from the National Conference of Bankruptcy Judges Endowment for Education to study debt collection, resulting in another article. He is a member of the National Association of Consumer Advocates.
Ann L. Goldweber is affiliated with NACA as a member.
Gina M. Calabrese is affiliated with the National Association of Consumer Advocates, New Yorkers for Responsible Lending, and the Association of the Bar of the City of New York (former chair, Committee on the Civil Court).
Federal Communications Chairmain Ajit Pai continues to push through rollbacks that critics warn will enable major media companies to have an outsize influence on public opinion and fail to serve local communities. (Photo: USDA/Flickr/cc)
In a series of moves this week that have alarmed free speech advocates and critics of media consolidation, the Federal Communications Commissions (FCC) voted to abolish a rule requiring radio and television broadcasters to maintain studios near the communities they serve, and FCC chairman Ajit Pai announced further plans to end certain media ownership rules.
Vice President Mike Pence presiding over the Senate on Capitol Hill in Washington, Tuesday, Feb. 7, 2017, during the Senate’s vote on Education Secretary-designate Betsy DeVos. On Tuesday night, Pence returned to the chamber again to a break another tie. This time it was to make sure it’s easier in the future for financial service companies and other Wall Street darlies to make it easier to rip-off consumers. (Photo: Senate Television)
While in the end it was two Republicans, Sens. Lindsey Graham of South Carolina and John Kennedy of Louisiana, who joined with Democrats and the Senate’s two Independents in voting against the resolution, Pence broke the 50-50 tie in order to scrap the rule. Continue reading →
“Congress created the loopholes in our tax code that allow offshore tax avoidance and force ordinary Americans to make up the difference,” the new study observes. (Photo: Michael Fleshman/Flickr/cc)
As President Donald Trump and the Republican-controlled Congress intensify their push for massive corporate tax cuts that critics have said would encourage businesses to offshore profits and jobs, a new report published Tuesday by U.S. PIRG and the Institute on Taxation and Economic Policy (ITEP) found that 73 percent of companies on the Fortune 500 list are already taking advantage of overseas tax havens—costing the United States $752 billion in federal tax revenue last year alone.
The new study discovered that, in total, America’s most profitable corporations in 2016 had $2.6 trillion stashed overseas in over 9,000 subsidiaries in various locations, including notorious tax havens like Bermuda and the Cayman Islands.
Clark Gascoigne, deputy director of the Financial Accountability and Corporate Transparency (FACT) Coalition, cautioned in a statement on Tuesday that the Trump-GOP tax proposals would, if passed, make this bad situation even worse.
“As Congress considers proposals to institute a near zero percent tax rate on profits booked offshore by multinational corporations, the findings in this report should give policymakers pause,” Gascoigne said. “The study shows that today’s flawed tax system allows for gaming on a grand scale.”
The PIRG-ITEP analysis makes clear that corporate tax avoidance is both an unnecessary problem—”Congress created the loopholes in our tax code that allow offshore tax avoidance and force ordinary Americans to make up the difference”—and a pervasive one.
At least 366 of the 500 companies on Fortune’s list “operate one or more subsidiaries in tax haven countries.” Furthermore, “30 companies with the most money officially booked offshore for tax purposes collectively operate 2,213 tax haven subsidiaries.”
But the report also highlights the fact that there are several “particularly egregious examples”:
Apple, which “holds at least $246 billion offshore, a sum greater than any other company’s offshore cash pile,” would owe $76.7 billion in U.S. taxes if this profit was not overseas;
Citigroup, which stashes $47 billion overseas, would owe $13.1 billion in U.S taxes; and
Nike, which holds $12.2 billion offshore, would owe $4.1 billion in U.S. taxes.
Richard Phillips, a senior policy analyst at ITEP, argued that in the face of these numbers, Congress should be looking to close loopholes that allow businesses to offshore profits on an enormous scale, not open them even further, as Trump and the GOP have proposed.
“Lawmakers shouldn’t be discussing how to sweeten the pot and give corporations a huge tax break that amounts to a huge financial reward for engaging in bad corporate behavior,” Phillips said.
The PIRG-ITEP analysis outlined several steps that could be undertaken by lawmakers in the place of their attempts to slash taxes, gut the safety net, and further incentivize offshoring.
“To end tax haven abuse, Congress should end incentives for companies to shift profits offshore, close the most egregious offshore loopholes, strengthen tax enforcement, and increase transparency,” the study concluded.
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.
The Embarcadero at high tide. Photo: Heidi Nutters/flickr
Environmentalists are celebrating two new lawsuits filed by the cities of Oakland and San Francisco, California, in attempts to hold some of the world’s largest oil companies to account for fueling climate change.
“It’s time to hold these climate deadbeats accountable,” said Greenpeace’s climate liability campaigner Naomi Ages, after the suits were announced this week. Continue reading →
Pruitt’s 24/7, 18-member security detail “demands triple the manpower of his predecessors” and is forcing “officials to rotate in special agents from around the country who otherwise would be investigating environmental crimes,” the Washington Post reported. (Photo: Gage Skidmore/Flickr/cc)
Thanks to a hiring freeze, budget cuts, and the exorbitant travel needs of Trump’s cabinet, Environmental Protection Agency (EPA) agents are being forced to ditch climate crime investigations in order to serve as personal bodyguards for EPA administrator Scott Pruitt, resulting in what one critic called an “evaporation of criminal enforcement.”
The EPA head has traditionally had one of the smallest security details among cabinet members,” the Washington Postreported on Tuesday. But Pruitt’s expansive security team—which cost taxpayers over $830,000 in his first three months as EPA chief—has shattered all precedent. Continue reading →