Written by Ron Rabatsky   

Regulatory Agencies

Existing regulations need to be reviewed regularly to be sure that they actually create the intended effect while not being in conflict with other regulations. This starts by just creating a directory of all existing regulations. We believe that there are regulations that are outdated and need to be shelved, while changes in our economy and in technologies require some new regulations to protect both consumers and the stockholders of poorly managed or criminally managed corporations.

The creation of the Consumer Financial Protection Bureau is perhaps the most significant new agency in government since the Great Society. Designed to protect the rights of consumers in financial dealings, it must also put back in place common sense regulations that prevent banks, for example, from continuing to package and sell the same type of CDO’s that got us in so much financial trouble. Credit card abuse by banks must be stopped. Robo-foreclosures must be stopped. It is bad for a bank that cannot foreclose, but if they cannot prove conclusively that they own title to the house in question because of the way the mortgage was sliced and diced and sold off on Wall Street, then foreclosure cannot be allowed. There must be some sort of regulation to protect both homeowners and banks in these situations, and allow for a resolution that works as well as possible for all parties.

Similarly, The Chairwoman of the SEC and head of the CFTC (Commodity Futures Trading Commission, Mary Schapiro, went before Congress in March pleading for a budget which would allow these regulatory agencies the manpower and travel budget to enforce the regulations. Republicans argue that more investigators need more oversight, not more money. Considering that among the regulations they are expected to enforce is more than $200 Trillion in derivatives and some of the same exotic investment gambles that brought us to the edge of a Depression such a short time ago, funding these regulators would seem to be of prime importance. But then again, do the congressional corporate masters want someone watching how they gamble in the market?

We must get banks back to their business of lending, rather than using money for buying out other banks or frankly most other uses of money. Without lending, the economy will continue to stagnate. Small businesses and entrepreneurs cannot grow. We do not advocate giving credit or loans to those who are not credit worthy—and neither did the CRA for that matter, no matter what conservatives still like to claim—but money must circulate in a capitalist economy in order for all to make money. By hoarding their capital—in some cases still the capital given to them by the taxpayers to bail them out—they are not serving their purpose in the economy and should be replaced with financial institutions which will be part of the economy rather than working around and outside of it. We must rebuild both our national and international confidence in our banking system.

But the SEC has a lot more on its plate, which entices corporate America and their republican allies to fight it even harder. As noted in The Hill, “corporate disclosure is not as TV-friendly as the budget battle, but since Congress passed new rules requiring more openness by oil and mining companies, a war of words has broken out over the Dodd-Frank provisions for fuller disclosure of oil and mining payments to governments. Citizens and investors around the globe, especially those in oil-rich countries, should hope that the debate over industry reporting rules also shifts to facts.

“As the SEC—still understaffed and under pressure to implement the hundreds of changes mandated by Dodd-Frank—drafts the oil and gas reporting rules, the oil industry's U.S. lobbying arm the American Petroleum Institute has continued to decry the law's supposedly dire effects. Statements from API, the CEO of Shell and other industry spokespeople have focused on alleged bad consequences of transparency in the details about their payments to governments for oil, gas and minerals. (We have all seen TV ads for “clean coal”—there is no such thing. Next time you see a pro-U.S. Energy commercial on TV, wait for the end to see that it was run by the API--except for the Shell ad that extols the shoal sands that will bring energy to us and jobs to Canadians.)

But, “Dodd-Frank requires all U.S.-listed companies to report their payments to governments for oil, gas and mineral resources. This helps citizens hold their governments accountable, bolsters the fight against corruption, and gives investors the detailed information they need to identify risks.

“As for compliance costs of the new Dodd-Frank reporting practices, these will be modest. The SEC estimates that they entail an increase of one-third of one percent (0.33 percent) over existing professional compliance costs.” Dodd Frank is now under siege. Goldman Sachs officials have sat in on Treasury Department meetings about the Volcker Rule, the provision in Dodd-Frank that perhaps poses the greatest threat to banks. Named after Paul A. Volcker, a former Federal Reserve chairman who proposed it, the rule prohibits federally insured banks from trading for their own benefit rather than for clients, a tactic known as proprietary trading.

Congress has to-date failed to provide the Securities and Exchange Commission and the Commodity Futures Trading Commission—the agencies that must write the new rules and reports that the law requires—with the necessary funds to carry out their mandates. Denying these funds is a not-so-stealthy attack on the financial reforms called for by Dodd-Frank. Various measures to repeal Dodd-Frank are also active in the Congress. So instead of getting the additional regulations that we need, we are headed to an era of no regulations.

A critical area of Dodd-Frank under siege is the limitation of speculation in energy. Companies that do not inventory oil for sale should not be allowed to buy oil futures and drive up the price we pay for oil via this speculation. Estimates range from $10-$20/barrel as the amount of extra cost attributed to energy speculators. According to McClatchy Newspapers, Wikileaks has reported that when oil hit a record $147/bbl in July 2008, “the Bush administration leaned on Saudi Arabia to pump more crude in hopes that a flood of crude would drive the price down. The Saudis complied, but not before warning that oil was already plentiful and that Wall Street speculation, not a shortage of oil, was driving up prices.”

“One cable recounts how Masjid al-Moneef, Saudi Arabia’s OPEC governor explained what he thought was the full impact of speculation to then U.S. Rep. Alan Grayson (D-FL) who in July 2009 was in Saudi Arabia for the first time. According to the cable. Al-Moneef said Saudi Arabia suspected that ‘speculation represented approximately $40 of the overall price of oil when it was at its height.”

“Cables show that the subject of speculation has been raised in Saudi meetings with U.S. diplomats and at least once with former President George W. Bush himself.”

A letter to the Editor of the Charlotte Observer was published 5.21.11: “Has anyone else noticed what the republicans (sic) majority in the U.S. House is doing? U.S. Rep. Patrick McHenry’s banking committee is doing what they can to dismantle regulations and oversight for banks and other financial institutions, and at the same time doing their best to take the teeth out of the CFPB, saying the agency has too much power. I thought we elected our representatives to ‘represent’ the people!”

Another commented “Patrick McHenry – protecting BofA from Elizabeth Warren. Our Hero!”

And also, “Congressman Patrick McHenry. Wall Street’s Employee of the Month.”

Apparently Dr. Warren really gets under the Representative’s skin. He called her a liar “for not waiting around to testify for absent Republicans” when she was on a tight schedule of testifying before different committees and the republicans on McHenry's committee could not see fit to show up on time. He called her a liar on TV, and on the Congressional Record. Check you dictionary. I don't see where this constitutes lying. It constitutes bad manners and a lack of respect by the congressional committee in an attempt to embarrass Dr. Warren.

Other House Republicans piped in, demonstrating their lack of understanding of the Bill they were castigating.

Rep. Ann Marie Buerkle (R-NY) quizzed Dr, Warren on why people getting hired at the CFPB earned better salaries than the average government employee. Dr. Warren rebutted that federal financial regulators are usually paid better, but not very well compared to the people they regulate.

Rep. Frank Guinta (R-NH) thought that the CFPB was unique among financial regulators by having a leader with a five year term, and not being subject to annual congressional appropriations – neither of which is true. Dr. Warren pointed out that the head of the Office of the Comptroller of the Currency had just completed a 5 year term.

Guinta went on to say that the CFPB was exempt from annual oversight through appropriations. Dr. Warren pointed out “There is no banking regulator who is subject to the political process or to appropriations.” Banking regulators take fees from financial institutions for their budgets.

Rep. Trey Gowdy (R-SC) accused Dr. Warren of having written the Dodd-Frank law, and was determined to know what Warren meant by defining “abusive” practices that he went on to list. Dr. Warren replied “Congressman, I believe the language you are quoting is out of the Dodd-Frank act. This is the language that Congress has adopted.”

As for the Majority Leader of the House of Representatives, Eric Cantor has promised speculators that he will dilute Dodd-Frank so they can keep speculating. To whom is the Leader of The House of Representatives responsible—taxpayers or his corporate sponsors?
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FDA.

In 1997 the FDA found and investigated Mexican strawberries infected with Hepatitis A. Also in 1997, Guatemalan raspberries with cyclospora. 2001-3 saw investigations into the safety of Mexican cantaloupes with salmonella, and green onions with Hepatitis A. 2008 saw an investigation first identified as bad tomatoes and found to be Serrano and jalapeno peppers from Mexico with salmonella. 2008 was also the year of melamine being found in Chinese milk, infant formulas, and pet foods. And that is just the tip of the iceberg.

In January, President Obama signed the Food Safety Modernization Act to overhaul the agency, enhancing its ability to deal with these offshore problems. They do not have the manpower to be everywhere all the time, so they have hired and are training third party staffers in places like Mexico City; Santiago, Chile; Guangzhou China; Shanghai, China; Beijing, China; Brussels; London; New Delhi and Mumbai, India--among other places from where we import our food. The number of FDA foreign food inspection facilities has grown from 95 in 2007 to 600 today.

But there are two forces standing in the way of implementing President Obama’s policy—-politics and money. The radical Ryandontcare bill calls for trimming the agency’s budget by $220 million. The conservatives’ opinion is that while food safety is certainly important, the rarity of food-borne illnesses means that the current system is effective. Tell that to the 48 million people who contracted a food-borne illness last year, 3000 of whom died. Tell that to the parents who gave their babies melamine tainted formula or the people who fed their pets melamine laced pet foods. Should the frequency or intensity of food-borne illnesses get any worse, republicans should have to explain why they did not protect their constituents.

The FDA is probably best known as the agency responsible for testing new drugs, new medical devices, pet foods and medications, vaccines, cosmetics, any radiation emitting devices, and tobacco products. Essentially they are the consumer watchdog in America's healthcare system, and as such need additional support and funding rather than any cuts in their budget as conservatives would do.
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Government Waste

Who can think of a presidential candidate who did not promise to eliminate government waste and spending?

Who can think of a President who, while trying to make the case for his budget did not promise savings from the elimination of government waste?

In a system as large as our governments', to not have waste or fraud would be the surprise. But, it is not as simple as the government would like us to believe. It’s not just a case of going through any tax code or department budget and identifying these things.

National Taxpayers Union Executive Vice President Pete Sepp concludes that “controlling federal spending is difficult but it's the only way to ensure major programs, including Social Security, are sustainable in the future."

"Government auditors recently found that nine government agencies spend $18 billion on 47 job training programs, many of which duplicate each other or have limited effectiveness," said Sepp. "Consolidating these programs and making them run more efficiently could free up money to provide better services to seniors." This could well be correct--it should definitely be investigated. It is not up to those who do the investigating to decide on the effectiveness or worthiness of any given program, simply to be sure that their spending is controlled and not wasteful, and they are not being defrauded by those they are charged with helping.”

Again, in a system as large as our government, to not have waste and fraud would be the surprise. But, it’s not just a case of going through any tax code or department budget “line-by-line” and identifying these things as candidates like to crow.

Following is a follow up quote from a friend, an executive in the Banking industry who wishes to remain anonymous for fear of losing his job:

“I truly believe that we are in a different era as far as fraud detection in the banking system. Just in the past 5 years we have had quantum improvements in our ability to detect odd/suspicious transactions or accounts and track them automatically---it is truly amazing. There is no big secret here—it is the advancements in computer technology. Streamlining the bureaucracy and programming the algorithms are the keys. Fewer people are needed, but much more fraud is identified and busted. And it is getting better every day.”

He continues: “We also need serious legislation to curtail companies selling products like motorized scooters to seniors who do not need them. Many just sit in garages collecting dust. Then there are those doctors who over-test and overcharge the government. Tight, enforced regulations will save an inestimable amount of money. Dismantling Medicare does nothing but force sick old people into the streets again. Not an option in my America.”