Consumer Financial Protection Bureau to Put End to Mandatory Arbitration for Consumer Loans, Credit Cards

Posted on May 5, 2016 by Yves Smith

It looks like a pervasive abuse is about to bite the dust.

A major way that financial firms have tipped the playing field even further in their direction is the inclusion of mandatory arbitration clauses in their contracts. The argument has been that this feature is beneficial to consumers, since arbitration is cheaper that litigation in the event of a dispute. But studies have repeatedly found that to be bollocks. The arbitrators that are chosen to serve are not only screened to be big institution friendly; arbitrators that wind up ruling in favor of customers have this funny way of being moved to the bottom of the selection list, while hanging arbitrators get regular assignments. For instance, from a 2009 report by the Center for Responsible Lending:

Arbitration cases can be unfair not only because consumers have no choice in the matter, but also because prior results from Public Citizen research suggests that consumers may win only 4% of the time. The relationship as currently structured gives arbitration forums and arbitrators a strong incentive to side with “repeat players” that control the flow of ongoing business, rather than a consumer seen only once. In the credit card context as well as many other consumer transactions, it is very difficult to find a product without a forced arbitration agreement hidden somewhere in the fine print.

Thomas Frank: Why must the Trump alternative be self-satisfied, complacent Democrats?

Convinced that the country’s ongoing demographic shifts will bring victory for years to come, the party establishment acts like its candidates need do nothing differently

The year of our discontent rolls on, and now it is Indiana that hands victory to the insurgent senator Bernie Sanders and the protectionist demagogue Donald Trump.

Seven years have passed now since the last recession officially ended, and yet the country’s fury has scarcely cooled. To this day we remain angry at Wall Street; we rage against career politicians; and we are incandescent that the economic system seems to have been permanently “rigged” against working people. Median household income has still not recovered the levels of 2007. Wages are going nowhere. Elite bankers are probably never going to be held accountable for what they did. America is burning.

FBI Chooses Secrecy Over Locking Up Criminals

Jenna McLaughlin

The Federal Bureau of Investigation’s refusal to discuss even the broad strokes of some of its secret investigative methods, such as implanting malware and tracking cellphones with Stingrays, is backfiring – if the goal is to actually enforce the law.

In the most recent example, the FBI may be forced to drop its case against a Washington State school administrator charged with possessing child porn because it doesn’t want to tell the court or the defense how it got its evidence – even in the judge’s chambers.

The FBI reportedly used a bug in an older version of the free anonymity software Tor to insert malware on the computers of people who accessed a child-porn website it had seized. The malware gave agents the ability to see visitors’ real internet addresses and track them down.

The Supreme Court Just Refused To Shield Corporate America From A $15 Minimum Wage. What Happens Now?

by Alan Pyke

With the Supreme Court’s decision Monday not to hear the fast food industry’s lawsuit against Seattle, the nation’s first $15 minimum wage law is safe – and opponents of higher pay floors for U.S. workers are running low on options.

The decision upholds two previous rulings that Seattle’s law does not discriminate against franchise firms like McDonald’s. The case was the most prominent legal challenge to a large minimum wage hike in recent years, and one of several to fail.

As Millions of Workers Face Pension Cuts Thanks to Wall Street Greed, Executive Benefits Remain Lavish

The big bank executives who gambled away working Americans' benefits are still getting lavish packages as the social safety net collapses.

By Jake Johnson

In October of 2008, while the economy was in the early stages of what the IMF called "the worst recession since World War II," the Washington Post reported that the "stock market's prolonged tumble has wiped out about $2 trillion in Americans' retirement savings in the past 15 months, a blow that could force workers to stay on the job longer than planned."

Thanks, in other words, to Wall Street's reckless and criminal behavior, workers who were promised a secure retirement were cheated out of the benefits they worked hard — for decades — to attain.

Which brings us to 2016: Just over a week ago, the Washington Post reported (déjà vu?), "More than a quarter of a million active and retired truckers and their families could soon see their pension benefits severely cut — even though their pension fund is still years away from running out of money."

Trickle-Down Economics Has Ruined the Kansas Economy

And it threatens to launch a civil war within the state's Republican Party.

—By Patrick Caldwell

Republicans have long sung the praises of trickle-down economics: Just cut taxes, and the economy will flourish as companies and individuals use the windfall to boost investment and create jobs. But a grand experiment in implementing those policies at the state level has revealed a far less rosy reality—and the consequences are threatening to spark a civil war among Republicans.

Kansas Gov. Sam Brownback, a Republican, launched an "experiment" in conservative policy after he was elected in 2010, drastically slashing the state's income taxes under the assumption that the move would kick-start Kansas' economy and rev up job creation. With help from Arthur Laffer, Ronald Reagan's mastermind of trickle-down economics, Brownback convinced lawmakers in the state to cut personal income tax rates across the board and eliminate the top tax bracket, with further reductions to come. Kansas also completely erased the income tax bills for the owners of certain "small" businesses, totaling 330,000 by this year and including a host of subsidiaries of Wichita-based Koch Industries. The Koch-funded organization Americans for Prosperity helped Brownback push the bill and has remained a staunch defender of the changes. The tax cuts were sold by Brownback with the idea that they would pay for themselves when a renewed economy boosted state revenues despite the lower rates.

 The Roots of American Conservatism

 Why do the politics of free markets and cultural reaction keep returning like some Republican Freddy Krueger?

By Kim Phillips-Fein

 hen Barry Goldwater sought the Republican nomination for president in 1964, his opponents—especially Nelson Rockefeller and George Romney—pilloried him for holding views that had no basis in reality, which for them meant mainstream politics. Here was a politician who criticized labor unions and had made an enemy of the United Automobile Workers; who rejected any suggestion of peaceful coexistence with the Soviet Union; who loathed Social Security and argued that the federal government should play no role in guaranteeing civil rights; and who warned of a growing criminal threat that he seemed to associate with unruly protesters. Perhaps worst of all, Goldwater refused to distance himself from the conspiratorial John Birch Society, accepting their support as he fought for the nomination. When his loyal delegates waged a dogfight at the Cow Palace and secured him the candidacy, he tipped his hat to the Birchers in his acceptance speech: “I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue.”

 For all the fear of extremism in 1964, neither Goldwater nor his opponents could possibly match the sheer spectacle of the 2016 race for the Republican nomination, with its distinct resemblance to a reality-TV show. Donald Trump’s gold-plated hair is the least of the attractions. With the various candidates taunting each other for being insufficiently pro-gun, anti-immigrant, or pro-life, mocking each other all the while with locker-room humor, it seems that the conservative movement has reached the end of the line. One by one, the putatively mainstream Republicans—the patient Jeb Bush, the stolid Scott Walker, even the obstreperous Chris Christie, all of whom did their duty by attacking public-sector unions, defending the right to work, and pushing tax cuts—have been kicked to the sidelines.

David Dayen: What Good Are Hedge Funds?

Hedge funds make big returns by manipulating markets in ways that are illegal for small investors. Remind us: Why are they permitted?

In the pilot episode of the Showtime drama Billions, a CNBC host grills Bobby Axelrod (Damian Lewis), founder of the hedge fund Axe Capital, at a public forum. “How do you respond to the criticism that hedge funds are the scavengers of the financial sector, and that a select few have undue influence on the markets?”

“We’re not scavengers,” Axelrod replies. “We’re white blood cells scrubbing out bad companies, earning for our investors, preventing bubbles. A hedge fund like mine is a market regulator.”

This claim invites an important debate: Do hedge funds represent an asset to the larger economy, or a menace? Do they really help make markets more efficient and transparent, or do they just exploit opportunities at the expense of other investors?

Maryland climate and health report identifies state's vulnerabilities to climate change

University of Maryland

As world leaders convene in Washington, DC this week for the Climate Action 2016 summit, a new report by Maryland public health leaders, the Maryland Climate and Health Profile report, details the impacts of climate change on the health of Marylanders now and in the future.

Developed by the University of Maryland School of Public Health's Maryland Institute for Applied Environmental Health in collaboration with the Maryland Department of Health and Mental Hygiene, the report examines the relationship between exposure to extreme weather events and risk of selected health outcomes including food and waterborne illnesses (caused by Salmonella and Campylobacter), hospitalization for heart attacks and asthma, and motor vehicle accidents. Using historical climate data along with health data, researchers were able to describe relationships between exposure to extreme events and risk of these selected diseases. These data, along with the climate projections, were used to calculate health burdens among Marylanders in future decades.

Dean Baker: The Fed's Urge to Raise Interest Rates

The Federal Reserve Board's Open Market Committee (FOMC) decided not to raise interest rates at its meeting last week. However, the FOMC also made clear that a rate hike was still an option for its June meeting.

The decision to put off a rate hike is good news, but the real question is why the Fed is even considering a rate hike. Just to remind everyone, the point of raising interest rates is to slow the economy. Higher interest rates discourage home buying, investment and act in other ways to slow the economy.

'Today Marks the End of TTIP': Greenpeace Leak Exposes Corporate Takeover

The secret documents represent roughly two-thirds of the latest negotiating text, and in several cases expose for the first time the position of the U.S.

by Deirdre Fulton, staff writer

Confirming that the TransAtlantic Trade and Investment Partnership (TTIP) amounts to "a huge transfer of power from people to big business," Greenpeace Netherlands on Monday leaked 248 secret pages of the controversial trade deal between the U.S. and EU, exposing how environmental regulations, climate protections, and consumer rights are being "bartered away behind closed doors."

The documents represent roughly two-thirds of the latest negotiating text, according to Greenpeace, and on some topics offer for the first time the position of the United States.

KIPP's Efforts to Keep the Public in the Dark while Seeking Millions in Taxpayer Subsidies

By Lisa Graves and Dustin Beilke

Charter schools are big business, even when they are run by "non-profits" that pay no taxes on the revenue they receive from public taxes or other sources.

Take KIPP, which describes itself as a "national network of public schools."

KIPP (an acronym for the phrase "knowledge is power program") operates like a franchise with the KIPP Foundation as the franchisor and the individual charters as franchisees that are all separate non-profits that describe themselves as "public schools."

But how public are KIPP public schools?

Paul Krugman: Wrath of the Conned

Maybe we need a new cliché: It ain’t over until Carly Fiorina sings. Anyway, it really is over — definitively on the Democratic side, with high probability on the Republican side. And the results couldn’t be more different.

Think about where we were a year ago. At the time, Hillary Clinton and Jeb Bush were widely seen as the front-runners for their parties’ nods. If there was any dissent from the commentariat, it came from those suggesting that Mr. Bush might be supplanted by a fresher, but still establishment, face, like Marco Rubio.

A Simple Solution to Boost Workers Across the Planet

There's a progressive way to approach global trade that can help workers abroad and at home at the same time.

By Moshe Adler

In the competition for jobs between U.S. workers and developing world workers, American workers are losing, and the TPP, which the Obama administration touts as being pro-labor, is, like NAFTA, anything but. Under the TPP, signatories will be required “to have laws governing minimum wages, hours of work, and occupational safety and health,” but the level of the minimum wage and any other standard is left entirely to each country to determine on its own.

In the competition for jobs between U.S. workers and developing world workers, American workers are losing, and the TPP, which the Obama administration touts as being pro-labor, is, like NAFTA, anything but. Under the TPP, signatories will be required “to have laws governing minimum wages, hours of work, and occupational safety and health,” but the level of the minimum wage and any other standard is left entirely to each country to determine on its own.