On Tuesday, Sen. Elizabeth Warren (D-Mass.) and Rep. Elijah Cummings (D-Md.) called on the heads of the Federal Reserve, the US central bank that sets monetary policy and helps regulate Wall Street, to take a more active role in bank oversight.
The Fed metes out dozens of penalties against banks each year, for infractions including faulty foreclosure practices and inadequate money laundering protections. But the seven board members—including newly-minted Fed chair Janet Yellen—who head the Federal Reserve rarely vote on penalty and enforcement decisions. Of the roughly 1,000 formal enforcement actions taken by the Federal Reserve over the past 10 years, only 11 were voted on by the board. The rest were delegated to Fed staff, sometimes even mid-level employees. Warren, who sits on the Senate banking committee, and Cummings, the ranking member of the House oversight and government reform committee, have been critical of this arrangement, arguing that the delegation of authority results in penalties that are too lenient. On Tuesday, the two Democrats sent a letter to Yellen asking her to tighten the Fed's rules governing when the Board of Governors may delegate regulatory decisions, and when they must take important supervisory duties into their own hands.
"We respectfully request that the Fed…require that the Board retain greater authority over the Fed's enforcement and supervisory activities," Warren and Cummings wrote. "We believe that increasing the Board's direct role in overseeing enforcement and supervision would strengthen the Fed's efforts to reduce systemic risk in our financial system."
The two note that the Fed Board gives more attention to monetary policy decisions than to its other mandate, bank oversight: "While the Board votes on every important decision the Fed makes on monetary policy, the board rarely votes on the Fed's important supervisory and enforcement policy decisions." Other Wall Street regulators, such as the Securities and Exchange Commission (SEC), require that all bank penalties be approved by their head panels.
In their letter, Warren and Cummings ask Yellen to require the Fed board to vote on any penalty agreement that exceeds $1 million or that involves changes in bank management. They also urge that all board members be notified before staff members enter into an enforcement action against a bank.
The US economy added 113,000 jobs in January, according to numbers released Friday by the Labor Department. The jobs gains were lower than expected, but the unemployment rate still dropped a tenth of a percentage point to 6.6 percent—the lowest level in five years. In contrast with with previous months, the labor force participation rate—the percentage of people working or looking for a job—increased slightly to 63 percent.
Several factors make it especially hard to make much sense of this month's job numbers. Unusually cold weather last month meant that more people stayed home, dampening retail sales and hiring. Annual data revisions released Friday show that job growth was slightly stronger last year than initially reported—suggesting that January's numbers could be low, too. Extended federal unemployment benefits, which expired in December, further complicate the picture: Since individuals are required to search for jobs in order to receive unemployment benefits, the end of those benefits could cause some people to stop their job searches and drop out of the labor force.
The disconnect between the two surveys the Labor Department uses to take the temperature of the economy also make January's numbers hard to interpret. The survey of employers, which is used to calculate the unemployment rate, found that 113,000 jobs were created last month. That number was much lower than the 616,000 new jobs reported in the survey of households. "Given the statistical mess," economist Douglas Holtz-Eakin noted Thursday, "the only real message is that the economy is not accelerating significantly."
The unemployment rate for blacks and Hispanics remained high in January, at 12.1 percent and 8.4 percent respectively. Last month, the jobless rate was 5.7 percent for white people, and 4.8 percent for Asians.
Employment gains came mainly in construction, manufacturing, wholesale trade, and mining.
Here's what the January employment situation looks like in chart form, via Quartz:
The number of people employed in part-time work because they could not find full-time work fell to 7.3 million in January. Over the past year, full-time employment has risen by 1.8 million jobs, while part-time work has increased by only 8,000, despite fears that part-time work would jump due to Obamacare. (The Affordable Care Act says that employers have to provide health insurance for employees who work more than 29 hours a week.) The Congressional Budget Office just released a report saying that the Affordable Care Act will reduce employment by about 2 million jobs, but that will be mostly due to people leaving jobs they held onto for the health insurance.
The number of people actively engaged in the workforce edged up slightly in January, but economists warn that the labor force participation rate could drop in the coming months because Republicans are blocking an extension of federal unemployment benefits for the long-term jobless. Americans must be actively looking for work in order to qualify for federal unemployment insurance. Without out that incentive, some of those looking for work may give up on their search.
On Thursday morning, Sen. Elizabeth Warren (D-Mass.) called on President Barack Obama to nominate more judges to the federal bench who have backgrounds serving the public interest instead of corporate America.
Of Obama's judicial nominations so far, just ten—fewer than four percent—have worked as lawyers at public interest organizations, according to a report released Thursday by the Alliance for Justice, a network of civil rights organizations. Only 10 nominees have had experience representing workers in labor disputes. Eighty-five percent have been either corporate attorneys or prosecutors. At an event Thursday sponsored by several civil rights organizations, including the Brennan Center for Justice and the Alliance for Justice, Warren called for more balance in the system.
"Power is becoming more and more concentrated on one side," she said. "Well-financed corporate interests line up to fight for their own privileges and resist any change that would limit corporate excess… We have an opportunity to…fight for something that balances the playing field in the other direction."
Warren noted that now is the perfect time to take up that fight. Obstruction by Senate Republicans has stalled the confirmation of many of the president's judicial nominees over the years. More federal judgeships remained vacant during Obama's first term than during President George W. Bush's, and there are still more than 50 vacancies on the federal bench that need to be filled. "So it's unsurprising that the president and a majority of the Senate gravitated to nominating corporate lawyers…that most conservative senators could not object to," Warren said. In November, however, the Senate voted to put an end to GOP obstruction by ending the filibuster for judicial nominations. Now it only takes a simple majority of the Senate to confirm nominees to the federal bench. Theoretically, that means that Obama can nominate progressive candidates with experience representing the average American, and Democrats will be able to confirm those nominees without any Republican votes.
On Jan 16, the president nominated four lawyers with public interest backgrounds to fill district court vacancies in Illinois, Washington, Nevada, and Missouri. Two of those nominees have significant trial experience representing plaintiffs in corporate wrongdoing cases, one is a former public defender, and one comes from criminal defense.
But there are still roadblocks that may prevent the president from nominating progressive candidates. The GOP can still use something called the "blue-slip process" as a de facto filibuster on nominations. Here's how: When the president is considering a potential judicial nomination, the senators from the state where the judge would serve are given a blue slip of paper. If both senators do not return their blue slips, the nominee is not allowed to move on to a vote in the Senate judiciary committee.
It is because of the blue-slip process, for example, that Obama recently nominated two candidates to serve on the federal bench in Georgia who raised the hackles of liberals: Georgia Court of Appeals Judge Michael Boggs and Atlanta attorney Mark Howard Cohen. Boggs voted to keep the Confederate battle emblem as a prominent part of Georgia's state flag when he was a Georgia legislator in the early 2000s. Cohen helped defend Georgia's voter ID law, which voting rights advocates say makes it harder for poor people and minorities to vote.
This week, Sen. Elizabeth Warren (D-Mass.) introduced legislation along with Sen. Marco Rubio (R-Fla.) that would protect elderly veterans from financial scams and sketchy financial advisers.
The Department of Veterans Affairs (VA) funds an assisted living program for certain low-income veterans, and for years scammers and faux investment consultants have preyed on elderly vets enrolled in it. Warren and Rubio's bill, introduced Tuesday, would require the VA to crack down on these shady dealers.
"For thousands of our oldest veterans who need help with basic daily activities, the…program is a critical lifeline," Warren said. "Unfortunately, scams are turning the program into something that can actually undermine the financial security of our older veterans and waste federal funds."
Swindlers calling themselves "veteran's advisers" often charge vets fees to help them obtain assisted living benefits, even though the application is free, according to the Consumer Financial Protection Bureau (CFPB). "Investment advisers" also profit off the assisted living program. These advisers will counsel veterans who have too many assets to qualify for the program to stow some of their money in a trust or account that cannot be accessed for years, so that it appears the vets are poor enough to qualify. The result is that vets cannot access their savings, and investment advisers earn a healthy commission for their "advice."
Warren and Rubio initially proposed the legislation in November as an amendment to the annual National Defense Authorization Act (NDAA). The amendment did not make it into the final annual defense bill, prompting Warren and her Republican colleague to introduce a stand-alone bill.
"This bipartisan proposal will help put an end to these financial scams and ensure that we honor our veterans' commitment, sacrifice, and service to the nation," Warren said.
"Unemployment insurance is a critical lifeline for people who are trying their hardest and need a little help—a recognition that Wall Street and Washington caused the financial crisis, but Main Street is still paying the price," Warren said in a speech on the Senate floor.
She added that it's hypocritical for Republicans to push for an extension of a package of mostly corporate tax breaks called "tax extenders" without offsetting the cost, but are demanding that aid for the unemployed be paid for. "Republicans line up to protect billions in tax breaks and subsidies for big corporations with armies of lobbyists," the senator said, "but they can’t find a way to help struggling families trying get back on their feet."
Each year since the onset of the recession in 2008, Congress has re-authorized federal emergency unemployment benefits for the long-term jobless, which kick in after state unemployment benefits run out—usually after 26 weeks. The number of extra weeks of federal unemployment insurance has varied over the years, but last stood at 47 weeks.
The long-term unemployment rate—the percentage of those without a job for 27 weeks or longer—remains at record high levels, but Republicans in the House and Senate don't want to extend federal unemployment benefits unless they are offset by savings elsewhere. A Senate plan to renew the benefits failed a couple of weeks ago, because Republicans said Senate Majority Leader Harry Reid (D-Nev.) wouldn't allow them to amend the legislation to their liking. The upper chamber is now working on a new proposal that would pay for the $6-billion extension by temporarily increasing taxes on employers. But even if the Senate passes the measure, it is unclear whether House speaker John Boehner (R-Ohio) will bring the bill up for a vote, according to Democratic House aides.
UPDATE, February 6, 2014: On Thursday, Senate Republicans successfully filibustered a Democratic bill that would have extended unemployment benefits for 3 months. The vote was 55-42, but Democrats needed 60 votes to advance the legislation.