Erika Eichelberger

Erika Eichelberger

Reporter

Erika Eichelberger is a reporter in Mother Jones' Washington bureau. She has also written for The NationThe Brooklyn Rail, and TomDispatch. Email her at eeichelberger [at] motherjones [dot] com. 

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House Passes Bill Written by Citigroup Lobbyists

| Thu Oct. 31, 2013 8:48 AM PDT

In May, Mother Jones reported on a Wall Street-friendly bill that was largely written by Citigroup lobbyists. On Wednesday, that bill passed the House—but with fewer yes votes than expected.

The bill, which passed 292 to 122, would gut a section of the 2010 Dodd-Frank financial reform act known as the "push-out rule." As we reported earlier:

Banks hate the push-out rule…because this provision will forbid them from trading certain derivatives (which are complicated financial instruments with values derived from underlying variables, such as crop prices or interest rates). Under this rule, banks will have to move these risky trades into separate non-bank affiliates that aren't insured by the Federal Deposit Insurance Corporation (FDIC) and are less likely to receive government bailouts. The bill would smother the push-out rule in its crib by permitting banks to use government-insured deposits to bet on a wider range of these risky derivatives.

The New York Times reported in May that draft bill language written by Citigroup lobbyists was "reflected in more than 70 lines of the House committee’s 85-line bill." Mother Jones was the first to publish the document showing that Citigroup wrote the legislation.

Dems Who Once Supported Gutting Investor Protections Bail on Wall Street

| Wed Oct. 30, 2013 12:11 PM PDT

In August, Mother Jones broke the news that a letter signed by 32 progressive House Democrats that pushed to weaken protections for millions of Americans' retirement accounts had been written by a financial industry lobbyist.

Since then, those Dems must have had a change of heart. On Tuesday, nearly all of them flip-flopped, and voted against a House bill that would have undermined the same safeguards the letter opposed.

Here's some background, which was covered in our August report: The Department of Labor, which oversees the law that sets minimum standards for many retirement plans, is considering a rule that would simply require retirement investment advisers to act in the best interest of their customers. The letter, which was signed by 28 out of the 43 members of the Congressional Black Caucus (CBC)—a group of lawmakers that advocates for low-income people and minorities—and four other Democratic lawmakers, sought to delay and weaken the rule. Consumer advocates and government officials argued the rule could provide much need protection for small investors:

The current law doesn't do enough to prevent unscrupulous investment brokers from parking Americans' hard-earned cash in high-fee investments that benefit themselves, even if it's not in their customers' best interests, argues Barbara Roper, director of investor protection at the Consumer Federation of America...

"This rule is about protecting people from conflicts of interest," says Phyllis Borzi, the Department of Labor's assistant secretary for employee benefits security, who is spearheading the push for a stronger investment adviser rule. "Those conflicts harm everyone who is doing the right thing and trying to save."

The bill that passed the House on Tuesday by a largely party-line vote would, just as the letter urged, also have delayed and weakened the rule. But negative attention to the lobbyist's letter (our scoop was noted by MSNBC's Chris Hayes, among others) may have helped change some of the Democrats' minds.

Only two of the letter-signers voted with Wall Street: Reps. Gwen Moore (D-Wisc.) and Jim Costa (D-Calif.). A short time ago, the letter and other sources suggested at least 60 Democrats would support the bill; in the final tally, only 30 supported it. This was a "shockingly bad vote for Wall Street," one House staffer said.

Even though the vast majority of its signatories voted against the bill, the lobbyist-written letter was still being used to win over Democrats in the last hours. According to an email reviewed by Mother Jones, Rep. Patrick Murphy (D-Florida), who co-sponsored the bill with Rep. Ann Wagner (R-Mo.), circulated it to Democratic staffers just before the vote Tuesday, as evidence of Democratic support for the bill.

Despite the House bill's passage, the investment industry's chances of delaying the rule through legislative action are slim: the Democratic-controlled Senate is unlikely to pass the measure, and the White House is also opposed. And on Tuesday, Wall Street found out that its influence among House Democrats wasn't as strong as they'd once thought.

Economists to Congress: It's Time for a "Robin Hood Tax" on the Rich

| Wed Oct. 30, 2013 11:07 AM PDT

Kevin Costner in Robin Hood: Prince of Thieves.

Congress resolved the shutdown and debt ceiling crisis (for now) by agreeing to hash out a budget agreement by mid-December. Already, hopes are dim. Budget experts say that if any deal at all is worked out to replace the deep budget cuts that went into effect in March, the most likely outcome will be a short-term plan involving slightly less severe spending cuts—but with no new revenue, a big Democratic priority. Now, several prominent economists, along with a coalition of labor, health, and community groups are pushing progressive lawmakers to aim higher, calling for what they term a "Robin Hood tax" on the rich.

On Wednesday, economist Jeffrey Sachs briefed members of Congress on the Robin Hood tax, also known as a financial transaction tax, which would charge Wall Street investors a fraction of a penny on the dollar value of each trade they make. Given the mind-boggling number of trades that occur each day, the tax could rake in as much as $700 billion a year. That would increase federal revenues by about 24 percent.

"We are calling on Congress and the White House to refocus on a human needs budget, not just an endless cycle of more austerity and more cuts," says Karen Higgins, RN, co-president of National Nurses United, one of the groups backing the tax. "We need the Robin Hood tax."

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