On Wednesday, Sen. Elizabeth Warren (D-Mass.) called on the biggest US banks to disclose their donations to think tanks, which influence laws that affect them.
Under current law, banks and other corporations are not required to publicly report their contributions to think tanks. That means that lawmakers who use think tank data and analysis to shape laws and regulations designed to police banks do not know how much bank money influences that research. "A lot of the power of big banks over DC comes from donations to think tanks, who then put out 'studies' favorable to certain ways of doing business," says one Democratic aide. In a letter to the CEOs of the nation's six largest financial institutions—JPMorgan Chase, Wells Fargo, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley—Warren called on the companies to start voluntarily reporting their donations to these policy shops.
"To prevent future [economic] crises," Warren says in the letter, "policymakers need access to objective, high-quality research, data, and analysis about our consumer and financial markets…[P]rivate think tanks are extremely well-suited to provide this research and analysis, but for it to be valuable, such research and analysis must be truly independent."
Corporations are required to tell the public when they lobby members of Congress or government agencies, Warren says, so "the same transparency should exist for any indirect efforts [banks] make to influence policymaking through financial contributions to think tanks."
One way to do that is through think tanks. The Roosevelt Institute, for example, recently published a report on the successes and failures of the 2010 Dodd-Frank financial reform act. If the institute had received loads of Wall Street cash, it might have been motivated to minimize the failures of the law, and thus further regulation.
Warren's letter comes a few days after the president and vice president of the centrist think tank Third Way wrote a Wall Street Journal op-ed warning Democrats against following Warren over a "populist cliff." The Nation reported this week that Third Way employs a Washington consulting firm that represents financial institutions including MasterCard and Deutsche Bank.
The letter also comes on the heels of a recent defeat for corporate contribution transparency advocates. The Securities and Exchange Commission, a Wall Street regulator, considered forcing corporations to disclose the money they spend on campaigns and elections. But just this week, the agency announced it had dropped that issue from its 2014 priority list.
Last month, Democrats changed the rules of the Senate. Now, confirming President Barack Obama's judicial and executive-branch nominees will take just 51 votes instead of the previous 60. That is good news for Obama's efforts to rein in big banks.
Since Obama took office in 2009, GOP senators have used filibuster threats to delay and block scores of executive-branch and judicial nominees. That has greatly benefited the financial industry. Three long-standing openings on the bench of the DC Circuit Court—which hears challenges to rules required by the 2010 Dodd-Frank financial-reform act—have created an imbalance that has tilted rulings to favor big banks. And vacancies on the Commodity Futures Trading Commission (CFTC) and the Federal Reserve Board of Governors, if left unfilled, could slow Wall Street rule-making to a snail's pace. Last month's rules change will make it easier for Senate Democrats to confirm Obama's choices for these posts. That could lead to regulations and court rulings that are more to reformers' liking.
Over the past month, the House and Senate have been working to come up with a compromise farm bill—the five-year piece of legislation that funds agriculture and nutrition programs. The main sticking point is the level of cuts to the food stamp program. House Republicans want to cut $40 billion from the program, while the Senate wants to trim $4 billion. Last week, the talks fell apart, and the two sides are fighting over why.
A Democratic aide tells Mother Jones that House Speaker John Boehner shot down several informal compromise farm bill proposals because the food stamps cuts were not deep enough. Boehner's spokesman denies this.
The Democratic aide says the joint House-Senate panel that is trying to work out a deal presented Boehner with a few proposals that contained food stamps levels close to what the Senate wants. Even though Rep. Frank Lucas (R-Okla.)—the chairman of the House agriculture committee and a top member of the compromise panel—was willing to give a lot of ground to the Senate on food stamps, he says, Boehner rejected the proposals. "Boehner is playing spoiler," he adds. "That's why [negotiations] fell apart."
Another source familiar with the negotiations echoes the Dem aide's claim, saying that the House leadership has Lucas on a tight leash. Sen. Tom Harkin (D-Iowa), who is on the compromise committee, told Congressional Quarterly the same thing last week. "I'm hearing that the speaker still keeps inserting his people into the process," and that House members on the farm bill compromise panel "have to go and check with the speaker’s people [who] say they want this and this and this. I hear that's one of our major problems."
But a spokesman for Boehner says the assertion that Boehner shot down the food stamps proposals "is absurd." He adds that "the Speaker has full confidence" in Lucas and the rest of the House GOP team that is working out a compromise farm bill. On Friday, Lucas said negotiations stalled because of differences over the crop subsidy provisions in the legislation.
If Boehner did reject the compromise committee's food-stamp proposals, he adhered to something called the Hastert rule—an informal measure used to limit the power of the minority—which says that a "majority of the majority" party must support a bill before it is brought up for a vote. It was first used by former House speaker Dennis Hastert in the mid-90s.
Boehner may not use the Hastert rule on the farm bill, but time is running out to reach an agreement. The two sides were supposed to have a final compromise bill on the House floor by December 13. A Senate agriculture committee aide says that negotiations are technically still ongoing, but the deadline may be pushed into next year. The farm bill is already more than a year behind schedule.
Labor Secretary Tom Perez has taken a lead role in President Barack Obama's push to increase the federal minimum wage. The fast food industry is one of the nation's largest employers of low- and minimum-wage workers. So why has the labor secretary brought on a top McDonald's PR person as a senior adviser?
During a national strike in August, in which workers were demanding that fast-food joints pay a $15 minimum wage, Casillas told Bloomberg that the strikers were not "providing an accurate picture of what it means to work at McDonald’s."
At the Department of Labor, Casillas will be meeting with business and community groups about the secretary's policy priorities, one of which is raising the minimum wage. That means she will inevitably be dealing with companies like McDonald's as well as the striking fast-food workers, says Craig Holman, a government ethics expert at the consumer watchdog Public Citizen. Her previous work for McDonald's could color how she presents their concerns to Perez, he argues, which means there is "clearly an appearance of a conflict of interest."
(The White House did not respond to a request for comment. The SEIU, which has helped organize the national movement of fast-food strikes, and the AFL-CIO, which is active in the minimum wage fight, declined to comment, as did Berlin Rosen, a public relations firm promoting the SEIU's Fast Food Forward Campaign.)
Carl Fillichio, senior communications adviser at the DoL, says the hire does not represent a contradiction. "The Secretary is committed to raising the minimum wage and so is the Obama administration," he says. Fillichio notes that prior to her job at McDonald's, Casillas was a regional press secretary for the Obama campaign, and before that she worked at the American Civil Liberties Union. At the DoL, she does not influence policy, he adds, but merely serves as a liaison between the labor secretary and outside groups.
Critics are not convinced. "If she's a gatekeeper for who [the DoL] is meeting with, that's a problem," says a top organizer in the minimum-wage fight who did not want to be identified. He adds that McDonald's officials clearly don't have an "understanding of where workers are… [The hire] certainly sends a troubling message."
House financial services committee chair Jeb Hensarling (R-Tex.).
Last week, Sen. Elizabeth Warren (D-Mass.) warned that, five years after the financial crisis, the biggest Wall Street banks are still so large and loosely regulated that their failure would endanger the entire financial system, forcing the government to bail them out. This problem—called too-big-to-fail—is worse now than it was in 2007, Warren said, because the four largest banks are 30 percent bigger than they were before the financial crisis. House Republicans have made common cause with Warren on the issue—at least rhetorically. But when it comes to proposing a solution, GOPers in the House are MIA; in fact, they've pushed bills that would preserve bank bailouts.
Since Republicans took over the House in 2010, the House financial services committee hasheldsixhearingsonhow the 2010 Dodd-Frank financial reform act may not have ended too-big-to-fail.
In March, Rep. Jeb Hensarling (R-Texas), the chairman of the committee, told the Wall Street Journal that he would doggedly work to prevent more big bank bailouts. The article was titled "Texan's Plans Put Wall Street on Edge."
But Hensarling and his fellow Republicans have yet to propose a fix. "They've been in power for three years now," says one Democratic aide. "What have they done?"
Financial reformers agree with Warren and Hensarling that Dodd-Frank has not ended too-big-to-fail. One reason is that big banks operate internationally, which limits the government's capacity to wind down failing institutions. Another is that the rules that regulators have drawn up to implement the Dodd-Frank law are too weak, reformers say. The financial reform law says that banks have to hold onto a sufficient amount of emergency reserves to protect themselves in case of another downturn, but advocates charge that bank regulators have proposed reserve levels that are too low to save banks in case the economy tanks again.