Verizon has agreed to pay $58 million in rebates and $25 million in penalty fees for incorrectly charging fees to customers. The $25 million dollars is the largest amount ever paid to the FCC under a consent decree. Elizabeth Warren blogged about her plans to make the Consumer Financial Protection Bureau as effective as possible. … Continue Reading
Monthly Archives: October 2010
In Defense of Whistleblowers: Cheryl Eckard – Our Person of the Week
Posted in WhistleblowersMany will think Ms. Eckard’s receipt of $96 million is out of line and unnecessary. All she did was tell the FDA what she witnessed as part of her job. But her value should be judged against the impact she made. If she just saves one life, her payment is appropriate. If she incentivizes just one whistleblower to come forward with similar information, her payment is appropriate. And finally if compliance is tightened at Glaxo and other major pharmaceutical companies, her payment is appropriate.
The SEC Gets Tougher By Streamlining Its Complaint Process
Posted in Consumer ProtectionThis shift in focus to efficiency and incentivizing self-regulation are a major step forward. But the Commission must continue to vigilently maintain its commitment to a more practical, nimble and effective form of regulation.
Republican Senatorial Candidates and Climate Change: 100% Disbelief
Posted in Weekend EditionFrom a political and philosophical perspective none of this should surprise us. GOP climate science doubt fits with a strong anti-science (see also stem cell research and “Intelligent Design” theory) strain in the conservative movement, which has deeper echoes in anti-elitist paranoia and evangelicalism.
Quick Links: Facebook Privacy, JPMorgan Exploits Investors, and Bankruptcy Advisors Bleed Lehman Brothers
Posted in Consumer ProtectionRecently, we reported on Facebook’s information sharing agreement with Microsoft and the major privacy issues it may cause. The Wall Street Journal validated our concerns with a study that shows large amounts of personal data being shared by Facebook with third parties; often, this sharing occurs despite an explicit agreement to keep web browsing information private. Facebook is working to restrict its applications from illegally sharing information but so far the money-hungry profiteers have prevailed.
The Tea Party – Three Questions with Jeffrey Goldberg
Posted in Weekend EditionWhat will happen to the Tea Party? While Tea Party groups roundly criticize the establishment Republican Party the viable Tea Party candidates for federal office are running as Republicans. Already we see prominent Tea Party candidates like Sharon Angle, Rand Paul and Ken Buck temper previously stated positions on major issues considered too extreme for the general election. The bet here is that the Tea Party will be subsumed within the Republican Party. The notion that the Tea Party will fundamentally change the Republican Party and the practice of politics will be frustrated by the realities and compromises of politics and governing. The Tea Party isn’t the only political movement that wants to “Take our country back!” The same words served as a prominent rallying cry for liberals in 2008. For a glimpse of its future the Tea Party might examine the frustrations of liberals still waiting for fundamental change following the election of Barack Obama and a majority Democratic congress two years ago.
Facebook and Microsoft Team Up to Generate Major Privacy Issue
Posted in Consumer ProtectionSeeking more users of its Bing search engine, Microsoft teamed up with Facebook to allow a more “personalized” search. Bing now has access to any public information on your Facebook profile, and when you search using the engine it will use that information to fine-tune the results and display your friends’ opinions. There are two sides to this coin: the added convenience and the concern of privacy violation.
Deloitte, PricewaterhouseCoopers, Ernst & Young, and KPMG Stare Down a Big Barrel: Reform in Europe
Posted in Banks and Financial ServicesTo put the significance of this discussion in perspective, the big four (Deloitte, PricewaterhouseCoopers, Ernst & Young, and KPMG) provide 85% of auditing services to top companies in Europe. What’s more, they also provide financial consulting services to the same companies they audit. You ask: how can a firm provide unbiased audits to a professional client? They can’t. For any independence to be achieved there must be tight and narrow restrictions on the type of consulting services an auditor can provide a company.
Wall Street Pay: Shame On Us
Posted in Consumer ProtectionFor years the public mostly turned a blind eye to Wall Street’s corporate practices, including the lucrative (and ludicrous) bonuses and salaries paid to top executives, largely for speculative trading. Wall Street produces no products. But so long as their companies made enough to pay out such exorbitant amounts, we rationalized, what was the problem? The financial collapse should have served as ice water poured on our snoozing faces. Incentivized by a pay structure that valued risk, we were all led to the brink of disaster. It was only the infusion of $450 billion in taxpayer money that saved us from The Great Depression, Part II. So why on earth are Wall Street’s top companies set to pay a record $144 billion in compensation this year?
Quick Links: Elizabeth Warren on the Importance of the CFPB; President Obama’s Veto Protects Main Street; and Campaign Financing in the Midterm Election – a Touchy Subject
Posted in Social PolicyElizabeth Warren claims that the Consumer Financial Protection Bureau will be “The first real agency of the 21st century”. Warren is optimistic about the agency’s potential to help improve the Amrican investing climate. Click Here For the Story Three cheers for Obama for his pocket veto of the Notarizations act. The bill was originally… Continue Reading
TARP and Decisive Government Action: An Historical Anomaly
Posted in Weekend EditionOur government is specifically designed to prevent decisive action. Montesquieu wrote of the need to separate and balance the functions and powers of the branches of government. In Federalist 10 Madison wrote that government should serve to temper misdirected passions of the people. Frustrating as this is in hard times, our system is built for inaction, compromise and half measures.
Person of the Week: Mary Schapiro, Chair of the SEC and Former CEO of FINRA
Posted in Person of the WeekNice work FINRA. On the one hand you pay yourselves like captains of industry, but when the going gets tough you hide behind immunity reserved for lunch bucket civil servants making less than $80,000 per year. And yes there is more. When Ms. Schapiro left FINRA, she received a parting payment of $9 million. Yes $9 million. As in, “Thanks Mary you did a great job.” A great job?
During her tenure, the markets nearly imploded and investors lost trillions. I don’t know Mary Schapiro. When I was at the SEC, I would see her now and again in the hallways. I have nothing against her personally, but the payments she received as President of FINRA are nothing short of an outrage. A true public outrage. But the internal report and investigation, paid for by FINRA after a feisty California securities broker-dealer called Amerivet demanded an explanation, was far from expressing outrage. Indeed, it defended every aspect of Ms. Schapiro’s pay and her performance. Relying on studies of executive salaries at leading investment firms, Ms. Schapiro was being–well if anything–underpaid.
Visa, MasterCard Settle Antitrust Suit: What’s Up With American Express?
Posted in Banks and Financial ServicesConspicuously absent from the agreement was American Express. Fighting American consumers and American law enforcement, “American” Express vowed to fight the proposed changes. Why? Simply put, they have the most to lose (they charge higher fees). Attorney General Eric Holder, my former boss, was strident in his opposition to the company’s position:
Because American Express has refused to change its rules, consumers are being held hostage from receiving the expanded choices and lower prices that they deserve under our settlement… We cannot allow this to stand.
Well said, General. AmEx, already notorious for charging 25% more in merchant fees than Visa or Mastercard, puts its greed on display. CEO Kenneth Chenault of AmEx hypocritically calls the government’s case “anticompetitive,” omitting the glaring and obvious truth: AmEx’s standard agreement forbids its merchant clients from soliciting non-credit forms of payment. Now that’s anticompetitive behavior.
Quick Links: NY Times Writer Questions Warren, a Leader-less CFPB, and the Supreme Court Begins
Posted in Consumer ProtectionWilliam Goldman at the New York Times writes that the Elizabeth Warren’s brainchild, the Consumer Financial Protection Bureau, is based on the ill-founded belief that consumers are not at fault for their poor investments. I agree that consumers must be more diligent, but to place the blame for sleazy contract terms and other fraudulent behavior solely on the backs of consumers is ludicrous and unfair. The CFPB is essential to our sustained recovery from the financial crisis, which occurred in large part due to under-regulation.
Jim Puzzanghera of the LA Times reports on the concern that the CFPB has much work to do. Without a Senate-confirmed director many fear its efforts will begin to stall. Certainly the Bureau needs a director, but isn’t it enough for now to let Elizabeth Warren run the preliminary operations? It was her idea, after all.
The Supreme Court’s term begins today, as it does on the first Monday in October each year. Let us hope the recent infusion of youth among the Justices will help lead the Court to more forward-thinking decisions.
Verizon Caught Skimming From its Own Customers to the Tune of $90 Million. Consumers Need to Take Extra Effort to Check Their Bills
Posted in Consumer ProtectionAlways double check your phone bills. Over 15 million Verizon customers have been charged fees for data access they in fact never requested and could not even use. Consumers $0. Verizon $90 million. Individually the charges amount to less than $10 per customer, but the windfall for Verizon was nearly one hundred million. Not bad… Continue Reading
Friday’s Quick Links: Rahm Emanuel out, Pete Rouse in; Elizabeth Warren; Consumer Protection; and reactions to The Supreme Court
Posted in Consumer Protection, In the CourtsRahm Emanuel is retiring to run for Mayor of Chicago. Who will fill his Shoes? Pete Rouse. Click here to read the Washington Post’s primer on President Obama’s new chief of staff, Pete “the fixer” Rouse. Hey, we can’t all agree all the time, right? Here’s an interesting op-ed in today’s New York Times expressing… Continue Reading