The Corporate Observer : Washington D.C. Class Action Lawyer & Attorney : Steven Berk Law Firm : Consumer Protection, Corporate Abuse : The Corporate Observer Blog

In many ways, the days of Tammany Hall and Boss Tweed are deep in the rear view mirror.  Politics is surely more transparent these days.  There are many more stakeholders to be reckoned with:  unions, non-profits, civil rights organizations and foundations just to name a few.  But thanks in part to the Supreme Court, large corporations  will dominate the game.   And oh are they good at playing the game.  They know where to focus and can contribute directly to the campaigns of congressional members whose job it is to regulate them and their industry.  A conflict of interest to be sure; but it’s legal and just part of the game.

In last Sunday’s editorial, the New York Times detailed the dubious fundraising ethics of certain members of congress. Chief among these ethical offenders are those esteemed members of the Financial Services Committee. These powerful congressmen, just days before votes on a seismic  regulation overhaul, continue to plan and throw together fundraising events for officials of the very corporations they will regulate. Representatives of the financial industries come from all over the country to meet with elected officials, to dine, and to share their two cents – more like millions of cents.  Why now? Because money is flowing and campaigns are ever more expensive. 

The banks and their lobbyists sure know how to play the game.  Public outcry may be loud for now, but memories are short.  Behind the scenes – the lobbyists are getting face time and putting in all those provisions and loop holes that water down high profile legislation.  In the end, we are right back where we started before a financial collapse (of our own making) was days away from igniting a worldwide economic catastrophe. 

Private interests regularly flood congress with money, biased information, and campaign contributions – this is nothing new. But we should have learned something from being on the brink.  Congressional leaders must decline dinner dates with financial heavy-hitters.  It’s time instead to soberly contemplate real reform,  Indeed, what we really need is a sea change in the way we value risk and reward our executives.  Those hard issues cannot be contemplated over gourmet dinners with lobbyists and their clients sipping $250 bottles of wine.  Left unfettered, the banks are winning and Main Street  is destined to lose again.

Assisted by Zachary Kady

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Greed continues unabated and unapologetically on Wall Street.

Wall Street bonuses are skyrocketing. The rate increased to a staggering 31% at Goldman Sachs, JPMorgan Chase announced $9.3 billion in bonuses.   Bank of America has joined in the fun too; dishing out $4.4 billion – yes billion – to investment banking employees, with top employees receiving $5 million a pop. In total for 2009, New York City bank employees were paid a whopping 20.3 billion.

How bout a box of chocolates or simply a thank you for Main Street?  They made it possible with a no strings attached bailout just last year. Think what America could do with $20.3 billion. Schools, a new bridge or two, heck let’s pay off some of that mounting debt to the Chinese.

As troubling as the sheer size of these bonuses, is their source.  The fancy name for it is proprietary trading. Most of us would call it gambling.  Yes trading is gambling.  But generally when you are Goldman Sachs or JPMorganChase, you don’t lose.  Others do though – the fellas on the other side of the trade – that’s why they call it a trade.

All this “proprietary trading” can be an unstable and a risky way to run a bank.  Eventually the music stops and someone loses.  Those losses are multiplied by derivatives upon derivatives and those tidy trading profits can soon vanish turning into colossal losses.  But fear not, Main Street can be scared into at least one or two more bailouts.  

Perhaps more troubling though is when the major Banks are busy at the poker table, with all their chips deployed, little attention is paid to innovative financing for existing and new companies trying to compete in the world economy.  Face it, proprietary trading does not produce value outside of Wall Street; the only beneficiaries are the banking employees themselves. This circular system keeps billions of dollars in the hands of Wall Street bankers, and none of it in the hands of the American people.

The services offered on Wall Street are vital to all Americans, and the work that employees do should be fully compensated. But right now, Wall Street rewards its employees for engaging in selfish transactions that benefit none but their own.

So what do we propose?

Let’s restructure Wall Street bonuses to incentivize banking employees to produce profit on transactions that create jobs, build infrastructure, and reward innovation:  not financial innovation but real world innovation.  How about putting some of that creativity and energy into financing clean coal plants or schools designed to retrain our work force.  Those endeavors deserve a bonus.

Assisted by Jessica Begen

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 The number of melanoma cases is increasing at a rate higher than any other form of cancer. And a disproportionate amount of these new cases are found in young women.

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This past July, indoor tanning joined the ranks of cigarettes and arsenic, finally earning classification as a bona fide carcinogenic. The International Agency for Research on Cancer (IARC), an expert committee of the World Health Organization, placed tanning beds in the highest risk category, declaring them “carcinogenic to humans." 

Indoor tanning in the U.S. makes up a $5 billion industry, with 25,000 professional indoor tanning facility businesses and a customer base of 30 million people. Each year, 10% of Americans visit an indoor tanning facility. 2.3 million are teenagers. 71% are women aged 16-29.

On its public website, the Indoor Tanning Association heralds the benefits of indoor tanning. ITA says tanning is natural—“what your body is designed to do.” Moderate exposure to the sun or UV light is “absolutely” good for you and in fact, indoor tanning is actually safer than outdoor tanning. Skin cancer—the elephant in the room—merits no concern, says ITA. There is no association or “connection between melanoma and UV exposure from tanning beds.”

The tanning industry markets itself as a healthy and beneficial service. “Tanning is a lifestyle. Tanning is relaxing and makes us look good and feel good. So why not celebrate it?!” asks the 2008/2009 LOOKING FIT ® Tanning Fact Book.

According to medical experts, there is little reason to celebrate. There is “convincing evidence to support a causal relationship” between indoor tanning and melanoma, says the IARC report. Moreover, the study suggests that indoor tanning is particularly dangerous for young customers, since exposure to indoor tanning before the age of 35 may increase melanoma risk by 75%. And all of this is taking place as melanoma rates continue to skyrocket.

Despite the high risk, teenagers are a prime demographic of the tanning industry. Most of the 2.3 million teen customers are girls. A 2000 survey found that 42% of teen girls had tried indoor tanning. That’s nearly half of all American teenage girls—a startling statistic.

Research suggests that these girls are influenced by an adolescent culture that worships tan skin. Although many teens are aware of the health risks associated with tanning, they continue to seek UV ray exposure. "We're so wrapped up in the instant gratification we don't really worry about it," explains one teen.

But that instant gratification has consequences, above all for young tanners. Professor of Public Health at San Diego State University, Joni Mayer, says that tanning is dangerous for all, but especially for teens because they “are very interested in looking tan and don't often think about the consequences of any of their behaviors."

Mayer’s solution is simple: "Our data and other data indicate that those under age 17 need to be banned from tanning beds."

Assisted by Jess Begen.

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New authoritative studies continue to confirm the significant link between indoor tanning and cancer. Despite these reports, teens and young adults continue to visit tanning salons in record numbers.

Surprisingly, the public remains largely silent as this public health risk progresses. The strongest voice in this debate comes from the indoor tanning industry, which continues to extol the false virtues and health benefits of indoor tanning. Where is the public outrage?

Our law firm has a keen interest in halting the availability of indoor tanning to minors and strengthening the disclosure of risks to young adults. This is an important public health issue. We are devoting a three-part series to: 1) explain the cancer risks of indoor tanning; 2) explain the results of indoor tanning; and 3) analyze the responses to indoor tanning.

We hope this series generates a response from teens that are at risk of indoor tanning and their families. It is time to engage in a meaningful conversation on how we can move forward to protect youth from the significant and real cancer risk associated with indoor tanning. 

Assisted by Jess Begen. 

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This Blog typically supports Main Street heroes, but this week we are saluting one of Wall Street’s greatest: Warren Buffett. Buffet is a rare breed, a multi-billionaire who has not lost touch with normal society and is a daily champion of Main Street America.

Appearing on BBC 2 Monday night, Warren Buffett once again called for a progressive tax system where the money of the rich is spread more equally throughout society. Some have called this socialism, but Buffett seems to think this it is just how a practical, realistic society should work. He decided to compare our modern society with that of a small group trapped on a remote island with no hope of rescue. Buffett wisely claimed that if 20 people were trapped on such an island and decided to grow rice, it would be ludicrous to assume that we would ask the five smartest people to simply trade futures on the rice. He added that it would be even more ludicrous to assume that these elites would be asked to give less back to the community than the people doing the actual work.

            Buffett claimed that the rich in America – including himself and Bill Gates – are the beneficiaries of circumstance. Had they been born in another time or another place they may have been some animal’s lunch, but being born in America at the times when they were, these giants of capitalism were allowed to grow into the magnates that they are today. Men and Women like Gates and Buffett, though deserving of praise should not be treated as untouchable elites. Buffett famously showed the world that he paid a lower rate of taxes (about 17%) than the person who cleans his office (about 30%). It is time the tax system reflected more progressive social values rather than protect the rich and their interests.

            Buffett’s main claims are easily comprehendible and should be quite easy for all to accept:

·        The great heads of industry and capitalism should not “delude” themselves into thinking that they are somehow superior individuals

·        The rich should play a larger part in repaying the masses of people who got the short ends of the sticks and allowed the privileged few to succeed

·        The financial community needs to readjust its ideas of wealth to include values of social responsibility

Buffett was right to claim that Americans are infuriated by losses of jobs and foreclosures with no judicial intervention or punishment. A little more government regulation and taxation to repay the less fortunate should not send investors running for the hills (or in this case, the Cayman Islands and Switzerland), but rather it should be each person’s social duty to contribute their fair share to society.

Nobody is asking for fully equal distribution of wealth or a 90% income tax, but simply a sense of moral obligation and a reevaluation of the importance of personal wealth over societal wealth. It is time Wall Street stopped its selective learning of financial lessons from the Sage of Omaha and started respecting his social wisdom as well.

Assisted by Zach Kady

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