Archive for the ‘Corporations’ Category
In case you are a Japanese soldier who have been hiding somewhere in the Pacific for sixty years and have missed every single piece of news in the meantime, only to resurface and start reading right here right now, you might be aware that in 2008 there was a massive banking failure as a result of subprime mortgages that allowed the United States government through the Troubled Asset Relief Program (TARP) to transfer up to $700 billion to banks. About $550 billion has actually been spent. The rules on what the transfer actually bought are somewhat complicated, and not worth repeating here. The important point is that this entire program was necessary because banks were under-capitalized, especially so considering how risky their assets were (that’s a different story altogether). See more on capitalization here, here, and here.
You may be asking why am I making a return to blogging over something so obvious, when there is very little controversial about this? Good question, fake reader!
The reason is that there are forces who don’t think banks should actually be required to hold a higher percentage of money: not surprisingly, these forces are bankers themselves.
Citibank’s CEO Vikram Pandit wants to punish banks for riskiness and ignore capital requirements:
Pandit said that capital rules, such as the international Basel agreements, are not transparent and do not give investors a good idea of how much risk a bank is facing.
Pandit said that under the current capital rules it is difficult to tell whether two banks who claim to be meeting the same standard are “equally risky.”
“You don’t know how to calibrate risk because you don’t know enough about what those underlying assets actually are nor how that risk is measured,” Pandit said Friday to a Bretton Woods Committee meeting in Washington.
Pandit said a better way for making sure the financial system is sound would be to create a benchmark portfolio that banks and other financial institutions would measure their own portfolios against.
He said those results should be disclosed publicly.
The response to this is simple: the conventional wisdom on riskiness can very easily be wrong. People who saw the mortgage meltdown coming were mocked. Ratings agencies famously gave AAA ratings to bundled crap (and breaking today: the SEC may go after them). Even if we put the incompetence to the side, we can’t guarantee that a safe profile is, in fact, safe. Companies that were insulated from the subprime crisis were almost brought down by it – companies are too interlocked nowadays.
Secondly, I don’t think there’s an easy way to just get all banks together and get them to disclose their assets to some third party. Banking is too competitive, and if a bank thinks it has a competitive advantage, it’s going to want to hide that.
A couple weeks further bank, JPMorgan Chase CEO Jamie Dimon tried an even dumber line of reasoning to avoid capital requirements:
“I’m very close to thinking the U.S. shouldn’t be in Basel anymore. I would not have agreed to rules that are blatantly anti-American,” he said in the interview.
“Our regulators should go there and say: ‘If it’s not in the interests of the U.S., we’re not doing it’.”
The Basel III capital rules are designed to increase the safety of the financial system by making banks build up risk-absorbent “core tier one” capital to at least 7 percent of risk-weighted assets. The biggest, including JPMorgan, have to reach 9.5 percent.
This was promptly rejected by European and American regulators. At the time, Matt Yglesias pointed out that 1) Jamie Dimon is not paid to advocate for America, but for the banks, and 2) there is nothing inherently un-American about rules on a bank that happens to be American – the rules are normatively good or bad on their own accord, not because of whom they effect. (Incidentally, the only person I could find agreeing with Dimon also urged the US to default on the debt. Not the most credible voice in the world in my humble opinion.)
But Dimon is not going to give up easily: if there’s a regulator to scream at, he’s game, even if that regulator is Canadian:
The new Basel III agreement—the rules regulators from around the globe agreed to late last year—calls for all banks to hold 7 percent capital, up from 3 percent. The biggest banks would be required to hold an additional 2.5 percent capital.
Dimon’s tirade was directed at Mark Carney, Bank of Canada governor, in a closed-door meeting in front of more than dozens of leading bankers and regulators, the Financial Times reports. According to the FT, things got so heated that Goldman Sachs CEO Lloyd Blankfein sent an apologetic email to Carney afterwards.
That’s right, Dimon is so upset that his bank will have to maintain 7% capital that his anger even puts Goldman Sachs to shame.
There are a number of small issues with the Basel Convention that require general debate. The capitalization requirement is not one of them and it’s embarrassing that American banks are putting up this fight.
Banks are creatures of social utility: a bunch of private citizens give their money to an entity that by definition will spend it on other things but promise that if you need it you can get your money. It’s therefore up to the public (through the government) to set rules regarding such capitalization. Because failures in this market are not entirely rational: bank failures cause runs on all banks. It’s not an overstatement that the entire fabric of society is at risk when banks are at risk – that is why something like TARP was entirely necessary in the first place.
As I sat down for the night, I put C-SPAN on to find a panel from the Center for American Progress earlier today celebrating the 40th anniversary of OSHA. A quick Google news search showed that the only people covering this anniversary were, in fact, CAP itself and the AFL-CIO who had a representative on the panel. It did not even merit a press release from the Department of Labor! There is a OSHA at 40 page… located at the OSHA website. Most of what I’ve found here I found through twitter, not surprisingly.
So what is OSHA? It’s the Occupational Safety and Health Administration, signed into existence by the safest President of them all, Richard Nixon.
Basically, what OSHA does is ensure a safe workplace for everyone. I found these rebuttals of common complaints about OHSA salient. Here’s an excerpt:
3. Speaking of PPE, we never had that junk when I was in the field, and we did just fine.Did I just hear, “We’ve always done it that way?” Or maybe it was, “Real men don’t need that crap.” Think about this: Prior to 1970, there were about half as many workers in the United States as there are today, and there were 14,300 job-related deaths. Today, with a workforce more than twice as large, fewer than 5,000 workers are killed on the job in a year. Comparing relative rates (1970 vs 2008) there are about 82 percent fewer fatalities now than in 1970. That sounds pretty good, unless you consider that 5,214 workers were given capital punishment for the crime of going to work. Doesn’t sound so good, does it? Maybe the good old days weren’t so good.
4. OSHA writes citations that cost me money. How am I supposed to stay in business?Short answer: Maybe you shouldn’t be in business if you can’t protect your workers.
I’d really recommend the entire (short) article.
One last point: amidst all the talk about collective bargaining regarding wages (which is really important) collective bargaining also serves an important function in regards to safety standards. Unions are a major institution advocating for the safety of workers. Without their power and ability to mobilize, literally 6 or 7 thousand people a year would probably be dead because of their line of work.
Moreover, cutting OSHA is a dumb idea. It’s already underfunded. This is something the left should (and is) fighting for. There’s no business where it makes sense over any period of time to take serious safety risks in return for higher profit margins. None. OSHA is something that literally pays for itself, and is fundamental to what America is as a country: not letting people die on the job when simple inspections could prevent it.
We’ve seen attacks on OSHA before. The result? They’re nonsense:
OSHA has been particularly effective when regulating some of our most dangerous industries, which hasn’t stopped the affected employers from vigorously challenging the agency at every turn. Following a series of explosions in grain elevators in December 1977, which caused the deaths of 59 workers, OSHA began the process of developing a grain handling facilities standard that took a decade to put into effect. At the time industry was bitterly opposed. Yet, the National Grain and Feed Association (NGFA), a persistent critic of OSHA, acknowledged in 1998 that the industry had seen “an unprecedented decline in explosions, injuries and fatalities at grain handling facilities.” In 2006, a review by the U.S. Chemical Safety and Hazard Investigation Board reported a 42 percent decline in grain explosions, 60 percent decline in injuries, and a 70 percent decline in fatal accidents. (There are still recalcitrant employers who do not follow OSHA’s guidelines, leading to tragedies like the deaths of Pacas and Whitebread.) Similarly, the passage of the Cotton Dust standard in 1978 lowered rates of “brown lung” among textile workers throughout the country from approximately 12 percent to about 1 percent of all employees.
Despite these successes, business lobby groups and their allies in Congress have hamstrung OSHA’s effectiveness by thwarting tougher standards, restricting its budget, and limiting the number of inspectors. Today, state and federal OSHA agencies combined only have 2, 218 inspectors, and in every state the number of OSHA inspectors fails to meet the benchmark set by the International Labour Organization for the appropriate ratio of safety inspectors to employees.
This year’s headline catching accidents at Upper Big Branch and Deepwater Horizon, and many of the less known tragedies like the deaths of two teenagers in Mount Carroll, were avoidable with stronger laws and more vigorous enforcement. Industry groups have used their significant resources to escape their responsibilities. Now, the US Chamber of Commerce and congressional Republicans are stepping up their attacks on OSHA, recycling many of the same arguments they used 40 years ago. While they claim stronger workplace protections are “job killers,” the unfortunate reality is that it is American workers who are dying every day.
This is what the administrative state does: it slowly but inevitably makes society work better through a responsive, though slow, process. OHSA is just one example of that.
Sadly, that seems the road the right wants to take us on: where John Galt gives some crumbs, and if people die chasing them off a cliff, so be it. The moral repugnance of that cannot be overstated.
Today, the EPA issues a new rule regarding power plants, aimed at regulating levels of ” of heavy metals, including mercury (Hg),arsenic, chromium, and nickel, and acid gases, including hydrogen chloride (HCl) and hydrogen fluoride (HF).” Mercury is the headliner, here.
This is one salvo in a decades long war to clean up the emissions from power plants. The New York Times explains:
The new rules bring to a close a bitter legal and regulatory battle dating back to the passage of the Clean Air Act in 1970, which first directed the E.P.A. to identify and control major industrial sources of hazardous air emissions.
By 1990, however, federal regulators had still not set standards for toxic emissions from power plants, and Congress, in the face of stiff resistance from utilities and coal interests, passed legislation directing the E.P.A. to develop a plan to regulate the industry. In 1998, the agency finally complied, delivering a comprehensive report to Congress detailing the health impacts of numerous pollutants, including mercury, which by then had been linked conclusively in numerous studies to serious cognitive harm to developing fetuses.
In December 2000, in the final days of the Clinton administration, the E.P.A. finally listed power plants as a source of hazardous air pollutants under the Clean Air Act. Yet under the Bush administration, the effort to control power plant emissions would again falter.
The 2000 listing required E.P.A. to implement standards for mercury and other pollutants from the industry. But rather than comply, the agency made the controversial decision in 2005 to delist power plants as sources of hazardous pollution.
Jonathan Adler three years ago better explained the abject failure of the EPA under the Bush Administration to follow the statutory guidelines:
On December 20, 2000, as the Clinton Administration was coming to a close, the EPA listed coal-fired utilities as a source of mercury emissions under Section 112(c) of the Clean Air Act (CAA), a decision that would require regulating mercury emissions as hazardous air pollutants under the Act. The Bush Administration did not agree with this approach to controlling mercury emissions, preferring a less stringent and more flexible regulatory strategy than that contemplated by the Clinton Administration. So in 2004 the Bush EPA sought to chart a different course — one that would rely upon a voluntary cap-and-trade regime rather than stringent technology-based controls — and that’s where the problems began.
Section 112(c)(9) of the CAA only allows the EPA to delist a pollution source once the agency makes specific findings. Specifically, 112(c)(9) requires the EPA to determine that “emissions from no source in the category . . . exceed a level which is adequate to protect public health with an adequate margin of safety and no adverse environmental effect will result from emissions from any source.” This is a difficult standard to meet in any case, particularly so in the case of mercury. Yet rather than try and comply with this standard, and make the requisite findings, the EPA instead contended that it did not need to comply with the plain language of the law, prompting the D.C. Circuit to compare the agency’s reasoning to that employed by Lewis Carroll’s Queen of Hearts.
Adler further links to John Walke of the NRDC deconstructing that case, New Jersey v. EPA. It’s worth a read as well. Walke today updated with another longer background of the case, here. Pete Altman, also of NRDC, adds two useful slides showing where the power plants in question are and what percentage of toxics in the air they admit.
For a succinct summary of the rule from the EPA, with estimated benefits and costs, please see here.
So now, I need to add my part in. I have two salient observations.
One observation is to compare this with the radiation threat ongoing in Japan. There’s a number of ways insight can be gleaned. First, is that as Matt Yglesias notes, opposition to nuclear should not mean a further embrace of fossil fuels. Yglesias frames this mostly in relation to climate change, but it’s worth noting that fossil fuels contaminate the environment and have external costs on society in more traditional manners as well. Moreover, every single fossil fuel power plant has these external costs. In contrast, only a fraction of nuclear power plants do. That’s not to defend nuclear but rather to contextualize it in comparison.
The second observation is the limit of the Clean Air Act section 112. There’s no confusion in the law that this is required.
Section 112 (b) requires pollutants to be regulated if they “present, or may present, through inhalation or other routes of exposure, a threat of adverse human health effects (including, but not limited to, substances which are known to be, or may reasonably be anticipated to be, carcinogenic, mutagenic, teratogenic, neurotoxic, which cause reproductive dysfunction, or which are acutely or chronically toxic) or adverse environmental effects whether through ambient concentrations, bioaccumulation, deposition, or otherwise….” Not even the Bush Administration contested that regarding mercury – they just tried to find a way around it (see above regarding their massive failure to do so).
The meat of these regulations are in Section 112 (d), indeed it is too long to quote, but the key part is that Section 112(d)(2) does allow the EPA Administrator to take cost into consideration when weighing the benefits. (Not all regulations do allow that). As such, I think this is a more precarious ruling than I would prefer: if a GOP Administration were in place, it would almost certainly be gutted on the basis of cost, with softer regulations put in place (but still, more than the Bush EPA did, which was essentially nothing).
In short, these rules are good, but with a 5 year implementation plan and a seemingly high yearly cost (over 10 billion), it will only hold up if Democrats and independents fight to hold it up. Because rest assured, the right is going to come after this hard, accusing it of raising energy costs on everyone, and raising government spending. The latter is true, and the former is not. It does not raise energy costs, but rather recognizes that there are already external costs to the energy that exists. Even if sometimes those costs are reported in very annoying ways.
Okay, so Sharron Angle, the deranged tea party candidate for US Senate in Nevada, is being sued for copyright infringement (emphasis added):
The Las Vegas Review-Journal’s copyright infringement lawsuit partner on Friday sued U.S. Senate candidate Sharron Angle over R-J material posted on her website, allegedly without authorization.
The suit, filed in U.S. District Court in Las Vegas by Righthaven LLC, seeks damages of $150,000 against Angle personally and forfeiture of her website domain name sharronangle.com.
Real funny, right? Not really. I mean, sure it’s amusing that a political adversary is being sued during the campaign for something campaign related. But, when you actually consider the situation instead of just snarking (as I’ve seen far too many lefty blogs doing) it’s actually not funny at all.
The lawsuit was filed by a company called Righthaven. Righthaven was started with venture capital funds by Stephens Media, the publishing company that owns The Las Vegas Review-Journal.
Righthaven basically trolls the internet looking for copyright violations. Then, they purchase the copyright from the newspaper and file a lawsuit against the blog:
Since early spring, Righthaven has filed about a hundred lawsuits in federal court alleging infringement of Stephens’ copyrights. While many target small-time bloggers such as a Boston woman who writes about her cat, others are directed at for-profit companies such as the gambling site Majorwager.com, or advocacy groups such as the National Organization for the Reform of Marijuana Laws. The suits are filed without warning; website owners are given no opportunity to remove the offending material before they’re slapped with litigation.
Righthaven typically offers defendants the opportunity to settle the cases out of court to avoid the substantial cost of a trial. While the details of such settlements are confidential, the Las Vegas Sun reported that 22 of the Righthaven suits were settled as of Aug. 18, with known settlements ranging from $2,185 to $5,000.
The goal is simple. Find infringements and use the spectre of expensive litigation and/or very costly penalties to scare the alleged infringer into a settlement:
[Righthaven’s] vision is to monetize news content on the backend, by scouring the internet for infringing copies of his client’s articles, then suing and relying on the harsh penalties in the Copyright Act — up to $150,000 for a single infringement — to compel quick settlements.
Go ahead. Think it can’t happen to you. Or, yell something about “Fair Use.” Let me just remind you of this little fact: “fair use” isn’t a shield against lawsuits. In other words, fair use doesn’t prevent someone from suing you. Instead, fair use is a defense that can be used at trial.
Righthaven knows this. They also know, it’s probably a lot cheaper for you to pay them a settlement of few thousand bucks than to try and exonerate yourself at trial with the fair use defense, which would cost you many more thousands of dollars in legal fees.
But, they will only care if you’re copying the entire article, right? Not necessarily. If you quote anymore than a 100 words, you’re technically in violation of their copyright. From Las Vegas Sun’s website:
Text from our stories can be quoted when linking to our content, but it must not be more than one-tenth of the total word count of the story or 100 words, whichever is lesser. Quoted content must contain a direct link to the story from which it is taken.
Oh, and Righthaven is expanding:
Stephens Media in Las Vegas, runs over 70 other newspapers in nine states, and Gibson says he already has an agreement to expand his practice to cover those properties.
Righthaven is a business. And, this particular business will have real consequences for individual people, who get bullied into a settlement, as well as the blogosphere as a whole. Instead of snarking, a bit of analysis might help shed some light on a practice that will no doubt affect the way people blog.
Regardless of what you think about copyright, Righthaven is quite aggressive and nasty in its practices. EFF makes the case here.
The following is a brief summary of the Republican Party’s approach to government; it is incontrovertible:
- Attack the government.
- Use the manufactured disdain (along with dirty tricks, social wedge issues and massive amounts of cash) to get elected.
- Hollow out government institutions (after all, government sucks, right? They’re doing society a favor. Thank them…hell…you should hug a Republican today because of this. No?).
- Privatize the former government function.
- Private company sells the service back to the government at an exorbitant price.
- Republicans blame Democrats for budget deficits and attack government as wasteful and ineffecient.
- And the cycle repeats.
Yes, the above is so. And it routinely happens right under our noses. This morning a report from New Jersey Gov. Christie reveals some of his massive privatization goals:
New Jersey would close its centralized car inspection lanes and motorists would pay for their own emissions tests under a sweeping set of recommendations set to be released by the Christie administration today.
State parks, psychiatric hospitals and even turnpike toll booths could also be run by private operators, according to the 57-page report on privatization obtained by The Star-Ledger. Preschool classrooms would no longer be built at public expense, state employees would pay for parking and private vendors would dish out food, deliver health care and run education programs behind prison walls.
But, hey…what do we care? It’s only our society, right?
Thanks to @existentialfish for the assist with this post.
In this video General Electric celebrates Ronald Reagan. Sure, this is shameless pandering to the right-wing. To the anti-society folk (tea party clan, 912ers, Glenn Beck cultists, and Fox “News” viewers), NBC/MSNBC are odious entities and General Electric is by extension. So, I imagine GE wants to start ridding itself of the scent of liberalism among those groups.
But, this video is more than just pandering. General Electric is publicly and proudly endorsing Ronald Reagan’s policies, his impact on society and his legacy. Isn’t this worthy of debate? Discussion?
I certainly think so. Think about it…
GE benefits from an awful lot of public resources and taxpayer money. Accordingly, if they are going to be articulating a political viewpoint, it’s worth considering from a public policy perspective. Also, as consumers, we support this company. If they are going to use your money to advocate a political ideology, isn’t that worth knowing and considering?
I’m curious. Why isn’t this endorsement even remotely controversial? If a major corporation came out with such an laudatory video for LBJ or FDR, the right-wing noise machine would be up in arms.
Why aren’t progressives making noise about GE’s controversial decision to offer such high esteem to Reagan?
And celebrating Ronald Reagan is controversial. Even GE of old thought so, seeing as how they fired Reagan as their spokesperson in 1962 due to his incendiary and controversial anti-government positions. So, make no mistake about it, this is controversial…
Ronald Reagan destroyed unions…cut the budgets for education, EPA, poverty programs, etc…engaged in a public policy initiative aimed specifically at screwing over the poor…advanced the prison-industrial complex….hollowed out the Federal government to the best of his ability…ironically espoused the belief that government was the enemy (hello! he was the president *facepalm*)…was reckless and neglectful in responding to HIV/AIDS…tried to cut disabled people from social security rolls (that’s right…disabled people)…HUD grant fraud…Sewergate…
…I could go on and on, but I’ve made my point. Why is GE celebrating and endorsing Ronald Reagan? And, why are they able to freely get away with such blatant whitewashing of history and shameless political posturing?
Watch the video. (prepare to gag)
If you want to make some noise, feel free to contact GE about this.
Update: I said this was political. And, General Electric helped proved my point as they are now advertising their love for Reagan on Rush Limbaugh’s hate radio program.
As the Supreme Court was handing over our political system to corporations (see Citizens United), the U.S. Sentencing Commission began considering a rule change that would weaken criminal penalties for corporations.
In short, the proposed rule would allow the offending corporation to reduce its penalty, if it can show that it has an effective compliance program. This penalty reduction is available even “when high level personnel are involved in the offense.” In order to qualify for the reduction, the corporation must show all of the following:
- that the individuals responsible for compliance have direct reporting authority to the board level; and,
- “the compliance program was successful in detecting the offense prior to discovery or reasonable likelihood of discovery;” and,
- “the organization promptly reported the violation to the appropriate authorities.”
Now, you’re probably thinking to yourself: “Come on Angelo! What’s the big deal? This seems like a good idea to me.”
You know what? Perhaps it is. But, compared to what? I’ll refrain from offering up a final opinion about its efficacy for now. However, I do want to just offer up two broad considerations…
#1) Cops On The Beat:
For the most part, when you hear cheerleading about being “tough on crime,” just remember that corporate crime is generally not including in all those ra-ras. Consider this: When there is an uptick in crime, people demand more cops on the beat. Doesn’t matter if it’s the right solution, people demand it – ra ra. But, when it comes to corporate crime, our society doesn’t demand more. To the contrary, we promptly capitulate to corporate transgressors.
I understand what the proposed change is trying to do. It seeks to encourage a corporation to enforce the law against itself. The reality though is that our regulatory enforcement structures have been systematically weakened during the past couple decades. Although this policy’s intention may be good, it is a sad reflection of a regulatory system that is aware of its inability to effectively enforce the rules (whatever inadequate ones remain, I might add).
When crime involves flesh and blood people, we have a tendency to increase the stick. Yet, when crimes deal with corporate persons, we shrink the stick and offer them carrots.
#2) Corporations: A person, but with magic
As Citizens United emphasized, corporations are people too! Except, these “people” (or corporateople) are apparently capable of doing some pretty amazing things. If I were to shoot someone. Then, march myself to the cops and say “hey, my hand just shot someone…arrest him!” The cops would arrest all of me…and all of me would be incarcerated, not just my hand. However, what the U.S. Sentencing Commission’s rule change says to corporateople is that they can in fact send just their hand away and avoid criminal penalties. Oh, and unlike us regular people, corporateople won’t miss their hand since they can easily replace any of their appendages.
Yea, yea. I’m aware there are some counters to my analogy. But, my underlying point remains: we certainly do allow these corporateople to do some pretty magical things that us regular people can’t do.
Given how unbalanced the scales are, this rule might be the best available option. My point isn’t to necessarily rail against this particular rule change. Although, I think a case can be made for stronger alternatives. Rather, my point is to underscore our weakened regulatory system and emphasize just how much work people, as in real people, need to do in order to wrestle our democracy back from these corporateople.
If you feel strongly about this particular regulation, you can submit a comment to the U.S. Sentencing Commission, which they are required to consider when making a decision. If you’d like information on how to do that, just leave a comment or shoot me an email.