What’s Inside?

• The Economy and Finance at the Last Democratic Debate
• Financial Predators Hope the Courts Help Them Rip You Off
• Good News: SEC Does Not Weaken Protections for Whistleblowers
• The New Secretary General for the Basel Committee on Banking Supervision Visits Better Markets

The Economy and Finance at the Last Democratic Debate

We believe that all the 2020 candidates owe it to the voters to tell them what their specific, concrete plans are for the economy and the financial system so they can make informed choices and hold those they elect accountable.

That’s why we said, before last week’s latest Democratic Debate, that “It’s Time for Presidential Candidates to Talk About Jobs, the Real Economy and Wall Street,” and they did, finally! While there’s a lot more they have to talk about (and the moderators have to get a lot better at focusing on the issues rather than trying to ignite gratuitous disputes among the candidates), we hope you followed our live tweeting (which you can review here) and visit our Voter Education Guide. 

Financial Predators Hope the Courts Help Them Rip You Off

People should not be ripped off and, if they are, the predators should be caught, punished and the victims should be compensated. That, however, requires an effective cop on the beat: to deter, investigate, catch, prosecute and punish the bad guys.

That’s why the Consumer Financial Protection Bureau (CFPB) was created: to protect financial consumers. In fact, that’s the sole reason for its existence. That’s “Why Every American Should Want a Strong CFPB.”

Pretty straightforward and hard to argue with, unless you’re a financial firm and you want to keep the money you’ve ripped off and don’t want to be punished. That, in a nutshell, is what the fight over the CFPB is all about. 

That fight is now going to the Supreme Court. You’ll hear fancy words about the Constitution and due process, but those are smokescreens to hide the true motives of the industry attacking the CFPB: they do not want an effective cop on the consumer protection beat. They want to kill or cripple the CFPB, which is the most successful consumer protection agency in the history of the country: returning more than $12 billion to almost 25 million ripped off Americans in its first four years of existence. 

The Supreme Court will now decide if America’s financial consumers are protected or not. This is a perfect illustration of a point we’ve been making for a long time: the financial and economic security and prosperity of the American people are affected every year by court decisions, including in particular the Supreme Court as we detailed in this recent Report.

But, it’s not just the Supreme Court that has a far-reaching effect on investors, consumers and all Americans’ financial well-being and activities. For example, Better Markets was also in the DC Court of Appeals recently opposing an attack by the industry on the SEC for merely trying to get data on market activities that affect every investor. 

Hard to believe but the industry sued the SEC to prevent it from collecting data by what is referred to as the “maker-taker pilot program.” We filed a “friend of the court” amicus brief supporting the SEC, the pilot and investors and issue. While incredibly important, this can get a little complicated, which is why we produced this 2-page fact sheet of the basics.

Bottom line: these cases and many more detailed in our Report are going to have a big impact on anyone with a credit or debit card, loan of any type, savings or checking account, or any financial product. That why we pay attention to and advocate in court for you.

Good News: SEC Does Not Weaken Protections for Whistleblowers

Whistleblowers perform a vital public service by revealing fraudulent and illegal conduct, usually at great personal risk to their jobs, livelihoods and reputations.

Before the 2008 crash, the SEC was derelict in many of its duties, including in particular in its repeated failure to listen to and act on information from whistleblowers. The most egregious example was the decades-long $65 billion Ponzi scheme of Bernie Madoff. A whistleblower repeatedly went to the SEC and provided detailed evidence of Madoff’s scheme, but the SEC literally laughed at him and did nothing, year-after-year as Madoff ripped off hundreds-and-hundreds of more victims.

Congress was disgusted by the SEC’s indefensible behavior and included provisions in the Dodd Frank law that required the SEC to incentivize, reward and protect whistleblowers. The SEC aggressively opposed many of these common-sense requirements.

Almost ten years old now, the SEC’s whistleblower program has been wildly successful. By appropriately rewarding and protecting whistleblowers who have provided the SEC with original information about fraudulent and illegal conduct, more than $1.5 billion has been returned to harmed investors. Because whistleblowers only get paid if they provide decisive information that the SEC did not otherwise have and because they are only paid from monies recovered from the lawbreakers, this program protects investors, markets and the financial system at no cost to the taxpayer. It’s a win-win-win.

Yet despite all that, the SEC has proposed changes to the program that risk snatching defeat from the jaws of victory. As we spelled out in a comment letter opposing those changes, the move would violate the law and the SEC would needlessly put investors at risk, disincentivize whistleblowers, and increase the likelihood that future Bernie Madoffs will go unreported and undetected.

Nevertheless, as recently as last Friday, the “SEC was poised to finalize” the changes this week. Until, as PoliticoPro reported late last Friday, a torrent of criticism from elected officials and the media, which recognized the value of whistleblowers, caused the SEC to delay their meeting to adopt the changes. 

We hope that — even after the headlines highlighting the critical importance of whistleblowers fade — the SEC reconsiders its groundless and unwise decision to weaken the whistleblower program and kills the proposed rule. It should be proud of the achievements of its whistleblower program and strengthen it.

The New Secretary General for the Basel Committee on Banking Supervision Visits Better Markets

Not many people know of the Basel Committee on Banking Supervision (BCBS), but it’s a key global standard-setter for financial regulators around the globe. It recently underwent a leadership change, receiving a new Chair (Pablo Hernandez de Cos) in March and a new Secretary General (Carolyn Rogers) in August this year. 

They are both deeply experienced professionals who are setting a clear direction for maintaining strong financial reforms. Chair Hernandez de Cos gave an important speech at the IMF meeting in Washington last week that everyone should read: “The Future Path of the Basel Committee: Some Guiding Principles.”

We were fortunate that the new Secretary General had time last week when she was in town for the IMF meetings to come by our offices to discuss those principles and the work of the BCBS. In addition to encouraging the BCBS’ work for many years, we also recently participated in a Financial Stability Board workshop on too-big-to-fail, making this presentation.

The work of the BCBS continues to be of vital importance as the pressure for mindless deregulation of the financial sector continues relentlessly both in the US and around the globe, as Germany’s most senior financial regulator recently pointed out: “German Bank Supervisor Warns of a New Cycle of Deregulation.”