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December 21, 2017

When You're the Only Consumer Voice Speaking Out, It's Not Fake

When You’re the Only Consumer Voice Speaking Out, It’s No Fake

Sadly, when fighting for consumers, investors and financial stability in the rulemaking process by, for example, filing comment letters, Better Markets too often finds itself as the only non-industry organization trying to get the rules right.  That’s why is was particularly distressing to read a recent article in The Wall Street Journal that revealed millions of fraudulent comments on public policy issues had been submitted to various Federal agencies.   Bad enough to fight Wall Street and its allies, but to also have to fight fictitious commentators!

The fraudulent comments used stolen, fake and defunct email accounts and even sent in comments from people who were deceased.   The fake comments used similar if not identical phrases and words and virtually all of them, not unsurprisingly, favored industry positions and rolling back regulations.  While mainly targeting the Federal Communications Commission ahead of its recent vote on net neutrality, several other agencies were also the targets of these fraudulent comment campaigns, including the Consumer Financial Protection Bureau(CFPB) and the Securities and Exchange Commission(SEC).

This corruption of the public-comment process is outrageous for a number of reasons.  First, alleging that an agency failed to fully consider public comments has become a central argument in litigation and judges have forced agencies to go back and reconsider comments it supposedly ignored.  Second, when you are one voice like us, you risk getting drowned out by comments filed by industry, its associations and its lobbyists and that becomes even more challenging if the agency record is filled with fake comments.  Third,  industry groups hiring companies like and IssueHound to generate fill-in-the-blank letters to agencies creates the false impression that the industry’s positions have more support and substance than they do. This is fraudulently misleading the public as well as the regulators.

The good news, however, is that Better Markets knows that the rulemaking process is not only limited to comment letters.  As illustrated by the Arc of Advocacy in our Annual Report (pps. 14-15), there is a great deal more to the policy-making process, including  meetings before and after letters have been submitted, reviewing the final rule, monitoring implementation and interpretation, and engaging in litigation if necessary.  Thus, even in the face of these bogus comments and manufactured support for rolling back regulation, we will continue to fight for consumers, investors, financial stability and the public interest.


Rolling Back Even Minimal Rules on Money Market Funds, Which Received a $3.7 Trillion Guarantee From Taxpayers in 2008, Is a Threat to Financial Stability

Even though they were incremental and incomplete, reforms to money market funds (MMFs) after the financial crisis were a positive step in the right direction and meant that taxpayers were less likely to once again bail out industry to keep it from collapsing.  Yet, even those minimal rules are once again under attack.

In the latest attack, a battle is being waged to roll back a 2014 Securities and Exchange Commission (SEC) rule requiring certain MMFs whose shares are held by institutions and purchase corporate debt or municipal bonds to float in value like other mutual funds.  In the throes of the 2008 financial crisis, the Reserve Primary Fund, the country’s oldest prime money-market fund, officially “broke the buck” as its asset value fell below $1 a share, setting off a very dangerous run on prime MMFs.  This in turn disrupted short-term credit and vastly increased the impact of the crisis on Main Street America.

One of the more necessary rules enacted since the crisis to prevent this from happening again is that some funds float their net asset value (NAV), rather than artificially maintaining a $1 share price which misleadingly caused investors to conclude that no matter what they’d always get their money back.

The floating NAV has once again come under attack from municipalities who allege that it will increase borrowing costs.  This argument is erroneous for several reasons: (1) institutional municipal MMFs supply only a small percentage of financing for municipalities; (2) those funds will continue to attract at least some institutional investors even with the floating NAV in place; and (3) any impact is a necessary cost of stabilizing our financial system, preventing future devastating financial crises and even greater taxpayer bailouts.

Given the threat to financial stability posed by MMFs and the significant time and expense, on all sides, that has been used in developing, implementing, and complying with this rule, any rollback now is misguided and disruptive.  Better Markets is already focusing its efforts to push back on this rollback effort on several different fronts and we will be reporting more on this issue as events progress.


The Many Gifts Wall Street is Getting This Season All Come at the Consumer’s Expense

As the end of the year approaches, we are taking a look at the many gifts heaped on Wall Street and the financial services industry during the first year of the Trump administration contrary to Candidate Trump’s promise to protect Americans’ families on Main Street from Wall Street’s dangerous, high-risk gambling.

Here are a few of the goodies Wall Street has gotten this year:

CFPB Acting Director Mick Mulvaney.  After having set the gold standard running this vital consumer protection agency, Richard Cordray was replaced by Mick Mulvaney. Where Cordray set the gold standard for consumer protection, returning almost $12 billion from the bonus pools of Wall Street giants to the pockets of nearly 30 million hard working Main Street consumers who had been scammed, tricked and ripped-off, Mulvaney has called the CFPB a “joke…in a sick, sad way” and, when he was a congressman, voted to kill the agency.

Treasury reports.  Over the past year, President Trump’s Treasury Department has issued four reports outlining what they call their “principles.” While some of the most visible fights may take place in Congress over Dodd-Frank and other financial regulation legislation, these documents will be the basis for thousands of lesser known shifts in regulatory policy that will end up having a monumental impact on the future of our country’s economic and financial stability. It’s as if New Orleans decided to remove the levee system protecting the city just because a hurricane hasn’t come through since Katrina. Were that to happen, everyone would be asking “why would they do that?” The same goes for regulatory policies enacted not even 10 years ago, after the greatest economic crisis since the Great Depression.

Goldman Sachs becomes Government Sachs.  Candidate Trump railed against Goldman Sachs as a threat to the country; President Trump merged the White House with Goldman Sachs. In President Trump’s first year in office, he appointed six former senior Goldman Sachs employees to some of the most senior posts in his administration, including: Treasury Secretary Steve Mnuchin and Director of the National Economic Council Gary Cohn. These advisers are in key positions and will be able to dramatically shape financial regulations across the board.  However, their Wall Street mindset (“what’s good for Wall Street is good for America”) isn’t what Main Street families need and was proved disastrously wrong when Wall Street crashed the global financial system in 2008.

To see what else Wall Street received this year, check out the Better Markets blog and follow us on Twitter.


In Case You Missed It…

From time to time we like to highlight for you articles or op-eds that have appeared in the media that focus on an important issue or provide a particular perspective.  To that end, what follows are two recent op-eds.  The first is from University of Buenos Aries economics professor Martin Guzman, Columbia University professor and Nobel-laureate Joseph E. Stiglitiz, and Harvard Kennedy School fellow and former Treasury Department official Antonio Weiss on the continuing economic crisis in Puerto Rico and how the recent hurricanes exacerbated it.  The other piece is from Center on Budget and Policy Priorities fellow Jared Bernstein on economic bubbles and busts and how memories of the calamity inflicted by economic busts quickly fade and lead to deregulatory efforts such as we are seeing now.

Don’t expect debt payments from Puerto Rico any time soon, The Washington Post, Martin Guzman, Joseph E. Stiglitz, and Antonio Weiss

America’s Shampoo Economy, The News York Times, Jared Bernstein



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