Wall Street attempts sneakiness, fails.

Just two years after the Wall Street banks were bailed out and just three months after we passed a tough new law to rein them in, the Wall Street bankers want weak regulations so they can keep making risky bets with your money.

Because of the upcoming election, the banks apparently thought nobody would notice that they redeployed their horde of lobbyists to try to weaken the new rules as they’re being written.

They were wrong. We noticed. And we need your help to fight back.

Regulators with the Financial Stability Oversight Counsil are accepting public comments on the new law’s important “Volcker rule.” The rule is named for Paul Volcker, former chairman of the Federal Reserve and a vocal White House official who called on Congress to stop banks from making risky bets for their own profit while relying on taxpayer bailouts if the bets go bad.

Here’s how you can help:

1. Follow this link, and you’ll get to the page where you can submit a comment about the Volcker rule.

2. Next, cut and paste the SAMPLE COMMENT at the end of this post into the comment box. Fill out all the required information (First Name, Last Name, and Organization Name).

3. In the required field that asks for your “Organization Name” write “PUBLIC CITIZEN MEMBER.”

4. Click “Submit.”

The banks have already submitted their regulatory comments. Now it’s our turn!

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Hopeful in St. Louis

All around the country, newspapers’ consumer journalists are taking notice and reporting on the injustice of forced arbitration. Most recently, Matthew Hathaway, columnist for the St. Louis-Post Dispatch, posted a short article on the “The Savvy Consumer” blog. While Hathaway reports on the biases and unfairness of the predatory corporate practice, he’s a tad overly optimistic that it may soon come to an end.

As Hathaway noted, the new Consumer Financial Protection Bureau created by the recently passed financial reform law will be authorized to ban or restrict forced arbitration. So will the Securities and Exchange Commission. But here’s what Hathaway leaves out: millions of other consumer contracts exist that fall outside of these agencies’ jurisdictions. The CFPB and SEC can restrict investor-broker contracts and contracts for other financial products as designated under the new law. But they have no authority to restrict or ban forced arbitration in numerous consumer contracts, such as those for employment, nursing homes, cell phones, and home building.

Hathaway guesses that the days of forced arbitration “could be numbered.” His optimism is refreshing. But even with SEC and CFPB’s new authority, we still need Congress to pass the Arbitration Fairness Act to eliminate pre-dispute forced arbitration from all consumer contracts for good.

Christine Hines is the consumer and civil justice counsel for Public Citizen.

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Public Citizen researchers on medical device safety

On Tuesday, Public Citizen researchers published an article in PLoS Medicine about the safety of various medical devices. The authors of the article found that the FDA approval process does not adequately weed out ineffective and sometimes dangerous devices. From the press release issued Tuesday:

The weaknesses identified by the authors include:
• A lower approval standard for devices than for drugs;
• Lax interpretation of the requirements for the medical device approval process;
• A loophole that allows manufacturers of novel devices to circumvent the premarket approval process;
• Failure of the FDA to appropriately regulate many types of devices that were first marketed prior to the 1976 enactment of the current regulatory scheme; and
• A superfluous appeal mechanism that gives manufacturers a second go for approval after FDA has rejected a device.

The authors enumerated specific cases where FDA allowed dangerous products to be sent to market. In one particularly egregious instance, a device was approved by the FDA director after other FDA board members had expressed significant concerns about the device, the vagus nerve stimulator, which is supposed to treat severe depression. Currently, the Centers for Medicare and Medicaid considers the device to be of such questionable value that it refuses to reimburse for it.

In the words of one of the researchers, Dr. Sidney Wolfe,

“The FDA’s mission is to protect public health, but allowing questionably effective products onto the market is inconsistent with that mission.”

The article can be found in the latest issue of PLoS Medicine.

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I wouldn’t sign the document

Yesterday evening I met with a financial advisor from a large financial company. The meeting was going well and I was ready to sign on for much-needed financial advice until we started discussing the agreement.

First, he told me that the agreement was not a contract. I quickly corrected him and explained that they were one and the same. Then I started flipping through the three-page document. Lo and behold, there it was, in bold: an arbitration clause AND a statement claiming that there is no agreement to enter into any class action arbitration.

I explained to him in my excitable way that I wouldn’t sign the document, explained to him what the arbitration clause meant and its impact on consumers. He was shocked. In a very brief moment he removed the professional mask and showed that he was appalled by the provision’s meaning. I told him about the need to support the Arbitration Fairness Act in Congress. He asked if it would eliminate arbitration. I explained that it wouldn’t – but it would make it voluntary, rather than forced.

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“Too Big to Fail” – The movie

It’s no secret that Public Citizen is against large banking institutions that are “too big to fail” – the corporations whose risky practices led to the crash of the financial industry.

While consumer activists have long been captivated with each ensuing step, trying to prevent the industry’s collapse from reoccurring, average movie-watchers are now getting a glimpse into the drama, as well.

HBO announced this month that it had bought the rights to New York Times reporter Andrew Ross Sorkin’s bestseller “Too Big To Fail: The Inside Story Of How Wall Street And Washington Fought To Save The System — And Themselves.”

As viewers across the nation tune in to the movie, Public Citizen calls on them to get involved and take a stand. Learn about financial reform and why we must push to get stronger protections in the reform legislation currently being debated on Capitol Hill. The proposals already announced do not do enough to protect consumers.

And just for fun, check out the Huffington Post’s casting choices for the HBO production.

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Lax regulation leads to higher electric bills

Utility companies have been taking advantage of lenient federal regulators for too long, and we all get stuck with the bill.

Public Citizen is pushing for a return to a system in which rates are set by the cost of providing the power, rather than being set by the market, at least until the government’s failings can be corrected. 

The problem is that the Federal Energy Regulatory Commission (FERC) has not used the authority is has been given. Tyson Slocum, director of Public Citizen’s Energy Program, explains.

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Wall Street reform must protect military, civilians from auto dealer financing fraud

As the Senate banking committee prepares to consider financial protection reform legislation, Public Citizen and Consumers for Auto Reliability and Safety (CARS) call on Congress to protect the military from predatory auto dealer financing — an enormous problem for troops and civilian consumers alike.

Sen. Christopher Dodd’s (D-Conn.) Wall Street reform measure only partly closes the auto dealer loophole opened by the version that the House of Representatives passed Dec. 12, 2009. The groups urge lawmakers to close the loophole. In the current draft of the Senate bill, the proposed Consumer Financial Protection Bureau (CFPB) would have authority to write rules on non-bank lending, including payday loans and loans originated by auto dealers, but would have limited authority to enforce the rules.

“Rules have little value if they are not enforced,” said Robert Weissman, president of Public Citizen. “The bill should be strengthened to ensure that the CFPB has full enforcement authority. The financial industry has run roughshod over consumers and investors for too long. This is the time to stop it.”

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Public interest battle vs. Wall Street rages on

The House financial reform battle has been nothing if not brutal. Can you join the fight for the Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173)? The bill goes to a vote on the House floor tomorrow, and we need you to turn up the pressure on your representatives.

Here is an update on amendments that your representative needs to know you support, and those that need to be defeated.

• SUPPORT the Stupak/DeLauro/Larson/Van Hollen amendment on derivatives. Regulators must have the authority to ban abusive derivatives instruments rather than simply reporting them to Congress, and transactions which violate the law should be considered invalid.
• OPPOSE the Minnick amendment to eliminate a new Consumer Financial Protection Agency (CFPA) from the bill. It would leave enforcement of consumer protection and civil rights laws in the hands of the same existing regulatory bodies that resoundingly failed to use them.
• OPPOSE the Marshall amendment, which would deny financial whistleblowers the right to hold their employer accountable in court when they are retaliated against.

Call or email your representative today. You can also show your support by signing the petition at Change.org . With enough signatures, the message about the need for a Consumer Financial Protection agency will be blasted to thousands more activists. We need to stand firm against predatory banking practices and prevent financial crises from crippling our economy ever again.

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Mortal battle with Wall Street

This week the stakes are high. As the House prepares to vote on the financial reform we’ve been fighting for all year, Wall Street and the big banks are making every attempt to kill it.

We urgently need calls and emails to reps in the House with the message: Vote YES on the Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173), YES on strengthening amendments, and NO on any amendments that would weaken consumer protections or oversight of the financial industry.

The House Financial Services Committee spent months deliberating, debating, and voting on the Wall Street Reform and Consumer Protection Act. While some improvements to the bill are needed, Public Citizen and our coalition of more than 200 pro-consumer groups – Americans for Financial Reform – strongly support it.

The House bill will put an end to the unchecked greed and recklessness that has wreaked havoc in our economy and brought hardship to so many hardworking Americans. In particular, the Consumer Financial Protection Agency is critical to fill the regulatory hole that allowed unsafe financial products to put our economy at risk.

But in spite of the strong support for the new watchdog agency, the financial industry had little trouble finding someone in Congress to help kill it.

An amendment by Walter Minnick (D.-Idaho) would strike the Consumer Financial Protection Agency (CFPA) from the bill altogether. And just how much money has this Wall Street Democrat taken from the financial industry? According to our recent report, Minnick has taken more than $170,453 in this year alone from the very banks and firms he is supposed to oversee as a member of the Financial Services Committee.

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Which side is Congress on?

We’re close to winning the new rules of the road for the big banks and Wall Street that will stop them from driving our economy off another cliff. But first we have to beat back the attempts to kill the hard-fought commonsense reforms we’ve brought this far.

We’re going to war with the big banks and their lobbyists next week. The financial reform package passed by Rep. Barney Frank’s (D-Mass.) committee during the past several months of consideration, debate and votes will finally be voted on by the entire House of Representatives. This bill contains much of what we’ve advocated to rein in greed and risk-taking on Wall Street and put the safety and security of Main Street first.

But you can be sure that the big banks and Wall Street are pulling every trick in the book to try to prevent the passage of these significant reforms.

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