Posts Tagged ‘New York Times’

Campaign Finance Regulation Needs a Home

Posted on:

securities-and-exchange-commission-photo-thanks-to-flickr-user

The Federal Election Commission can no longer be considered the sole federal agency tasked with regulating federal campaign activity.  As a recent New York Times article suggests, the Securities and Exchange Commission may soon require publicly traded corporations to disclose the names of individuals who contribute to various so-called Super PACs.  Not surprisingly, the measure is strongly opposed by business organizations such as the Chamber of Commerce, which argue that such measures would infringe on the group’s right to free speech. The Internal Revenue Service has also been highlighted recently for its alleged overreach in targeting tax-exempt 501(c)(4) organizations associated with the conservative Tea Party.

These latest events highlight just how thorny of an issue campaign finance regulation has become.  Agencies that are not normally tasked with any kind of campaign regulation have found themselves forced to overcompensate for a seemingly ineffectual FEC.

In international relations, the term “proxy war” is used to describe a situation in which two opposing parties utilize a substitute, or a third party, as an alternative to fighting each other directly.  What Citizens United seems to have engendered, is a proxy war between liberals and conservatives in which government agencies are being used as reluctant battlegrounds.   As we have witnessed this past week, the results are at best messy, and at worst, damaging to the overall legitimacy of the federal government.

The longer both sides continue to battle one another over procedural matters in multiple agency arenas, the more distant they become from their purported fundamental purpose for being, which is to engage in political advocacy.  Not to mention, of course, the more contributor money they waste in the process. But is there any alternative?

These organizations might benefit from looking back to 2004 and the similar issues brought forth by so-called “527” organizations and their apparent exemption from the recently passed Bipartisan Campaign Reform Act of 2002 (also known as McCain-Feingold).  The crucial similarity between the battles being waged today, and those of the past, boil down to one thing: the definition of a “political committee” as defined in the FEC Act.

The difference between the strategies implemented today versus 2004, is that in the latter, watchdog groups and political parties funneled all their complaints and fought all their battles in one arena – the FEC.  Both sides filed complaints and the FEC came down hard on 527’s, primarily for failing to register as political committees.  As a result, America Coming Together was fined $775,000, the Media Fund was fined $580,000 and the Swift Boat Vets and POWs for Truth were fined $299,500.

A strategy that devotes resources to one specific arena (namely, the FEC) could be particularly beneficial for liberals and other proponents of increased disclosure.  The Supreme Court unambiguously upheld disclosure laws as constitutional.  If disclosure is the bottom line, then liberals and supporters need to bring the fight back to the FEC where they maintain a home turf advantage. Otherwise, they risk undermining their cause by fighting procedural battles in agencies that have little interest in regulating campaign activity and little incentive to become enmeshed in a political battle as contentious as campaign finance.

 By Erinn Larkin, Compliance Director, PACs and Parties

 

Payday Lenders Moving From the Storefront to the Internet

Posted on:

Screen Shot 2013-05-22 at 2.14.50 PM

For the past year, CFO Consulting Group has been pushing for tighter regulation of the Payday Loan industry within the state of Rhode Island.  Nationally, storefront payday lenders are facing tighter regulations across the country. Twenty-five states currently have pending legislation that pertain to payday lending regulation.

As storefront payday lenders are coming under intense scrutiny in some states, another form of usury is flying under the radar.  Faced with the prospect of storefront payday businesses becoming unprofitable under new regulations, many payday lenders are moving their operations to the shadowy, unregulated world of the internet.  A growing number of the lenders have set up online operations in less regulated states in the U.S. or foreign countries like Belize, Malta, and the West Indies in order to avoid statewide caps on interest rates.  There are a few differences between the traditional storefront payday loan system and the payday loans available online.  Via the internet, there is an immediate approval system, which enables customers to get in touch with numerous “expert” lenders and receive cash deposited directly into their accounts.  This allows lenders to have direct access to borrowers’ bank accounts.

Sadly, major banks have become enablers of internet-based payday lenders.  A recent New York Times article states that while large banks  – including Bank of America, and Wells Fargo among others –  do not make the loans, they are a critical link for the lenders. They enable the lenders to withdraw payments automatically from borrowers’ bank accounts, even in states where the loans are banned entirely. This is a practice that has been flourishing on the internet for years.  However, there has been some movement within the United States Congress and some of the major banks to help combat this issue.

JPMorgan, the nation’s largest bank by assets, will give customers whose bank accounts can be accessed by the online payday lenders more power to halt withdrawals and close their accounts.  Within the United States Congress, Senator Jeff Merkley of Oregon introduced a bill in January to further rein in payday lending.  The bill, S. 172, or better known as the SAFE Lending Act, would crack down on the worst practices of the online payday lending industry and give states more power to protect consumers from predatory loans.  As of March, the bill is sitting in committee.

CFO Consulting Group is looking forward to seeing the United States Senate & House of Representatives vote in favor of the SAFE Lending Act to successfully bring to an end the predatory practice of payday lending in internet and storefront locations nationally.

By Brett Smiley, co-founder of  CFO Consulting Group

Helping Rhode Island Crack Down on a National Problem

Posted on:

For many of us, Payday Loans are an unknown financial instrument. While many have a general understanding of what pawn shops and check cashers are, payday lenders are a different animal.

Rhode Island’s population is barely over a million and yet nearly 200,000 of these loans are taken out yearly. Payday loans are short term, high interest loans. They are capped at $500, due in two weeks and carry an APR of 260%. For many, these loans are the not the solution to a short term financial crises but rather cover ordinary living experiences. In fact, the average borrower takes out 8 loans per year.

CFO Consulting Group is proud to be the public affairs team fighting for the Rhode Island Payday Loan Reform Coalition. A great coalition is fighting back against predatory lending in Rhode Island, but there are similar efforts underway across the country. Additionally, there is an effort to crack down on the enabling role the big banks are playing for the industry.

Recently the New York Times covered how the nation’s biggest banks, including Bank of America and Wells Fargo have proved to be willing partners allowing the payday lenders to continuously debit accounts, racking up big overdraft fees along the way. In response to this coverage JP Morgan pledged to change its practice. CFO is looking forward to seeing that change, and change in Rhode Island.