Financial regulation

  • June 5, 2014

    by Jeremy Leaming

    Likely the most powerful court decision so far this year involving the Employee Retirement Income Security Act (ERISA), the U.S. Court of Appeals for the Eighth Circuit found that employers of a technologies company breached a fiduciary duty to take action to protect employees’ 401(k) plans from hidden fees that, as The New York Times has reported, can significantly harm workers’ retirements.

    In the case, Tussey v. ABB, Inc., a three-judge panel of Eighth Circuit largely agreed with a lower court opinion that the technologies company mishandled their employees’ 401(k), breaching fiduciary duties as detailed in ERISA.

    Writing for the majority opinion, Chief Judge William Jay Riley, citing 8th Circuit precedent, wrote that ERISA “imposes upon fiduciaries twin duties of loyalty and prudence, requiring them to act ‘solely in the interest of [plan] participants and beneficiaries’ and to carry out their duties ‘with care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims.’”

    Reporting for The New York Times, Gretchen Morgenson, wrote that the “significance of this ruling extends far beyond ABB. It sends a powerful message to plan sponsors everywhere: if you think you’ve done your fiduciary duty simply by offering low-cost funds as investment options, think again.”

    In late May, the entire 8th Circuit refused to rehear the three-judge panel’s ruling in Tussey. The Tussey opinion is available here.  

  • February 12, 2014
     
    Writing for Bloomberg, distinguished Harvard Law School professor Cass R. Sunstein objects to the “originalist” approach to constitutional interpretation. Sunstein reveals originalism’s “alluring siren’s call” and why “our constitutional tradition has been right to resist it.”
     
    Today, members of the Privacy and Civil Liberties Oversight Board will testify before the Senate Judiciary Committee regarding their report on the National Security Agency’s bulk collection of phone records. Jennifer Granick of Just Security offers eight important questions Congress should be asking the PCLOB about the controversial surveillance tactics under section 702 of the FISA Amendments Act.
     
    Last year, the Internal Revenue Service proposed new rules regulating political speech for select nonprofit organizations. Reporting for the ACLU’s Blog of Rights, Gabe Rottman and Sandra Fulton explain why these rules “create the worst of all worlds.”
     
    At the NAACP, U.S. Secretary of Health and Human Services Kathleen Sebelius and NAACP Senior Director of Health Programs Shavon Arline-Bradley celebrate Black History Month with a discussion about the Affordable Care Act.
     
    NPR’s Carrie Johnson notes Attorney General Eric Holder, Jr.’s call for 11 states to repeal laws prohibiting current or formerly convicted felons from voting
  • February 5, 2014
     
    JPMorgan Chase has agreed to pay the U.S. government $614 million to settle its defective loan case. Announced Tuesday, the deal settles claims stemming from JPMorgan’s approval of unqualified home mortgage loans since 2002. NPR reports on the legal ramifications being felt by the world’s biggest banks.
     
    The U.S. Department of Transportation is designing new “Vehicle to Vehicle” communication technology that would help prevent traffic accidents. Reporting for the ACLU’s Blog of Rights, Jay Stanley discusses the privacy implications surrounding the new technology.
     
    Herbert Smulls, a convicted inmate in Missouri, was executed before his final stay was denied last week by the U.S. Supreme Court. Andrew Cohen at The Atlantic reports on what went wrong and reveals a “breach in ethics and in the law.”
     
    Daphne Eviatar at Just Security addresses the issues surrounding drone technology and what must be done to guarantee that its use remains within the law.
     
    Writing for The Root, Henry Louis Gates Jr. provides a brief history of Black History Month and its founder, Dr. Carter G. Woodson.
  • May 7, 2013

    by Jeremy Leaming

    Once again a right-wing controlled federal appeals court has dealt a blow to workers’ rights. The Koch brothers and their staunch defenders of an unwieldy corporate America have yet another court action to celebrate.  

    In National Association of Manufacturers v. National Labor Relations Board, a three-judge panel of the U.S. Court of Appeals for the District of Columbia invalidated a rule issued by the National Labor Relations Board (NLRB) requiring employers to post notices containing information about rights pursuant to the National Labor Relations Act (NLRA). For instance a flyer, poster or notice could inform workers of their rights to create a union, engage in collective bargaining, advocate for safe working conditions, or wage a strike. The NLRB rule also stated that companies failing to post such notices were engaging in unfair labor practices.

    The three-judge panel, all consisting of Republican-appointed judges, invalidated the NLRB rule, saying it went beyond the Board’s authority, the Los Angeles Times reports. The D.C. Circuit also complained the NLRB rule amounted to government-controlled speech, saying employers covered by the NLRA cannot be forced in all circumstances to post or disseminate workers’ rights spelled out under the law. The D.C. Circuit called this “compelled speech” and said the employers “see the poster as one-sided, as favoring unionization, because it ‘fails to notify employees, …, of their rights to decertify a union, to refuse to pay dues to a union in a right-to-work state, and to object to payment of dues in the excess of the amounts required for representational purposes.’”

    The D.C. Circuit is often considered the second most important court in the country because it hears an array of weighty constitutional matters, including the creation of federal regulations, like those aimed at enforcing the NLRA. The eleven-member court has four vacancies and Senate Republicans have blocked President Obama’s attempts to fill the vacancies. Earlier this year, the Senate, led by Minority Leader Mitch McConnell (R-K.Y.), again blocked the nomination of Caitlin Halligan to a seat on the bench. She has subsequently withdrawn her nomination.

    The Senate Judiciary Committee has conducted a hearing on another Obama nominee to the D.C. Circuit, Sri Srinivasan. But during that hearing, Ranking Member Chuck Grassley (R-Iowa) announced legislation to cut the number of judges serving on that bench to 8. If Grassley has his way, Obama will be fortunate to get one judge placed on the D.C. Circuit.

  • April 15, 2013

    by Jeremy Leaming

    Despite the lofty rhetoric to the contrary, the Obama administration has failed to help the scores of Americans thrown out of their homes because of rampant foreclosure fraud. The administration instead chose to try to put a sheen of due diligence on a federal effort to get to the bottom of what David Dayen for Salon calls “the largest consumer fraud in the history of the United States.”

    With the nation’s economy still hobbled by high unemployment and a growing gap between the superwealthy and everyone else, the U.S. Treasury Department recently revealed a pathetic settlement with some of the shady bankers behind the criminal foreclosure schemes that fails to provide little if any help to the millions of victims of the tawdry financial machinations. Part of the problem, as Dayen reports, centers on the fact that the federal government allowed consultants hired by banks to conduct so-called independent reviews of millions of foreclosures. The consultants, Dayen continues, made millions and only completed a tiny portion of “independent reviews” requested by scores of aggrieved homeowners. When the Treasury settled with the bankers it announced the “vast majority" of borrowers  – 3.4 million -- will receive paltry sums, like $300 or less.

    But the Treasury Department’s Office of Comptroller of the Currency (OCC) likely didn’t expect U.S. Senators to dig much into the obviously overblown and flawed review of the millions of foreclosure victims. And they likely were not expecting Elizabeth Warren, one of the nation’s most recognizable and passionate spokespersons on behalf of the middle class, to be holding a U.S. Senate seat and a committee position to zero in on their woefully or intentionally inept handling of the foreclosure crisis. 

    But last week, Sen. Warren (D-Mass.), former Harvard Law School Professor, longtime consumer rights advocate and driving force behind the creation of the Consumer Financial Protection Bureau did just that. And it was not the first time the senator has used her platform to highlight the federal government’s bungling of the foreclosure crisis. Last week, as TPM’s Sahil Kapur reported Warren has in just a few months in the Senate “seized opportunities to highlight questionable banking practices an ostensibly lax regulatory response, a chamber frequently criticized for its coziness with Wall Street.”

    During a subcommittee hearing Warren, who as Dayen notes has “a grass-roots army of enthusiastic supporters” and “makes headlines crossing the street,” blasted the OCC regulators for “withholding information they said they possessed about improper foreclosures or other abusive financial practices from victims of those practices seeking recourse in court,” Kapur reported.

    The regulators told Warren they had not made a decision about what information they will make public about criminal foreclosures.

    “So you have made a decision to protect the banks but not a decision to tell the families who were illegally foreclosed against?” Warren asked the regulators.