About Micah Hauptman

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Public Citizen to House subcommittee: Yes, Dodd-Frank authorizes breaking up big banks

a protestor carrying a sign that reads "too big to fail is too big to allow"
Flickr photo via Nowviskie

Note: Public Citizen submitted testimony to the House Financial Services Subcommittee on Oversight and Investigations in advance of its hearing today titled “Who is Too Big to Fail: Does Dodd-Frank Authorize the Government to Break Up Financial Institutions?” The testimony is available here.

Public Citizen commends the House Financial Services Subcommittee on Oversight and Investigations for holding today’s hearing to discuss the government’s authority to break up financial institutions under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

In January 2012, Public Citizen called on the Federal Reserve and the Financial Stability Oversight Council to break up the financial behemoth Bank of America. We relied on a relatively obscure provision in the Dodd-Frank Act, Section 121, which grants financial regulators authority to mitigate the grave threat that an institution poses to U.S. financial stability. More than 30,000 people have signed our petition calling for regulators to break up the bank into pieces that are smaller, simpler and safer for market stability.

But regulators appear unwilling to use the broad authorities in their arsenal to safeguard financial stability, and the Federal Reserve Board’s three-paragraph response to our detailed petition suggests that regulators may not be taking seriously their responsibilities under Dodd-Frank. More

Consumer financial watchdog must crack down on lenders that prey on students

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Photo of Public Citizen financial policy council Micah HauptmanWhen the Consumer Financial Protection Bureau (CFPB) wanted to hear from the public about private student loan affordability, Public Citizen’s members and supporters responded in full force!

More than 18,000 Public Citizen activists sent comments, decrying Wall Street’s over-financialization of our educational system and calling out the corporate predators that have trapped students in cycles of debt to reap millions of dollars in ill-gotten gains. Many commented specifically on forced arbitration clauses and class-action bans that lenders stick into the fine-print language of student loan contracts, which prevent borrowers from going to court to hold their lenders accountable for predatory lending and other harmful industry practices.

Here are just a few of the public comments our members and supporters sent to the CFPB:

  • “I am permanently burdened, I can never stop working. I feel enslaved.”—a 71 year old woman who borrowed $40,000 in the early nineties to fund her master’s education. Since taking out her loans, the loan amount ballooned to $140,000. Now, a portion of her pay is garnished.
  • “In my 50 years as a lawyer, judge, and alternative dispute resolution provider, I am convinced that compulsory arbitration … is too often fundamentally unfair… A class action suit empowers the powerless which is precisely why the lenders want to jam arbitration and class action waivers down student throats.” More

European Union moves towards financial speculation tax: Why U.S. should follow

Note: In the 112th Congress, Sen. Tom Harkin (D-Iowa) and Rep. Peter DeFazio (D-Ore.) introduced the Wall Street Trading and Speculators Tax Act. The nonpartisan Joint Committee on Taxation said the bill would raise more than $350 billion over 10 years through a miniscule fee on Wall Street transactions.

On Tuesday, European Union finance ministers took a giant step toward implementing a financial speculation tax. Eleven European governments – led by Germany, France, Italy and Spain – voted to approve a fee on the sale or transfer of stock, bonds and derivatives.

The fee will raise significant revenues for those countries’ ailing economies. It also will cut down on the kind of wasteful, predatory and speculative trading activities that have harmed financial markets.

Policymakers in the United States should act now to implement a similar policy so we don’t fall behind the rest of the world.

Sen. Harkin and Rep. DeFazio plan to re-introduce their bill in the coming weeks. Public Citizen urges the rest of Congress to immediately endorse the legislation.

One of the biggest industry criticisms of the financial speculation tax is that it would increase trading costs, which would cause trading to flow overseas. But with 11 countries appearing willing to implement an even higher tax than the one proposed by Sen. Harkin and Rep. DeFazio, that argument is swiftly becoming meritless.

Micah Hauptman is Public Citizen’s financial reform organizer

Cliff fatigue

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Flickr photo by wallyg

If you’re like me, you’d be pretty pleased about never again hearing the phrases “fiscal cliff” or “debt crisis.”

But Congress – that venerable institution that now receives lower approval ratings than cockroaches and colonoscopies – is about to disappoint us once again.

In the next few months, we can look forward to Congress and the White House arguing back and forth about sequestration cuts, raising the debt ceiling and passing a budget. Austerity extremists, meanwhile, want to put Medicare and Social Security on the chopping block.

Sequestration cuts, you may ask? Weren’t those already dealt with?

Answer: Nope!

In the “fiscal cliff” bill, Congress and President Obama simply punted on the automatic, across-the-board cuts totaling $1.2 trillion that were scheduled to begin taking effect on January 1.

Now, they are set to begin on March 1. More

Fiscal debacle

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a photograph of dollar bills
Flickr photo by borman818

Whatever you want to call it — “fiscal cliff,” “fiscal slope” or “fiscal obstacle course” — if Congress and President Barack Obama don’t act, automatic tax increases and spending cuts will begin to kick in on January 1, 2013. And if they permanently fail to act, the economy could be thrown back into recession.

The automatic, across-the-board “sequestration” cuts totaling $1.2 trillion over 10 years would be particularly devastating (PDF), affecting vital services, including education, food safety, disaster relief and law enforcement.

But we don’t have to go down that road. We don’t have to fall victim to lawmakers who are willing to impose crippling austerity measures on the nation.

One simple solution can significantly help fill the budget gap: a financial speculation tax.

The Wall Street Trading and Speculators Tax Act (S. 1787, H.R. 3313), introduced by Sen. Tom Harkin (D-Iowa) and Rep. Peter DeFazio (D-OR), would impose a 0.03 percent fee (three pennies on $100) on the transfer of stocks, bonds and derivatives.

According to the nonpartisan Joint Committee on Taxation, this bill would generate more than $350 billion in revenues over the next ten years. Alone, that amount would fill 30 percent of the “sequestration” gap. More

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