The Cambridge Analytica-Facebook Scandal and the Coming Data Bust

From today’s New York Times:

The queasy truth at the heart of Facebook’s Cambridge Analytica scandal, which is so far the company’s defining disgrace of 2018, is that its genesis became scandalous only in retrospect. The series of events that now implicate Facebook began in 2014, in plain view, with a listing on Amazon’s Mechanical Turk service, where users can complete small tasks for commensurately modest sums of cash. In exchange for installing a Facebook app and completing a survey — in the process granting the app access to parts of your Facebook profile — you would get around a dollar. Maybe two.

This was a great deal, at least by the standards of the time. Facebook users were then accustomed to granting apps permission to see their personal data in exchange for much less. It was the tail end of a Facebook era defined by connected apps: games like FarmVille, Candy Crush and Words With Friends; apps that broadcast your extra-Facebook activities, like Spotify and Pinterest; and apps that were almost explicitly about gathering as much useful data as possible from users, like TripAdvisor’s Cities I’ve Visited app, which let you share a digital pushpin map with your friends.

Most of these apps, when installed, demanded permission to access “your profile info,” which could include things like your activity, birthday, relationship status, interests, religious and political views, likes, education and work history. They could also collect information about users’ friends, multiplying their reach. In providing a marketplace for such apps, Facebook made it easy for users to extend their extraordinarily intimate relationship with the site to thousands of third-party developers. One of them turned out to be connected to Cambridge Analytica, which was using the data for right-wing political campaigns — a fact that was lucidly and widely reported as early as 2015 but promptly lost in the roiling insanity of primary season. (As of Facebook’s most recent admission, data was collected on as many as 87 million users.)

Not that more exposure in the news cycle would have mattered much back then. It was self-evidently absurd to grant a virtual-farming game access to your religious views, but that’s just how the platform worked at the time, and so we got used to it, much in the same way we got used to conducting our private lives on any other corporate platform. (When Gmail first started in 2004, the fact that it placed ads based on the contents of users’ emails was considered invasive. That feeling passed; Google continued scanning consumer email until 2017, and Gmail now has more than a billion users.) Still, these individually trivial decisions never gave us cause to confront just how much we had come to trust Facebook.

Read the complete article here.

Mick Mulvaney says CFPB’s priority is ‘free markets and consumer choice’

From today’s LA Times:

Consumer Financial Protection Bureau chief Mick Mulvaney told lawmakers Wednesday that the agency’s new priority is “to recognize free markets and consumer choice” and take “a humble approach to enforcing the law,” according to prepared remarks released in advance.

In his first testimony to Congress since his controversial appointment as the bureau’s acting director, Mulvaney acknowledged that many lawmakers have disagreed with his actions in the job, “just as many members disagreed with the actions of my predecessor.”

Mulvaney blamed lawmakers’ frustrations on the structure of the bureau, an independent watchdog created in the wake of the financial crisis. He was an outspoken critic of the bureau as a Republican congressman, and last week he formally asked Congress to reduce the bureau’s authority.

Mulvaney and other Republicans have said the bureau is unaccountable because its funding, like that of other financial regulators, is outside the appropriations process, and the president can fire the bureau’s director only for cause, rather than at will.

Read the complete article here.

Facebook Says Cambridge Analytica Harvested Data of Up to 87 Million Users

From today’s New York Times:

Facebook on Wednesday said that the data of up to 87 million users may have been improperly shared with a political consulting firm connected to President Trump during the 2016 election — a figure far higher than the estimate of 50 million that had been widely cited since the leak was reported last month.

Mark Zuckerberg, the company’s chief executive, also announced that Facebook would offer all of its users the same tools and controls required under European privacy rules. The European rules, which go into effect next month, give people more control over how companies use their digital data.

Facebook had not previously disclosed how many accounts had been harvested by Cambridge Analytica, the firm connected to the Trump campaign. It has also been reluctant to disclose how it was used by Russian-backed actors to influence the 2016 presidential election.

Among Facebook’s acknowledgments on Wednesday was the disclosure of a vulnerability in its search and account recovery functions that it said could have exposed “most” of its 2 billion users to having their public profile information harvested.

The new effort to appear more transparent about the data leaks — including a rare question-and-answer session with Mr. Zuckerberg and reporters — came just before Mr. Zuckerberg’s expected testimony next week on Capitol Hill, where he will most likely face criticism over how the company collects and shares the personal data of its users. Sheryl Sandberg, Mr. Zuckerberg’s top deputy, has several national television interviews scheduled for later this week.

The company said that on Monday it would start telling users whether their information may have been shared with Cambridge Analytica.

Andy Stone, a spokesman for Facebook in Washington, said the 87 million figure was an estimate of the total number of users whose data could have been acquired by Cambridge Analytica. He said that the estimate was calculated by adding up all the friends of the people who had logged into the Facebook app from which Cambridge Analytica collected profile data.

Read the complete article here.

An International Final Four: Which Country Handles Student Debt Best?

From today’s New York Times:

Although an American college degree remains a good investment on average — the higher earnings for most graduates justify the cost— millions of borrowers are in default on their loans.

Policy analysts generally agree on a need for reform, but not on which path policymakers should take. Can America learn anything from other nations? We gathered experts with a range of perspectives, from America and abroad, and asked them to compare the systems in Australia, Britain, Sweden and the United States.

We chose this grouping of nations because they highlight important differences both in loan repayment systems and in related policies such as tuition and loan limits, not necessarily because they all belong among the best systems in the world. In the spirit of March Madness, we devised a bracket-style tournament, seeding the countries so that those with more similar systems would meet in the semifinals.

Sweden vs. United States

Sweden and the United States differ in whether the monthly loan payment remains the same over time and in the number of years borrowers can repay their loans.

The average American borrower with a bachelor’s degree leaves college with $28,400 in debt. Students can borrow for both tuition and living expenses, although loan limits make it hard for an undergraduate to borrow more than $45,000 over four years.

In Sweden, average debt levels are similar — the equivalent of around $21,000 — even though students borrow only for living expenses (Swedish universities do not charge tuition). Interest rates are also very low; the rate for 2018 is now 0.13.

In the United States, borrowers are required to begin making payments six months after leaving college. By default, payments are set so the whole principal and interest, which is tied to the market rate at the time the loan is made (currently 4.45 percent), will be paid off in equal monthly installments paid over 10 years.

American borrowers can opt into alternative repayment plans, including plans that tie payments to income or that start lower and increase over time. Income-based plans offer forgiveness of any remaining balance after 10 to 25 years, but enrolling in these plans requires making a request to the servicer and filing paperwork annually. If you miss the paperwork, you are put back into a 10-year repayment schedule, but can ask to re-enroll. There are a large number of plans that are hard for borrowers to navigate, especially in times of financial stress.

Swedish borrowers, on the other hand, pay off their loans over a much longer period. Borrowers can be in repayment for up to 25 years, with the typical borrower paying for 22 years.

Read the complete article here.

Tariffs bad news for American economy, including workers and consumers

From today’s The Hill:

There’s never a good time for tariffs. American workers and consumers will pay dearly for the Trump administration’s short-sighted action to protect an industry that shows no signs of needing any protection—the market values of the five largest steel companies have more than doubled over the past five years. Yet with a major infrastructure spending bill set to come through Congress over the next year, Trump’s tariffs are bad policy with even worse timing.

While a small amount of people will benefit from the proposed tariffs, many more will be harmed. The American steel industry employs roughly 140,000 workers, but industries that rely on steel to create their products—the ones who will suffer directly under the tariffs—employ 6.5 million workers. A recent study by the Trade Partnership found that the direct cost of tariffs on employment would be 18 jobs lost for every one created. On net, 470,000 Americans could lose their jobs.

The Trade Partnership’s study fits with the lessons of recent history. In 2002, President Bush instituted protective tariffs on foreign steel imports. After just a year in which steel prices rose by up to 50 percent, steel production was insufficient to meet demand, 200,000 Americans lost their jobs, and the tariff was dropped. A mere fifteen years later, these lessons have already been forgotten.

Nor will other countries sit idly by as Trump restricts trade. Well over 10 million Americans’ jobs are supported by exports—jobs which would be at risk in the case of a trade war. Already, the European Union has prepared a ten-page hit list of potential targets of retaliatory tariffs should Trump’s steel and aluminum tariffs go into effect.

American consumers will be harmed as well. A combination of new steel tariffs and lumber tariffs imposed last year mean that the cost of new homes is likely to continue rising—nearly half of steel imports go towards construction. Other American staples such as cars and canned beer are also set to see price spikes resulting directly from tariffs.

Read the complete article here.

56 years later, JFK’s call for a consumer bill of rights is forgotten under Trump

From the Los Angeles Times:

On this day in 1962, President Kennedy laid out in a speech to Congress the framework for a consumer bill of rights and the crucial role the federal government must play in protecting those rights.

Kennedy’s call to arms is now marked every March 15 as World Consumer Rights Day, which seeks to advance “guidelines for consumer protection”backed by the United Nations.

Yet over half a century later, the current occupant of the Oval Office, President Trump, a wealthy businessman, is aggressively pursuing policies that undermine each of Kennedy’s declared rights.

So it’s worthwhile asking: Is it too late to change course? Have corporate interests prevailed?

Read the complete article here.

Some Dems ready to loosen tough bank regulations passed after financial crisis

From today’s LA Times:

Before the 2008 financial crisis, BAC Community Bank in Stockton made about 100 mortgage loans a year. Now, after new regulations mandated in the Dodd-Frank Wall Street Reform and Consumer Protection Act, the figure is down to about two dozen.

“We were never a big mortgage lender, but we did quite a bit more before Dodd-Frank,” said Bill Trezza, the bank’s chief executive. “It basically pushed us out of that to the point where we will do mortgages only for our customers if they request it.”

He and other small bankers hope that’s about to change. And a political shift is making that possible.

Nearly a decade after the financial crisis, some Democrats are ready to go along with a Republican push to significantly loosen the landmark law enacted to try to prevent the next one.

Senate legislation focused on easing new mortgage and other rules for small and mid-sized and regional banks has been co-sponsored by a dozen Democrats, several of them moderates up for re-election this year in states won by President Trump in the 2016 campaign.

The bipartisan support has the bill on track to be approved as soon as this week in what would be the first major overhaul of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

The House, which has approved more extensive financial deregulation, is likely to go along with the Senate’s more modest changes. Trump, who has called Dodd-Frank “a very negative force” in the economy and vowed during the campaign to dismantle it, would be expected to sign any bill that reduces its authority.

“The tone has shifted in D.C. from where regulation was necessary to protect the economy to the concern where regulation has gone too far and might be a drag on the economy,” said Ed Mills, a Washington policy analyst for financial services firm Raymond James. “Where that shift has occurred, it gave an opening to the smaller and medium-size banks to pursue these changes.”

But while there’s broad support for easing unintentional burdens in the law for small banks, many liberal Democrats are fighting the bill from Senate Banking Committee Chairman Mike Crapo (R-Idaho). They say it goes too far by also providing significant benefits for some larger financial institutions.

The legislation would exempt about 30 banks and other firms from the stricter oversight put in place by Dodd-Frank after the 2008 financial crisis. That 2010 law was an attempt to prevent a repeat of the bailouts and damage to the economy.

Read the complete article here.

Breaking News: Dick’s Sporting Goods To Stop Selling Assault-Style Weapons

From today’s New York Times:

One of the nation’s largest sports retailers, Dick’s Sporting Goods, said Wednesday morning it was immediately ending sales of all assault-style rifles in its stores.

The retailer also said that it would no longer sell high-capacity magazines and that it would not sell any gun to anyone under 21 years of age, regardless of local laws.

The announcement, made two weeks after the school shooting in Parkland, Fla., that killed 17 students and staff members, is one of the strongest stances taken by corporate America in the national gun debate. It also carries symbolic weight, coming from a prominent national gun seller.

Late last week, after coming under attack on social media for their ties to the National Rifle Association, a number of major companies, including Hertz car rental, MetLife insurance and Delta Air Lines, publicly ended those relationships, issuing brief, carefully phrased statements.

But Edward Stack, the 63-year-old chief executive of Dick’s whose father founded the store in 1948, is deliberately steering his company directly into the storm, making clear that the company’s new policy was a direct response to the Florida shooting.

“When we saw what happened in Parkland, we were so disturbed and upset,” Mr. Stack said in an interview Tuesday evening. “We love these kids and their rallying cry, ‘enough is enough.’ It got to us.”

He added, “We’re going to take a stand and step up and tell people our view and, hopefully, bring people along into the conversation.”

Mr. Stack said he hoped that conversation would include politicians. As part of its stance, Dick’s is calling on elected officials to enact what it called “common sense gun reform’’ by passing laws to raise the minimum age to purchase guns to 21, to ban assault-type weapons and so-called bump stocks, and to conduct broader universal background checks that include mental-health information and previous interactions with law enforcement.

Read the complete article here.

The Tyranny of Convenience

From the New York Times:

Convenience is the most underestimated and least understood force in the world today. As a driver of human decisions, it may not offer the illicit thrill of Freud’s unconscious sexual desires or the mathematical elegance of the economist’s incentives. Convenience is boring. But boring is not the same thing as trivial.

In the developed nations of the 21st century, convenience — that is, more efficient and easier ways of doing personal tasks — has emerged as perhaps the most powerful force shaping our individual lives and our economies. This is particularly true in America, where, despite all the paeans to freedom and individuality, one sometimes wonders whether convenience is in fact the supreme value.

As Evan Williams, a co-founder of Twitter, recently put it, “Convenience decides everything.” Convenience seems to make our decisions for us, trumping what we like to imagine are our true preferences. (I prefer to brew my coffee, but Starbucks instant is so convenient I hardly ever do what I “prefer.”) Easy is better, easiest is best.

Convenience has the ability to make other options unthinkable. Once you have used a washing machine, laundering clothes by hand seems irrational, even if it might be cheaper. After you have experienced streaming television, waiting to see a show at a prescribed hour seems silly, even a little undignified. To resist convenience — not to own a cellphone, not to use Google — has come to require a special kind of dedication that is often taken for eccentricity, if not fanaticism.

For all its influence as a shaper of individual decisions, the greater power of convenience may arise from decisions made in aggregate, where it is doing so much to structure the modern economy. Particularly in tech-related industries, the battle for convenience is the battle for industry dominance.

Read the complete article here.

When Wall Street Writes Its Own Rules, It’s An Age of Unprecedented Corruption

From today’s New York Times:

On July 25, 2013, a high-ranking federal law enforcement officer took a public stand against malfeasance on Wall Street. Preet Bharara, then the United States attorney for the Southern District of New York, held a news conference to announce one of the largest Wall Street criminal cases the American justice system had ever seen.

Mr. Bharara’s office had just indicted the multibillion-dollar hedge fund firm SAC Capital Advisors, charging it with wire fraud and insider trading. Standing before a row of television cameras, Mr. Bharara described the case in momentous terms, saying that it involved illegal trading that was “substantial, pervasive and on a scale without precedent in the history of hedge funds.” His legal action that day, he assured the public, would send a strong message to the financial industry that cheating was not acceptable and that prosecutors and regulators would take swift action when behavior crossed the line.

Steven A. Cohen, the founder of SAC and one of the world’s wealthiest men, was never criminally charged, but his company would end up paying $1.8 billion in civil and criminal fines, one of the largest settlements of its kind. He denied any culpability, but his reputation was still badly — some might argue irreparably — damaged. Eight of his former employees were charged by the government, and six pleaded guilty (a few later had their convictions or guilty pleas dismissed). Mr. Cohen was required to shut his fund down and was prohibited from managing outside investors’ money until 2018.

Now, with the prohibition having expired in December, Mr. Cohen has been raising money from investors and is set to start a new hedge fund. He’ll find himself in an environment very different from the one he last operated in. His resurrection arrives as Wall Street regulation is under assault and financiers are directing tax policy and other aspects of the economy — often to the benefit of their own industry. Mr. Cohen is a powerful symbol of Wall Street’s resurgence under President Trump.

As the stock market lurched through its stomach-turning swings over the past week, it was hard not to worry that Wall Street could once again torpedo an otherwise healthy economy and to think about how little Mr. Trump and his Congress have done to prepare for such a possibility. Stock market turbulence typically prompts calls for smart and stringent financial regulation, which is not part of the Trump agenda. One of Mr. Trump’s first acts as president was to fire Mr. Bharara, who made prosecuting Wall Street crime one of his priorities. Mr. Trump has also given many gifts to people like Mr. Cohen.

Read the complete article here.