SCOTUS Upholds Workplace Arbitration Contracts Barring Class Actions

From today’s New York Times:

 The Supreme Court on Monday ruled that companies can use arbitration clauses in employment contracts to prohibit workers from banding together to take legal action over workplace issues.

The vote was 5 to 4, with the court’s more conservative justices in the majority. The court’s decision could affect some 25 million employment contracts.

Writing for the majority, Justice Neil M. Gorsuch said the court’s conclusion was dictated by a federal law favoring arbitration and the court’s precedents. If workers were allowed to band together to press their claims, he wrote, “the virtues Congress originally saw in arbitration, its speed and simplicity and inexpensiveness, would be shorn away and arbitration would wind up looking like the litigation it was meant to displace.”

Justice Ruth Bader Ginsburg read her dissent from the bench, a sign of profound disagreement. In her written dissent, she called the majority opinion “egregiously wrong.” In her oral statement, she said the upshot of the decision “will be huge under-enforcement of federal and state statutes designed to advance the well being of vulnerable workers.”

Justice Ginsburg called on Congress to address the matter.

Brian T. Fitzpatrick, a law professor at Vanderbilt University who studies arbitrations and class actions, said the ruling was unsurprising in light of earlier Supreme Court decisions. Justice Gorsuch, he added, “appears to have put his cards on the table as firmly in favor of allowing class actions to be stamped out through arbitration agreements.”

As a result, Professor Fitzpatrick said “it is only a matter of time until the most powerful device to hold corporations accountable for their misdeeds is lost altogether.”

But Gregory F. Jacob, a lawyer with O’Melveny & Myers in Washington, said the decision would have a limited impact, as many employers already use the contested arbitration clauses. “This decision thus will not see a huge increase in the use of such provisions,” he said, “but it does protect employers’ settled expectations and avoids placing our nation’s job providers under the threat of additional burdensome litigation drain.”

Read the complete article here.

Trump Undercuts Giuliani’s Comments About Payments to Stormy Daniels

From today’s New York Times:

President Trump undercut his attorney Rudolph W. Giuliani on Friday, and said the former New York mayor will eventually get the facts right regarding a payment to a pornographic actress who said she had an affair with Mr. Trump.

“And virtually everything said has been said incorrectly, and it’s been said wrong, or it’s been covered wrong by the press,” Mr. Trump said.

Mr. Giuliani, who joined Mr. Trump’s legal team last month, “just started a day ago,” Mr. Trump said, speaking to reporters on Friday as he left Washington to attend a National Rifle Association convention in Dallas.

“He is a great guy,” Mr. Trump said. “He’ll get his facts straight.”

It was the first time the president addressed the inconsistent narrativeabout the payment made by his personal lawyer, Michael D. Cohen, to the actress, Stephanie Clifford, who goes by the stage name Stormy Daniels. Mr. Trump did not offer any details on Friday to clarify the confusion, but said, “It’s actually very simple. But there has been a lot of misinformation.”

Mr. Giuliani released a statement Friday trying to clarify the confusion, saying that his “references to timing were not describing my understanding of the president’s knowledge, but instead, my understanding of these matters.” He also said there had been no campaign violations in the matter.

The comments capped a week of evolving facts surrounding the Oval Office.

The American public learned its president, once described by a doctor as “the healthiest individual ever elected,” actually wrote that description himself, leaving his health ranking among those who held the office before him a mystery. Mr. Trump also hired an attorney he previously had deniedrecruiting. And the president contradicted himself when, this week, he said he paid back Mr. Cohen for the $130,000 given to Ms. Clifford just days before the election. Last month, the president said he did not know anything about the transaction.

Mr. Giuliani kicked off the confusion about the payment with an interviewon Fox News on Wednesday, surprising even some of Mr. Trump’s other attorneys.

Read the complete article here.

EPA Director Scott Pruitt’s Trip to Australia Organized by Foreign Lobbyist

From today’s New York Times:

A Washington consultant and onetime lobbyist for foreign governments played a central role in attempting to set up a trip to Australia by Scott Pruitt, the head of the Environmental Protection Agency, while the consultant took steps to disguise his role, new documents released this week show.

The disclosures add to the list of individuals from outside the government who have worked to influence foreign travel by Mr. Pruitt. The Australia trip, which was planned for late last year but never took place, was being promoted by Matthew C. Freedman, the chief executive of a consulting firm, Global Impact Inc.

Mr. Freedman has spent decades as an international political consultant and lobbyist, starting in the 1980s as an employee of Paul Manafort when the two men worked together to help the embattled Philippine dictator Ferdinand Marcos. Mr. Manafort later became Mr. Trump’s campaign chairman, and many of his former lobbying associates entered Mr. Trump’s orbit.

Mr. Freedman worked on Mr. Trump’s transition team in late 2016. He was removed after he was found to be conducting government business using an email address associated with his consulting firm.

Mr. Freedman could not be reached for comment. The E.P.A. did not immediately respond to questions about Mr. Freedman’s involvement in the Australia trip.

Read the complete article here.

Public Servants Are Losing Their Foothold in the Middle Class

From today’s New York Times:

The anxiety and seething anger that followed the disappearance of middle-income jobs in factory towns has helped reshape the American political map and topple longstanding policies on tariffs and immigration.

But globalization and automation aren’t the only forces responsible for the loss of those reliable paychecks. So is the steady erosion of the public sector.

For generations of Americans, working for a state or local government — as a teacher, firefighter, bus driver or nurse — provided a comfortable nook in the middle class. No less than automobile assembly lines and steel plants, the public sector ensured that even workers without a college education could afford a home, a minivan, movie nights and a family vacation.

In recent years, though, the ranks of state and local employees have languished even as the populations they serve have grown. They now account for the smallest share of the American civilian work force since 1967.

The 19.5 million workers who remain are finding themselves financially downgraded. Teachers who have been protesting low wages and sparse resources in OklahomaWest Virginia and Kentucky — and those in Arizona who say they plan to walk out on Thursday — are just one thread in that larger skein.

The private sector has been more welcoming. During 97 consecutive months of job growth, it created 18.6 million positions, a 17 percent increase.

But that impressive streak comes with an asterisk. Many of the jobs created — most in service industries — lack stability and security. They pay little more than the minimum wage and lack predictable hours, insurance, sick days or parental leave.

The result is that the foundation of the middle class continues to be gnawed away even as help-wanted ads multiply.

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.

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.

Why the Trump-led GOP Continues to be the Party of Massive Budget Deficits

From today’s LA Times:

The Trump administration proposed a spending plan on Monday that projects deficits as far as the eye can see, giving up the longtime Republican goal of a balanced budget to champion a spending plan replete with cash for a host of military programs and some domestic ones the president’s supporters might admire.

The budget calls for about $716 billion in annual defense spending, more than $100 billion above the level Trump requested last year. Add in the tax cut Republicans pushed through in December and the extra spending Congress approved just last week, and the result is a flood of red ink projected to send the national debt ever higher.

Trump’s budget anticipates deficits throughout the next 10 years even if Congress were to approve some $3 trillion in cuts over that same time period that he’s proposing for a wide range of federal programs. Both parties already rejected most of those cuts last year and have shown little interest in pursuing them.

The deficits persist even though the White House is forecasting extremely optimistic levels of economic growth. If growth falls short of those projections — most economists think it will — deficits would be higher still.

As a result, the budget marks something of a milestone — the Trump administration’s abandonment of the quest for budget balance that the Republican Party has claimed as a guiding light for years, at least rhetorically.

In reality, deficits have often soared under Republican presidents as the party has put cutting taxes ahead of balancing budgets on its list of priorities. In the past, however, Republican administrations have taken pains to at least come up with a budget that would balance on paper.

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.

Market Update: Why Rising Wages Are Scaring the Hell Out of Stock Investors

From today’s Slate Magazine:

On Friday, the U.S. Department of Labor released a strong jobs report showing wages rising at their fastest rate since the Great Recession. Then, the stock market promptly began to plummet. The Dow Jones fell an amusingly on-the-nose 666 points—its worst day since the U.K.’s Brexit surprise. Global markets subsequently took a beating, and U.S. equities are still sliding as I write this today.

Why is good news for workers turning into bad news for shareholders? The answer is a useful illustration of why the stock market is often a poor guide to the overall health of the economy.

Right now, traders seem to be worried that if wages rise too fast, it will cause the Federal Reserve to hike interest rates in order to head off inflation down the road. When, earlier this year, the central bank suggested that it would raise rates, much of the market was skeptical, in part because inflation has been so subdued for so long. But faster pay gains for workers make it more likely the Fed will follow through, both because rising wages are a sign that the whole economy is heating up and because employers will eventually have to raise prices to keep up with the cost of labor.

Read the complete article here.

How Wells Fargo and Federal Reserve Struck Deal to Hold Board Accountable

From today’s New York Times:

On a Thursday evening in mid-January, a group of top Wells Fargo executives sat down for dinner in an upscale surf-and-turf restaurant near the White House. At nearby tables, power brokers ate seafood on ice and sipped cocktails out of copper mugs.

The Wells Fargo executives — including the chief executive, Timothy J. Sloan, and the finance chief, John R. Shrewsberry — enjoyed their crab legs, but they were in Washington on unpleasant business. The Federal Reserve planned to impose tough sanctions on the San Francisco-based bank for years of misconduct and the shoddy governance that allowed it.

The executives’ mission, according to three people directly involved in the negotiations, was to avoid further shaking investor confidence in the bank and its management team.

Officials at the central bank had a different goal, according to people familiar with their thinking. They wanted to send a message to the Wells board that it would be held responsible for the company’s behavior.

After three weeks of frenzied negotiations, deal was announced on Friday night that represented a milestone in the evolving relationship between regulators and banks. Wells Fargo, one of the country’s largest banks, was banned from getting bigger until it can convince regulators that it has cleaned up its act.

Read the complete article here.