Financial Reform: Keep State AGs and State Law on the Beat Against Predatory Lending Practices

As Congress debates federal financial reform legislation, a key priority for financial industry lobbyists remains gutting provisions that would strengthen enforcement by state attorneys general and stopping the partial restoration of state powers to regulate national bank abuses against consumers.  As we detailed three years ago, much of the damage to communities from subprime lending might have been avoided if the Bush Administration had not been able to shut down most state anti-predatory lending laws early in the decade.

Strengthening state power to regulate abuses by national banks has been a priority for reformers from the beginning of the financial reform process.  While the bill approved in the House and the current leadership proposal in the Senate are not as strong in preserving state enforcement powers as some early proposals, under them state attorneys general would still retain the power to enforce federal law against national banks.  Federal authority to preempt state banking laws would also be more limited than under our current laws.  One broad amendment to keep current bad federal preemption of state banking laws was rejected last Thursday, although most conservative Senators voted for it.  (Note that "states' rights" inevitably lose out in conservative hands when corporate interests want federal power to trump state regulations). 

Stopping Bad Senate Deals on Preemption:  Newspapers continue to report on deals being negotiated between conservative Democrats and Republicans to undermine state regulatory authority, even as national consumer leaders continue to speak out against any further preemption compromises.  A letter sent to Senators on Friday by Americans for Financial Reform, a coalition made up of over 250 consumer, labor and civil rights groups, highlights the key arguments for why expanding state authority is so critical, including:

• "Help from state AGs is critical to ensuring that consumers have at least minimum protections against reckless Wall Street practices.  In addition, consumers are much more likely to complain to, and get a response from, state-based enforcement agencies."
• "States need to be able to address new problems before they spread nationally, without waiting for federal regulators to notice them and respond... States that had tough anti-predatory lending laws (until they were preempted) had lower foreclosure rates than states without those laws.  After state laws were preempted, national banks made riskier loans." 
• "It is critical to require a case-by-case assessment of state laws for purposes of federal preemption rather than permitting state laws to be wiped out broadly without due consideration for each law... the protections in the bill against excessive preemption need to be strengthened, substantively and procedurally, to ensure that the [federal government] must undertake a serious inquiry and not a pro forma one."

With critical votes happening all this week, Americans for Financial Reform has an action page with key alerts and tools for contacting Congress to express the need for real financial reform, including keeping authority in the states to protect consumers from national bank abuses.

Economy Adds 290,000 Jobs in April - But State Government Layoffs Could Drag Down Economy

Last Friday, the Bureau of Labor Statistics (BLS) reported that the economy added 290,000 jobs in April, exceeding initial economic forecasts.  This marks the fourth consecutive month the country experienced economic growth and added workers.  Industries across the board saw increases in jobs, including construction, business services, education, health, and leisure and hospitality.  Manufacturing employment rose by 44,000 jobs, the largest expansion since 1998.  As Christina Romer, chair of the Council of Economic Advisers (CEA) states, the "employment report shows the strongest signs yet of healing in the labor market." 

The jobs numbers indicate that the crucial investments in the American Recovery and Reinvestment Act (ARRA) are spurring private job growth and boosting national economic performance.  The graph below depicts the slowing of job losses that followed the passage of the Recovery Act and the recent surge in job creation.

Unfortunately, while private sector job growth is now expanding, state and local governments actually lost 6,000 jobs in April-- and the overall unemployment rate remains stubbornly high.   Massive state budget shortfalls will likely exacerbate this alarming trend with potentially hundreds of thousands of state and local jobs lost if Congress does not act to provide additional help for states.

President Barack Obama acknowledged that while the job growth is encouraging, "we’ve got a ways to go" with unemployment rates still stubbornly high.  Accordingly, this points to the urgent need for federal action on further job creation and state fiscal relief measures.  Though Congress passed a modest small business package in March, conservative leaders in Congress continue to delay and even block additional support for state Medicaid programs, funding for educational programs, investments in infrastructure projects and public transportation, support for the long-term unemployed to sustain them until they reenter the workforce, and direct assistance to state and local governments to perform the vital services needed to maintain growth in local communities.

AFSCME's State and Local Fiscal relief action page provides critical resources to strengthen the advocacy efforts of individuals and organizations.  If you are a state or local lawmaker, please sign onto this letter calling on the President and Congress to move on a jobs and state fiscal relief plan.

Bringing Integrity Back to Science: The US National Academy of Sciences Letter on Climate Change

Amidst a surge of questions on the veracity of climate change, 255 members of the U.S. National Academy of Sciences, which since 1863 has advised the government on scientific and technological issues, have expressed their disturbance by these recent “political assaults” and have made it clear: “humans are changing the climate in ways that threaten our societies and the ecosystems on which we depend.”

In a letter published on May 7 in Science Magazine, these leading scientists denounced those who deny climate change as “driven by special interests or dogma, not by an honest effort to provide an alternative theory that credibly satisfies the evidence.”  This unusually blunt letter was reportedly drafted in response to the remarks by Republican Senator James M. Inhofe (OK) who labeled climate change data as a "hoax" and to state-based groups like the Heartland Institute, which has promoted "climate denial" propaganda in statehouses around the country.

The letter outlines fundamental premises for which there is a scientific consensus:

1. The planet is warming due to increased concentrations of heat-trapping gases in our atmosphere.  A snowy winter in Washington does not alter this fact.
2. Most of the increase in the concentration of these gases over the last century is due to human activities, especially the burning of fossil fuels and deforestation.
3. Natural causes always play a role in changing Earth's climate, but are now being overwhelmed by human-induced changes.
4. Warming the planet will cause many other climatic patterns to change at speeds unprecedented in modern times.
5. The combination of these complex climate changes threatens coastal communities and cities, our food and water supplies, marine and freshwater ecosystems, forests, high mountain environments, and far more.

It is now, the undersigners insist, that policy makers must move forward to address the causes of climate change. The letter comes as Senators Kerry and Lieberman are ready to introduce a comprehensive clean energy bill this week in the Senate and as states continue to promote their own versions of climate change legislation.