A day after The Wall Street Journal attacked the Consumer Financial Protection Bureau for attempting to rein in racial bias in auto loan practices, Politico questioned the agency for seeking advice from a consumer advocacy group that many media outlets -- including Politico -- frequently ask to comment on consumer issues.
On November 19, Politico questioned the Consumer Financial Protection Bureau's (CFPB) supposedly "cozy" relationship with a consumer advocacy group after emails revealed the agency consulted with the Center for Responsible Lending (CRL) on payday lending reforms. CRL is a leading source of research on the issue of payday loans; however the article misleadingly compared the CFPB consulting with a consumer advocacy nonprofit to the often nefarious "influence of big banks and lobbyists in writing legislation":
When the Consumer Financial Protection Bureau put out its proposal to overhaul payday lending rules in March, the move was cheered by consumer advocates as a much-needed crackdown on an industry that preys on the poor.
But the final product wasn't a surprise to at least one nonprofit group.
While Elizabeth Warren and other progressives decry the influence of big banks and lobbyists in writing legislation, in this instance, the agency created by Warren to protect consumers from abusive lending leaned heavily on consumer activists as it drafted regulations for the $46 billion payday loan industry. The Center for Responsible Lending spent hours consulting with senior Obama administration officials, giving input on how to implement the rule that would restrict the vast majority of short-term loans with interest rates often higher than 400 percent. The group regularly sent over policy papers, traded emails and met multiple times with top officials responsible for drafting the rule.
Politico's criticism comes a day after The Wall Street Journal's editorial board lambasted the agency for drafting guidelines on ending racial bias in auto lending, and advocated for legislation to slow the CFPB's consumer advocacy work.
Politico's false comparison that consumer watchdogs have the same pervasive effect as big banks on legislation and rulemaking fails to note that the Center for Responsible Lending is a well-respected resource on financial products and how these products affect consumers. In the last month, research from the CRL has been cited by a Yale professor in The New York Times, and appeared in articles in Time, The Atlantic and The Huffington Post. On November 19, The Washington Post's Dave Weigel took to Facebook to criticize Politico, explaining to readers that "the nonprofit Center for Responsible Lending, which reporters who have covered any of this stuff recognize as a pretty above-board group that lobbies against predatory loan practices":
In 2009, the Center for Responsible Lending uncovered that 76 percent of the total volume of payday loans are borrowers taking out new loans to pay their existing loan. The CRL also reported that payday loan practices lead to $3.4 billion in excessive fees a year with over 75 percent of these fees generated by borrowers with more than 10 loans a year. The CRL and its sister non-profit -- the Self Help Credit Union -- use this research to advocate for lending practices that will end the perpetual payday loan cycle, saving low income Americans billions.
While Politico questioned why "CFPB requested data from the nonprofit on payday lenders 'to help focus these efforts,'" it failed to mention it has used reports and published comments from the Center for Responsible Lending on multiple occasions in relation to financial products and legislation. On October 29, Politico asked CRL's Maura Dundon to explain a financial ruling on student loans and, on October 16, quoted Dundon to emphasize the strength of a CFPB crackdown on for-profit colleges. In December of 2008, Politico reported on the CRL findings that minority homeowners were pushed into higher priced mortgage options:
Research by the Center for Responsible Lending, for instance, shows that African-American and Latino homeowners were often steered into subprime mortgages with hefty fees when their credit scores in fact qualified them for less expensive prime loans. Now those groups are experiencing some of the highest rates of foreclosure.
The Wall Street Journal editorial board championed a Republican-led effort to stop what it called an "outrageous regulatory campaign" by the Consumer Financial Protection Bureau, which aims to facilitate compensation for Americans who may have been discriminated against by auto financing agreements that have been shown to charge higher interest rates to minority customers.
On November 17, The Wall Street Journal editorial board argued that the Consumer Financial Protection Bureau (CFPB) should face additional administrative hurdles before making new rules on auto financing, dismissing evidence from the CFPB demonstrating racial bias in auto lending and financing agreements. According to The Huffington Post, numerous public interest groups in the United States are opposed to this attack on the CFPB which would "make it easier for car dealerships to overcharge people of color" through an interest rate manipulation process known as "markups."
The CFPB was authorized to reduce consumer exploitation in areas of banking and credit under the Dodd-Frank Act and is the brainchild of Sen. Elizabeth Warren (D-MA). In March 2013, CFPB drafted new guidance on interest rate markups to stop racial bias in lending, proposing that banks end the practice in favor of a flat fee service or follow strict rules to prevent prejudicial lending. The Center for Responsible Lending found that ending the markup practice and replacing it with a transaction fee would save all consumers money while still paying auto dealers for their financial services.
The Journal ignored all of this when it joined with anti-consumer advocates pushing for Congress to roll back the abilities of the CFPB to protect consumers from this predatory lending practice:
On Wednesday the House is expected to vote down the Consumer Financial Protection Bureau's extralegal campaign against the nation's auto dealers. This is an important moment. Even Democrats are beginning to push back against the regulatory agenda crafted by President Obama and Massachusetts Senator Elizabeth Warren. Let's hope the dissident donkeys survive the experience. The consumer bureau has been forcing settlements on banks that provide financing via car dealers by claiming the dealers are discriminating with higher rates against minority borrowers. The bureau's standard procedure is not to offer evidence of bias. Instead, the regulators guess the ethnicity of borrowers based on their last names and where they live, and then demand cash payments if the people they guess are black or hispanic seem to be paying higher rates than the people they guess are white. Every time we write about this policy we have to remind ourselves we work for the Journal and not the Onion.
At the heart of the bureau's outrageous regulatory campaign is its March 2013 "bulletin" that effectively codified its policy against dealer discretion in setting interest rates. This Beltway diktat never went through the normal rule-making process.
But on Wednesday a bipartisan bill with 65 Democratic co-sponsors will come to the House floor. The measure would knock down this informal guidance and instruct the bureau to allow public comment and to publish its data and analysis online before issuing new rules on auto financing.
It would also require the bureau to study the costs of such a rule on various affected parties. Imagine that. As for the regulators, they've done enough imagining about this market. Let's hope next time they just stick to the facts.
Fox News has announced that Jesse Watters, correspondent for The O'Reilly Factor, will be hosting his own show on the network. Watters has a track record of producing segments where he shames homeless Americans and mocks members of the LGBT community. Watters has also repeatedly made disparaging comments about immigrants, women, and African-Americans while guest hosting shows on Fox.
The USA Today editorial board denounced Republican candidates' "reckless" tax plans and "iffy economics" that would cost trillions of dollars, "wreck budgets," and reverse the current trend of a shrinking deficit.
The tax plans proposed by many of the Republican presidential candidates have been scrutinized for the negative effects they would have on the national debt and overall economic growth. Although some media outlets have mischaracterized Republican tax proposals as "populist," they in fact disproportionately benefit the wealthiest Americans.
In a November 11 editorial, USA Today's editorial board lambasted the GOP tax plans and highlighted the disconnect between the idea of Republicans as "the party of fiscal responsibility" and the reality that some of their tax plans would reduce the federal revenue by trillions of dollars. The editorial explained how "[s]tudies and real-world experiments" reveal that the tax-cuts Republicans champion "don't reliably spur growth, but they surely wreck budgets." Moreover, the board noted that Republican "proposals would reverse" the trend of a falling federal deficit under President Obama. From the editorial:
If Republicans are the party of fiscal responsibility, as opposed to those big-spending Democrats, you wouldn't know it from the GOP candidates' reckless tax-cut proposals. Donald Trump's plan would reduce federal revenue by a staggering $10 trillion over 10 years, Marco Rubio's by $2.4 trillion and Jeb Bush's by $1.6 trillion, according to analyses by the non-partisan Tax Foundation.
One of the scariest moments in Tuesday's GOP presidential debate came when Ted Cruz suggested his proposal was more responsible because it would cost only about three-quarters of a trillion dollars over 10 years.
Even worse, these numbers depend on the economic growth the candidates claim their plans will create. Studies and real-world experiments show that big tax cuts don't reliably spur growth, but they surely wreck budgets.
Candidates always claim they'll offset revenue losses with spending cuts, yet that promise rarely gets fully detailed, much less fulfilled.
Ironically, the candidates are proposing these plans when the federal deficit is falling, a trend their proposals would reverse.
Despite nationwide protests around the country and grassroots support for an increase in the minimum wage, Fox News host Neil Cavuto regularly invites wealthy CEOs and executives on his show to push the myth that minimum wage increases will kill American jobs. Economists have repeatedly found minimum wage increases have no effect on jobs.
The Atlantic pushed back against remarks from Sen. Ted Cruz (R-TX) and other Republican candidates at Fox Business' presidential debate that the United States should bring back the gold standard, noting "economists agree that the gold standard is a bad idea."
Right-wing media personalities like Glenn Beck and Alex Jones, who have profited greatly from advertisers selling gold and silver, have pushed for a return to the gold standard for years against the opposition of nearly all economists and monetary policy experts. At Fox Business' Republican presidential debate on November 10, Ted Cruz and other GOP presidential candidates once again advocated for reinstituting the gold standard. The New Republic called Cruz's gold standard proposal "particularly reckless," and ThinkProgress noted Cruz's support for a gold-based money supply would leave the "entire economy exposed to catastrophe" after the senator proposed a return to the gold standard during the October 28 presidential debate on CNBC.
On November 11, The Atlantic addressed many of these critiques, pointing out the volatility a gold standard would create and how the economic consensus is decidedly against returning to this outdated form of monetary policy. The article also noted Cruz's support for gold may be influenced by the millions of dollars gold standard supporter Robert Mercer has donated to super PACs supporting his presidential campaign (emphasis added):
During Tuesday night's Republican debate a familiar topic resurfaced to the dismay of most economists: the case for the gold standard.
Senator Ted Cruz criticized the Fed's ability to manipulate monetary policy (a common refrain among gold-standard advocates) saying, "Instead of adjusting monetary policy according to whims and getting it wrong over and over again and causing booms and busts, what the Fed should be doing is ... keeping our money tied to a stable level of gold
These conversations may be less an attempt to actually convince rivals, lawmakers, or voters that the gold standard is sound fiscal policy, and more about displaying commitment to conservative ideals, wooing big donors, and demonstrating a substantial disdain for current monetary policies.
In general, economists agree that the gold standard is a bad idea. Pegging the dollar to the metal is, in theory, supposed to offer long-term rate stability. But in practice, that hasn't usually worked out. In the short term, linking dollars to gold quantities can produce a currency that's pretty volatile.
The conversations about gold in recent years are perhaps less about the belief that it's actually smart policy and more about condemning and rejecting the power of the government, through the Federal Reserve, to control the printing of money and the setting of interest rates. For some conservatives these powers stand in direct opposition to their preference for small government and their conception of free-market capitalism. Some also see the ability to print money, which can devalue existing dollars, as a form of taxation, another violation of Republican beliefs.
The gold-standard advocates are not only politicians. They include a small but vocal (and rich) minority of Wall Streeters and hedge funders still angry about the Fed's low-interest rate (read: low yields) put in place during the 2008 crisis and lasting until today. This minority is an influential one, especially when it comes to political campaigns, because of its ability to drum up large sums of money. For example, the hedge-fund manager Robert Mercer, who favors the gold standard, donated millions to four super PACs affiliated with Cruz's campaign.
Pegging money to gold ounces offers no such protection, and in fact could be quite dangerous. While the commodity has long been considered valuable, it isn't immune to declines. The price has fluctuated significantly over the years, and hit a five-year low in July. As Matthew O'Brien noted in a 2012 article in The Atlantic, the ability to print money under a gold standard relies on how much gold can be found at any given time. That could create an economic disaster that has little to do with actual economic trends. With an economy that's just starting to show some signs of life after the recession, that's a problem the country certainly doesn't need.
During Fox Business' November 10 Republican presidential debate, moderator Sandra Smith asked GOP hopeful former Gov. Mike Huckabee (R-AR) if he disagreed enough with Federal Reserve chairwoman Janet Yellen to "change leadership at the Fed," an action that is explicitly illegal.
Huckabee, a former Fox News employee and two-time presidential candidate, opened his response with an arguably sexist joke before asserting that he would "absolutely" support Smith's proposed change of leadership, joining other GOP aspirants -- Sen. Rick Santorum (R-PA) and Gov. Chris Christie (R-NJ) -- in attacking the nation's central bank. Huckabee confusingly blamed the Federal Reserve for wage stagnation that has been observed across four decades of fluctuating interest rate policy, and suggested that the United States return to policies like the outdated gold standard, which Washington Post Wonkblog economic reporter Matthew O'Brien once called "the world's worst economic idea."
Janet Yellen, a decorated economist appointed by President Obama in 2014, serves as the head of an independent government agency in a four-year term ending February 3, 2018. A future president may choose not to re-appoint Yellen as chairwoman, but a member of the Fed's Board of Governors cannot be removed from their post because of policy disagreements:
Once appointed, Governors may not be removed from office for their policy views. The lengthy terms and staggered appointments are intended to contribute to the insulation of the Board--and the Federal Reserve System as a whole--from day-to-day political pressures to which it might otherwise be subject.
Does Fox Business not understand that it is illegal to remove Federal Reserve officials simply because a particular politician or president disagrees with them?
In 2013, Fox Business host Stuart Varney claimed that Yellen was a "shoo-in" to be the next Fed chair because she is a woman, ignoring her qualifications and broad support for her from other economists. Now, Fox Business moderator Sandra Smith is asking whether or not the next president will fire one of the most influential people in the world, despite the fact that doing so would be illegal.
Watch the full exchange between Smith and Huckabee below:
SANDRA SMITH (MODERATOR): Governor Huckabee, both Senator Santorum and Governor Christie were both critical of the Federal Reserve. Also, many have questioned whether Janet Yellen is the right person to be running the Fed. If elected president, would you keep Janet Yellen?
MIKE HUCKABEE: Look, I think the Fed's in a big trouble [sic] because they haven't addressed the number one issue that's hurting Americans, and that's the fact that wages for the bottom 90 percent of the economy have been stagnant for 40 years. In the 25 years after World War II, up to 1971, wages grew by 85 percent in this country. People were moving up in the middle class. There was a middle class. That's not happening anymore. And, in large measure, the Fed has manipulated the dollar so it doesn't have a standard.
SMITH: So, would you change leadership at the Fed?
HUCKABEE: Absolutely. Absolutely, because what we need to do is to make sure that they tie the monetary standard to something that makes sense, rather than to their own whims.
From the November 11 edition of CNN's New Day:
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From the November 10 edition of Fox Business' Republican Presidential Candidates Debate:
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Fox Business opened the early round of the fourth Republican presidential debate by highlighting a long-debunked myth about the supposedly staggering levels of unemployment in the United States.
During Fox Business' November 10 Republican presidential debate, moderator Trish Regan misleadingly claimed that "[m]ore than 90 million Americans are unemployed or they are not in the workforce altogether" as part of a question directed at presidential hopeful Gov. Chris Christie (R-NJ).
Media Matters has repeatedly debunked the claim that almost 90 million Americans are either "unemployed" or not engaged in the labor force, pointing out that the majority of those 90 million individuals are teenage children and retirees. In 2013, PolitiFact rated the exaggerated unemployment figure as "mostly false" and FactCheck.org chided former Gov. Rick Perry (R-TX) for citing the "grossly misleading statistics" after it gained traction in the media:
For instance, the 92.6 million figure includes 36 million Americans of retirement age -- 65 and older -- 17 million of whom were 75 and older. It also includes 11 million teenagers -- age 16 to 19 -- many of whom aren't looking for jobs. It includes 6.8 million 20- to 24-year-olds, some of whom are in college. Those not in the labor force would also include millions of stay-at-home parents, early retirees and anyone else who didn't need or want to work.
Despite its lack of credibility, the claim that 90 million Americans aren't working has become a favorite talking point of right-wing radio host Rush Limbaugh. In August, current Republican presidential frontrunner Donald Trump claimed that 93 million Americans were "out of work," only to be mockingly corrected by The Wall Street Journal's "Real Time Economics" blog and given a "false" rating by PolitiFact. Even James Pethokoukis of the right-wing American Enterprise Institute criticized the bloated unemployment claim, which he called "non-factual."
See the full exchange between Regan and Christie below:
TRISH REGAN (MODERATOR): Governor, economically, our country is struggling with some of the most anemic growth we've seen on record. More than 90 million Americans are unemployed or they are not in the workforce altogether. The number of people now willing, able, and wanting to go to work is at a level that has fallen to a level that we have not seen since the 1970s. For those that are working, wages aren't budging while other things -- costs -- like housing, remain high.
From the November 10 edition of Fox News' Outnumbered:
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From the November 10 edition of CNN's New Day:
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On the November 10 edition of ABC's Good Morning America, host George Stephanopoulos allowed GOP presidential candidate Donald Trump to greatly exaggerate the nation's unemployment rate when he falsely claimed that "unemployment is probably close to 20 percent." Trump has a history of trumpeting debunked right-wing media myths as campaign talking points. He previously claimed that the unemployment rate "might very well be" 40 percent or more, echoing Rush Limbaugh. According to the Bureau of Labor Statistics, October's unemployment rate stood at just five percent, the lowest rate since April 2008.
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Fox Business host John Stossel invited economist Ben Powell to debunk the widely held right-wing media myth that immigration takes jobs away from American workers. Powell explained that immigration actually creates jobs and better opportunities for Americans.
For years, conservative media have claimed that immigrants hurt the economy by stealing jobs from American workers. Powell explained that immigration actually helps the economy and "frees up American labor to do the things we're better suited to do, and that creates jobs."
From the November 9 edition of Fox Business' Stossel:
JOHN STOSSEL: The people who say they take jobs. It's logical. They do take some jobs. So what's your answer to that?
BEN POWELL: That on net they don't take jobs. Immigrants both take jobs and create jobs.
STOSSEL: The seen versus the unseen. Explain that.
POWELL: You can take this camera that I'm looking at right now and you can stick on somebody who used to do, say, landscaping, and you can say, "I used to do this job and look, there's an immigrant doing that job right now." That's the displace -- but also, it frees up American labor to do the things we're better suited to do, and that creates jobs. But those jobs are statistical because jobs are created because of technological changes, changes in resource costs, all sorts of things. So it's hard to stick a camera on the person who got the job, but it's certainly real. Just think about what's happened to the size of the labor force since the end of World War II. We've had massive entry of women, baby boomers, and after 1965, immigrants into the work force. We've roughly tripled the size of the civilian labor force, but we've seen no long-term increase in unemployment. As we've almost tripled the number of workers, we've almost tripled the number of jobs. We have a limitless desire for goods and services. As we get more workers, we put them to work doing those things.
Even the low-skilled ones [immigrants] who don't create businesses that create jobs perform tasks that their labor is better suited to than the American labor. The case for more immigration into the United States as an economic gain to us is the exact same as for international trade in goods and services. It's not about net number of jobs, it's about changing the mix of jobs so that the native-born citizens do the things we're better suited to do. When the brain surgeon hires an immigrant to mow his lawn, that frees him up to do more brain surgeries, making us more productive.
Right-wing media outlets hyped the misleading research conclusions of the conservative Empire Center for Public Policy, which claimed the $15 minimum wage bill proposed by Gov. Andrew Cuomo (D-NY) would kill half a million jobs in the state and would hurt workers.