GOP Senators Obstructing The Consumer Protection Bureau Receive Loads Of Wall Street Donations

43 Republican senators signed a letter last week saying that they would obstruct any nominee to run the Consumer Financial Protection Bureau, regardless of qualifications, unless the CFPB is weakened. Republicans are essentially attempting to nullify a federal law via obstruction; Congress passed and President Obama signed a bill creating a CFPB, but the GOP is ensuring that it can’t function.

By weakening the CFPB, the GOP is doing the bidding of Wall Street’s biggest banks, which would have preferred that a regulator solely focused on consumer protection never come into being. Here are some facts and figures that Public Campaign pulled together on how much cash Wall Street has handed over to the 43 GOP’ers publicly obstructing Obama’s nominee:

– The 43 Senators have received $143 million in industry cash during their time in Washington.

– Sen. John McCain (R-Ariz.), boosted by his 2008 presidential bid, is the top recipient of financial industry cash of those signing the letter, with $36.7 million in donations from the industry. McConnell is second with $7.4 million in donations. Sen. Mike Crapo (R-Idaho), the ranking member of the Senate Banking committee, has received $2.4 million in industry cash. [...]

– The six Senators recently elected, or re-elected, in November who signed the letter — Sen. John Barrasso (R-Wyo.), Ted Cruz (R-Texas), Jeff Flake (R-Ariz.), Orrin Hatch (R-Utah), Dean Heller (R-Nev.), and Roger Wicker (R-Miss.) — received nearly $7 million altogether in industry donations in the 2012 cycle. Hatch tops this list with $2 million raised from the industry for his last election.

Sen. Rob Portman (R-OH), who is one of two Republican senators that did not sign the letter, said last week that Richard Cordray, who was recess-appointed by Obama to be the first CFPB director, simply accede to the GOP’s hostage-taking and call for watering down his own agency.

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WRAPUP 2-Pfizer, Lilly profits beat Street; generics take toll

* Pfizer sees 2013 EPS $2.20-$2.30 excluding items

* Lilly sees 2013 EPS $3.82 to $3.97

* Pfizer, Lilly shares close up 3.2 pct

Jan 29 (Reuters) - Pfizer Inc and Eli Lilly and Co reported better-than-expected fourth-quarter profits as deals, cost cutting and strong sales of new products helped the pharmaceutical companies weather generic competition for once top-selling products.

The U.S. drugmakers also issued 2013 forecasts on Tuesday that encouraged investors, who sent shares of both companies up more than 3 percent.

Excluding special items, Pfizer earned 47 cents per share, topping analysts' average expectations by 3 cents, according to Thomson Reuters I/B/E/S.

But global sales for the largest U.S. drugmaker fell 7 percent to $15.1 billion as sales of Lipitor, formerly the world's top selling prescription medicine at nearly $13 billion a year, plunged 71 percent to $584 million. Sales of the cholesterol fighter began tumbling in November 2011, when its U.S. patent expired and cheaper generics flooded the market.

Pfizer's quarterly net profit quadrupled to $6.32 billion, or 86 cents per share, due to the November sale of its nutritional products business to Swiss food group Nestle SA for about $12 billion. It is also preparing to spin off its animal health business through an initial public offering expected to bring in billions more.

"I don't think the Lipitor expiration is an issue for our investors today," Chief Executive Ian Read said in an interview. "We've done what we needed to do and (investors) are focused on the future," he added, referring to the company's decision to spin off the nutritional and animal health units in order to focus on its more-profitable core pharmaceuticals business.

Pfizer recently won approvals for highly promising new products, including the blood clot preventer Eliquis, which it shares with Bristol-Myers Squibb Co, and Xeljanz for rheumatoid arthritis.

In mid to late-stage trials, it is testing treatments for cholesterol, psoriasis and numerous types of cancer. Read said Pfizer's biggest priority is developing the drug pipeline and getting the products to market.

"Pfizer is doing exactly what you want them to do," said Bill Smead, portfolio manager of Seattle-based Smead Value Fund that owns Pfizer shares. "Pfizer is moving back to their core with a strong balance sheet and a bright future."

Lilly's fourth-quarter net profit fell more than 3 percent as sales of its Zyprexa schizophrenia drug - at one time one of the world's top five sellers - fell 49 percent to $385 million.

Excluding one-time items such as asset impairments and restructuring charges, Lilly earned 85 cents per share, beating analysts' expectations by 7 cents per share.

Lilly's results and its 2013 forecast were dependent upon aggressive companywide cost controls. Strong sales of other drugs and animal health products helped offset the toll of generic Zyprexa in the fourth quarter.

"We are absolutely emerging from the loss of Zyprexa," Lilly Chief Financial Officer Derica Rice said in an interview. "We feel good where we are."

But the company is facing yet another daunting patent cliff at the end of this year when its best-selling product, the antidepressant Cymbalta, begins to face generic competition.

"They're negotiating the Zyprexa patent cliff pretty well by keeping costs down, but the question is whether they can keep tightening the belt to offset the patent expiration on Cymbalta," said Judson Clark, an analyst for Edward Jones. "It's a $6 billion a year drug, and a tough act to follow."

Lilly updated the 2013 earnings forecast it issued earlier this month, to include 7 cents per share from a delayed research and development tax credit. It now expects to earn $3.82 to $3.97 per share, up 13-17 percent from a year earlier.

Pfizer forecast 2013 earnings of $2.20 to $2.30 per share, excluding special items. The average analyst estimate was $2.29 per share, according to Thomson Reuters, and the midpoint of the company's range is less than that.

Pfizer earned $2.19 a share in 2012.

Pfizer earnings were propped up by rebounding sales in emerging markets, which rose 17 percent to $2.65 billion, and strong sales of its Prevnar vaccine for pneumococcal bacteria, which jumped 19 percent to $993 million.

"As they pare away non-pharmaceuticals businesses, that will allow Pfizer's drug pipeline to shine even more because it will represent a bigger portion of the company going forward," Clark said.

Smead likes the U.S. pharmaceutical sector as a whole. "The best business over next 20 years is keeping baby boomers alive and keeping their animals alive," he said.

Pfizer shares closed up 86 cents, or 3.2 percent, at $27.70, while Lilly shares rose $1.68, or 3.2 percent, to close at $54.32 on the New York Stock Exchange.

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Less Than Half Of Wall Street Reform Rules Are Finalized

President Obama yesterday nominated prosecutor Mary Jo White to become the next head of the Securities and Exchange Commission. An important part of her task will be implementing the Dodd-Frank financial reform law, which is slowly grinding through the rule-making process.

According to a new report from the Government Accountability Office, there is still quite a bit of work to do, as 52 percent of the law is not yet in place, and no rulemaking at all has occurred for nearly one-quarter of its provisions:

Overall, GAO identified 236 provisions of the act that require regulators to issue rulemakings across nine key areas. As of December 2012, regulators had issued final rules for about 48 percent of these provisions; however, in some cases the dates by which affected entities had to comply with the rules had yet to be reached. Of the remaining provisions, regulators had proposed rules for about 29 percent, and rulemakings had not occurred for about 23 percent.

Banks have already managed to win delays on key regulations, and successfully convinced international regulators to water down other new rules. Further delay on the part of regulators will just extend the amount of time that taxpayers are on the hook for the financial system’s failures.

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House Republicans Start New Congress By Telling The Same Old Lies About Wall Street Reform

The new chairman of the House Financial Services Committee, Rep. Jeb Hensarling (R-TX), this week released a statement announcing that “the work of our committee and subcommittees has perhaps never been more important to hard-working taxpayers.” However, Hensarling made it clear that he doesn’t have much interest in abandoning the playbook of former Chairman Spencer Bachus (R-AL), as the statement went on to say “during the past few years, we’ve seen a mind-numbing, innovation-choking, job-killing flood of federal red tape…And we’ve observed how Congress enshrined a ‘too big to fail’ bailout scheme into law.”

But there is no “too big to fail bailout scheme” in the Dodd-Frank financial reform law, which was signed by President Obama in 2010. The law lays out a clear process, called resolution authority, for unwinding a troubled financial firm without resorting to the sort of bailouts used in 2008. The law, in fact, explicitly bars the use of the process to bail out a firm. Former Rep. Barney Frank (D-MA) — whose name graces the Wall Street reform law — called the process “death panels” for banks.

But House Republicans love to perpetuate the myth that Dodd-Frank enshrines bailouts. In fact, recent House Republican budgets have called for the repeal of resolution authority, even though that would set the country back right where it was in 2008: with little choice but to bail out failing firms or risk a financial calamity. As economist Mark Thoma explained:

The resolution authority in Dodd-Frank is intended to fix this problem [of bailouts] by putting into place a procedure that is similar to what is done with ordinary banks. Resolution authority allows government regulators to take control of the banks, fix the problems, and then return them to the private sector. But, and this is important to recognize, Dodd-Frank also prevents the type of bank bailout that was done during the financial crisis.

Thus, the authority for the type of bailout that we saw during the crisis no longer exists. If if we now remove resolution authority there will be just one choice if a too big to fail firm gets in trouble — let it fail. That, and the cascading shadow bank failures that would follow, would be a disaster.

Rep. Maxine Waters (D-CA), the ranking member of the House Financial Services Committee, responded to Hensarling’s statement by saying, “our colleagues in the majority made a claim which misrepresents the Wall Street Reform and Consumer Protection Act…Dodd-Frank specifically ends too-big-to-fail by prohibiting the bailout of a failing financial institution. In fact, it mandates the orderly liquidation of such an institution, in which its executives are dismissed and its shareholders are wiped out.”

Outgoing Treasury Secretary Tim Geithner said in an interview that he believes “efforts to water down the Dodd-Frank financial reform law have largely fallen by the wayside.” But that hasn’t stopped House Republicans from employing the same rhetorical pot shots that they were using even before the law passed.

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Oregon Man Begs For Kidney Donor On The Street

Earl Martinez is a 28-year-old Oregonian suffering from Alport Syndrome, a genetic kidney disorder that has forced him to undergo dialysis treatments for the past year and a half. In order to survive, he needs a new kidney, but the hereditary nature of his disease makes it impossible for his family to provide it. So, after waiting on a transplant list for over a year, Martinez has taken a more active role in addressing his medical needs — by begging for a kidney donor on the side of an Oregon road, CBS News reports.

Money is no obstacle for Martinez, who has health insurance. “My insurance would cover all medical costs on my side and the donor’s side,” Martinez told local CBS affiliate KOIN. “The donor would have no medical costs at all.”

But coverage alone isn’t enough for the approximately 113,000 Americans on an organ transplant waiting list — 80 percent of whom need a new kidney. According to a 2009 Rutgers Law Review article, only 30,000 transplants are performed in America every year. That meets less than a third of the annual demand and leads to 20 American deaths every day due to the lack of organ donors, and 4,000 deaths annually from too few kidney transplants.

Studies suggest that America’s dearth of organ donors may have to do with public health policy. The U.S. relies primarily on an “opt-in” system when it comes to organ donation, meaning that potential donors must actively volunteer to donate, as many Americans do at the DMV after receiving a driver’s license. But other nations’ experiences with organ donation policy suggest that an “opt-out” system — which always presumes a person’s consent upon death, unless that person or his family refuses — could be more effective. Austria, an “opt-out” nation, has a staggering donation consent rate of 99.98 percent, for example.

Still, despite its donor shortage, the U.S. ranks third worldwide in overall organ donation rates after death. And even in states like Oregon, where 70 percent of residents over the age of 18 are registered donors, there are only 274 organ transplants performed annually — suggesting that a lack of registered donors isn’t the root of the problem. The answer to this dilemma may actually lie in the source of Americans’ demand for organs.

The vast majority of U.S. residents waiting for a transplant need a kidney, and the most common causes of chronic kidney disease are diabetes and high blood pressure. It follows that America’s diabetes and obesity epidemic is in large part responsible for the nation’s unsustainable demand for kidney transplants. Addressing the soaring rates of obesity in the U.S., and therefore improving the health of the general population, could help reduce America’s demand for organ transplants. And that could give Americans like Martinez — who has no control over his disease — a much-needed leg up on the waiting list.

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Corporate Lobby Threatens A Blizzard Of Litigation Attacking Wall Street Reform And Environmental Protection

Yesterday, U.S. Chamber of Commerce president Tom Donohue delivered his “State of American Business” address, in which he laid out the wealthy corporate lobbying group’s agenda for the coming year. After using several questionable statistics to attack regulations intended to protect the environment or prevent Wall Street from triggering another economic crisis, Donohue’s speech includes a promise to unleash a barrage of well-compensated lawyers to help immunize corporate America from these regulations. “You are going to see us significantly expand the expertise in our law firm, the National Chamber Litigation Center and in other areas of our institution, in order to deal with regulations. Our preference is always to work within the legislative and regulatory processes and we do that on a daily basis. But when rights have been trampled on, or regulators have overstepped their bounds, we’ll take the necessary legal action.”

So long as the Supreme Court’s current majority sits, the Chamber’s threat needs to be taken seriously. One of the Chamber’s top attorneys, Supreme Court litigator Carter Phillips, claimed in 2007 that “[e]xcept for the solicitor general representing the United States, no single entity has more influence on what cases the Supreme Court decides and how it decides them than the National Chamber Litigation Center.” If anything, this understates the corporate lobby’s success before the Roberts Court. According to a 2010 study by the progressive Constitutional Accountability Center, the Chamber’s victory rate before the Supreme Court spiked 15 points once Chief Justice Roberts took the Court’s center seat. In total the Court favors business interests 61 percent of the time.

Indeed, the Roberts Court is so favorable to the corporate lobby’s position that every single justice examined by the study was more likely to favor the Chamber’s position that the one who held that seat 25 years before:

If anything, the Roberts Court has become even more favorable to corporate interests since this study was conducted. In the term that concluded earlier this year, the Chamber went 7-0 before the justices — the first time since 1991 that the Chamber was undefeated in the nation’s highest Court.

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A small sales tax on Wall Street reaps big rewards

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One has to wonder if Paul Schott Stevens’ “Don’t enact financial transaction taxes,” December 20, 2012, is more about protecting the turf of billion dollar Wall Street banks and enormous investment firms, including their lucrative mutual fund businesses, than protecting the average people who invest and save. 
 
In his column, Stevens argues against the enactment of a financial transaction tax (FTT) in the U.S., as follows: “[A]ny benefits … would be dwarfed by the harm it would inflict on America’s savers, particularly its 90 million mutual fund shareholders.” Stevens is president and CEO, Investment Company Institute (ICI), a trade association comprised of more than 7,500 mutual funds, with names like Wells Fargo CoreBuilder and Morgan Stanley Global, as well as other investment entities.

What’s raised Stevens’ ire of late is legislation introduced in Congress in September by Rep. Keith Ellison (D-Minn.), H.R. 6411, “The Inclusive Prosperity Act,” an FTT now with 16 co-sponsors and the backing of the Robin Hood Tax Campaign, a coalition in the U.S. of more than 125 labor, religious, consumer, health advocacy and other groups, with combined memberships in the many millions.
 
Scores of leading economists and businessmen support passage of an FTT, as they, too, see it as a legitimate way to raise revenue. Backers include Bill Gates, Warren Buffett, David Stockman, Nobel Prize-winning economists Joseph Stiglitz and Paul Krugman, to name several.
 
The fact is that for the majority of Americans Ellison’s FTT should cost nothing, hence Stevens’ principal contention that FTTs “will produce a constant drag on shareholder returns… [and] make it all the harder for fund investors to achieve retirement security and other goals” is very misleading.
 
HR 6411 is a tiny tax; it is 50 cents per $100 on stock trades - that’s $50 on a stock trade of $10,000 - and even lesser rates on bonds, derivatives and currency dealings. Here’s what’s critical, and conspicuously absent from Stevens’ column: the facility or broker is levied the tax, not the investor. Thus Stevens’ argument that an FTT constitutes double, triple, even quadruple taxation is way off base. 
 
Here’s the rub for investors: The sales tax is paid by the investor only if the mutual fund passes it along. We would urge the mutual funds Stevens represents not to pass along this small sales tax to the very savers whose interests Stevens says he seeks to guard.

The point here is that mutual fund profits are more than ample to absorb this very tiny tax. Just look at the billions in wealth gathered by top mutual fund managers. According to Forbes, Fidelity Investments’ chairman is worth $11 billion; Charles Schwab’s wealth is approaching $5 billion, some attributable to fund activity; and Charles Johnson, chairman of Franklin Resources, has made $4 billion from his mutual fund business.

As a final protection to investors, per the Ellison law Americans with incomes of up to $50,000, $75,000 for households, would be rebated any FTT paid.   We do not share Stevens’ concern that a tax rebate is an unworkable administrative burden, as credits and rebates are hardly new concepts.
 
Stevens’ worries extend overseas, where the European Commission, he points out, is moving forward on a unified FTT scheme, with the support of 11 member countries. Forty countries now have some FTT in place. As for the U.K. and its decision to stay out of the EC scheme, we would reiterate that a tax on stock trades – the Stamp Tax - is in place in that nation and the London Stock Exchange remains one of the biggest in the world — even with an FTT on stock transactions.
 
A unified scheme in Europe and around the world, at all the major exchanges, avoids capital flight. So when Stevens raises that issue in the context of Sweden a generation ago, he seems behind the times.
 
In France, cautions Stevens, “large players are able to skirt the tax using an array of techniques, leaving small investors to bear the burden.” Unlike many taxes, Ellison’s proposal is difficult to evade because the tax is collected at the point of transaction and title is withheld until marked paid. With automation, trades are easy to track and tax collected.
 
Stevens shares our concern that “high frequency trading” needs regulation, but he believes an FTT  “seems an awfully blunt tool for achieving that goal.”  But the same top economists who support the FTT cite its usefulness in helping curb these destabilizing trading practices.
 
By one estimate, for every gallon of gasoline purchased in the U.S. today, $1 of cost can be attributed to speculative activity in the markets. We think that’s a national shame. An FTT can help to lower levels of speculative trading, according to numerous studies.  
 
To the  millions of Americans who are members of organizations calling for an FTT, some of whom are also mutual fund investors, the Ellison bill’s goal of raising an expected $350 billion annually serves an overwhelming national need. The FTT would expand state and federal investments in communities still very much experiencing harm from the 2008 financial collapse. The Inclusive Prosperity Act identifies job creation, the rebuilding of infrastructure, investment in transportation, education and healthcare, and environmental protection among its goals. It would also direct funds to international research and treatment of HIV/AIDS and to address climate change.
 
FTT supporters believe there is no time to delay, as the enduring harm faced by countless communities drags America deeper into poverty and forestalls a real recovery.   
 
Given the amounts our Treasury expended on Wall Street bailouts, not to mention substantial profits racked up in the finance sector today, an FTT at these small rates and under these well-defined conditions seems eminently fair. Wall Street’s debt to Main Street is past due.

Flynn is managing director, Health GAP, a founding member of the U.S. Robin Hood Tax Campaign.

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McKibben To Wall Street Journal: ‘Fossil-Fuel Companies Have Become Outlaws Against The Laws Of Physics’

Bill McKibben has a letter responding to an error-riddled Wall Street Journal op-ed — though I guess that’s redundant. This one attacks clean energy and the fossil-fuel divestment effort McKibben supports.

McKibben writes:

Robert Bryce’s Dec. 17 op-ed (“Harvard Needs Remedial Energy Math“) attacking campus efforts to have universities divest themselves of holdings in fossil-fuel companies is interesting for what it omits: even the slightest attempt to rebut the mathematical logic that shows fossil-fuel companies have become outlaws against the laws of physics. Here are the numbers: In order to prevent the two-degree Celsius rise in temperature that even the most conservative governments on earth have committed to avoiding, scientists tell us we can burn enough coal and oil and gas to produce 565 gigatons of CO2. Unfortunately, the planet’s fossil-fuel companies, and the countries that operate like fossil-fuel companies (think Venezuela and Kuwait), have five times that much in their reserves. It’s what their share prices are based on; they obviously plan to burn it; indeed, they spend hundreds of millions of dollars daily looking for more. If their business plan is carried out, the planet tanks.

Mr. Bryce is entirely correct that it will be hard to move away from fossil fuels, an enormous engineering challenge. But the Germans are demonstrating it can be done, and the most recent studies shows that we could rely on renewables for our power upwards of 99% of the time as early as 2030 if we got to work. Which we won’t, if the fossil-fuel industry continues to exert its massive financial muscle to block change. That’s why students in 189 campuses have so far risen up to demand divestment—this is the great moral challenge of our time, and maybe, given the stakes, of all time.

Bryce, of course, is one of the most debunked disinformers on the face of the Earth, who famously wrote (in the WSJ of course), “If serious scientists can question Einstein’s theory of relativity, then there must be room for debate about the workings and complexities of the Earth’s atmosphere” (see “Robert Bryce Makes Mockery of Science, Is Mocked in Return“). Hmm, if Bryce can be dead wrong about Einstein, then he’s probably dead wrong about everything else.

Bryce works for the Manhattan Institute, which “has received millions of dollars from donors tied to the fossil fuel industry” and the Kochs to spread pro-fossil-fuel messages.  Media Matters’ post, “Who Is Robert Bryce?” has more detail.  See also

Bryce’s nonsense is not worth debunking in detail — one could waste a lifetime doing that. But given that he claims “Harvard Needs Remedial Energy Math,” it’s worth noting one of his own countless instances of innumeracy, the tired “wind power uses too much land” myth:

Here’s where the math becomes college-freshman obvious: In 2011, the world had 240,000 megawatts of wind-generation capacity. That fleet of turbines produced 437 terawatt-hours of electricity. Therefore, just keeping up with the growth in global electricity demand—while not displacing any of the existing need for coal, oil and natural gas—would require the countries of the world to install about as much wind-generation capacity as now exists, and they’d have to do so every year.

Put another way, just to keep pace with demand growth, the wind industry will need to cover a land area of some 48,000 square miles with wind turbines per year, an area about the size of North Carolina. Even if that much land were available, no humans would want to live on the land because of the irritating noise generated by those turbines.

That paragraph would get any student in remedial energy math an ‘F’. The actual footprint used up by the wind turbines is quite tiny — so most of the land they occupy can be used for other purposes, notably farming.

Let’s go into the National Renewable Energy Laboratory’s wind farm area calculator, plug in 0.25 acres per turbine and 240,000 megawatts (240,000,000 kW), and use 2 MW for wind turbines since “most of the commercial-scale turbines installed today are 2 MW in size. “The estimated land area required is: 30000 acres.” [For more detail, see Land-Use Requirements of Modern Wind Power Plants in the United States.]

As one can quickly find out on Google, “1 square mile is equal to 640 acres.”  So these wind turbine would take out of use about 50 square miles of land. And that doesn’t even count offshore wind.

Most of the best wind is not where many people live, so his non-issue about noise is, well, a non-issue.

Of course, global warming will devastate North Carolina and indeed all coastal areas and much of the cropland in this country and around the world — so using up a little land to save the rest seems like the smart choice.

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