The Wall Street Journal has published a fascinating article which exposes how the SEC directs many cases to its own courts, in turn securing an over 90% success rate. The WSJ has investigated hundreds of cases and found that when the SEC sends cases to its own court, with its own judges, it wins 90% of the time, versus only a 69% success rate in federal courts. In appeals, the success rate is 95%, and the SEC court often raises penalties on appeal. A former counsel to two former SEC commissioners said about the SEC commission that, “the commission is akin to the prosecutor and then, in an appeal, the judge in the same case.” Mary Jo White, head of the SEC, has said the SEC’s court is “very fair”, but the SEC is currently employing judges who have actually never ruled in favour of a defendant. According to the article, a former SEC judge said she thought the system was slanted against defendants at times. The SEC has had its own in-house courts since the 1940s.
FINSUM: This is an eye-opening article about the inherent unfairness of the SEC’s courts. This does not seem to represent due process of law.
Source: Wall Street Journal
The main parties of the US government are reportedly finding common ground on some new proposals which seek to move the country towards a tax system more common in other parts of the world. Democrats and Republicans are seeing some agreement that a consumption-based tax system, as opposed to an income-based tax system, might be a viable option for the US. Such a system adds a variety of taxes, such as sales taxes and “value added tax’ to transactions, in effect taxing consumption rather than income. The system is said to help stimulate growth by not taxing savings and investment much at all, an aspect that helps encourage more investment and innovation. However, some view the tax as hurting lower and middle-income workers since it places a tax burden disproportionately on them as it effectively lowers the tax take on higher income individuals. Conservatives worry that some forms of consumption-based tax, such as value added tax, might make it “too easy” to increase tax revenue collection.
FINSUM: This would potentially be a major change to the US tax system, but there are numerous concerns regarding it—not the least of which are taxing the poor too much or making tax collection too easy to increase for the government. However, like seemingly any tax changes in the US, the likelihood of these measures getting through seems tiny.
The New York Times has run a disconcerting and eye-opening article which covers bad behaviour by oil companies and investment firms alike in emerging markets. In particular, the piece focuses on the ultra corrupt government of Angola, and how western firms have been complicit in the corruption and human tragedy occurring there. The country has a major health crisis and the highest rates of child mortality in the world, yet the government, including the presidential family, is able to earn billions by taking bribes and pocketing payments from foreign companies. Recently, groups have urged governments to force companies to disclose the payments they make to countries around the world as a way to help ensure such money reaches state accounts instead of private wallets, and Europe and Canada are now requiring their companies to make such disclosures. Companies like ExxonMobil, Chevron, and ConocoPhillips are active in Angola, while Goldman Sachs and Carlyle allegedly made investments in the country which allowed Angolan officials to secretly make massive sums of money. The US government, for its part, has a very poor track record of backing corrupt and autocratic leaders in the country, and this piece argues Washington could make a real difference if it merely used its influence.
FINSUM: This is a staggering article which shows just how bad things in Angola, and presumably other frontier markets, are. The US, like Canada and Europe, should hold itself to a higher ethical standard than countries like China, who readily pay bribes and are the example for how American corporate lobbyists want to model US behaviour.
With their recent successes in helping to reverse some of the new regulations, Wall Street and its lobbyists are launching a new push to repeal more. The White House is entering the fray as well, standing behind the Dodd-Frank act, a package of regulations which is considered one of the major successes of the Obama administration. The repeal of rules late last year caused a backlash amongst Democrats, who believed that Republican lawmakers were doing favours for big banks. The Republicans, for their part, are hoping they can gather enough cross-party support to push through some changes, but the White House may not support such shifts. Banks are still widely seen as politically toxic, and the only area that may be able to see some change is regulations on small and medium-sized banks. However, some, such as Senator Elizabeth Warren, worry that large banks will exploit rule changes to help themselves.
FINSUM: Wall Street regulations are set to be a big battle ground as the Democrats cannot be seen to be weak on the industry, while Republicans really want changes pushed through. Considering the latter party controls Congress, it seems some further repeals might succeed.
Many have probably already seen this story as it has gone viral on the internet, but in case any have not, the Republican party has just highlighted the extreme dysfunction prevailing in Washington by going around the Obama administration and writing an open letter to the Iranian government warning them not to do a deal with President Obama. 46 Republicans, led by Senator Tom Cotton from Arkansas, wrote a letter to Iran warning them that they perhaps did not understand the US political system and that any deal they signed with President Obama would quickly become void once he left office. As one can imagine, this quickly enraged many liberals and the general reception of the action seems to be negative, with some even calling it treason. There is little precedent for such behaviour, except when Richard Nixon intentionally scuttled a peace deal President Johnson was attempting to seal with South Vietnam in the 1960s.
FINSUM: This is just another in a tit-for-tat battle between right and left, with Republicans likely reacting to the President’s series of executive orders. Whether you are a Republican or a Democrat is beside the point, what should really be highlighted here is the complete failure of the government to compromise and move policy forward.
While to many French politics may seem completely inscrutable, there are major changes brewing inside the Eurozone’s second largest economy which could have major effects. Support of Marine Le Pen, leader of the far-right National Front, is growing strongly in the French presidential polls and she is now ahead of any other candidate with 33% of the vote. Le Pen’s vision for France is radical. She intends to have France leave the Euro, nationalize the banks, and stop all immigration, while she also believes her country is under attack by Islamic extremists. While far-right parties are doing well all over Europe—including Podemos in Spain and UKIP in Britain—France’s extremist party is surging, largely on the back of a prolonged economic malaise that has seen joblessness rise to above 10%. Additionally, Paris’ December terror attacks on Charlie Hebdo and a French store have added fuel to the fire over worries of future violence by Islamic terrorists.
FINSUM: While Europe has generally been a diplomatic and slow-moving place since WWII, there is emerging discord and an extremist bent taking hold all over the continent. It is hard to tell if it might fizzle out, but do not discount the possibility of major changes across Europe in the next half decade.