The Commodity Futures Trading Commission (CFTC) has been told by Congress to do more with less, taking on the responsibility of regulating the multi-trillion-dollar swaps market while having its funding frozen at an inadequate level, according to the agency.

 

In addition to overseeing the trading of futures, the CFTC must keep tabs of the $300 trillion market for swaps. Market swaps are complicated loan exchanges in which borrowers “swap” different types of loans, such as fixed rate loans and floating rate loans. Each party in the swap is hoping that the loan he has gotten has an advantage (i.e., creating capital losses to avoid taxes).

 

To watch over all this, the agency has to get by with a budget of a little more than $200 million.

 

CFTC Chairman Gary Gensler said that at this level, his agency can employ 710 staffers, which is only slightly larger than its team during the 1990s.

 

Gensler has told lawmakers the CFTC needs another $102 million to properly do its job.

 

A group of consumer and public interest groups wrote to Congress recently urging it to increase funding for the CFTC.

 

“Failing to provide the additional $102 million requested in the President’s budget to enable proper supervision of hundreds of trillions of dollars in derivatives and commodity markets would not save money,” the letter reads. “It would instead protect a broken and dangerous status quo, undermine effective oversight of our financial markets, and leave our economy at risk.”

-Noel Brinkerhoff

 

Will Congress Spare $100 Million to Oversee $300 TRILLION Swaps Market? (by Michael Smallberg, Project on Government Oversight)

RBS Citizens bank is being sued for allegedly taking advantage of customers when they mistakenly low-ball the amounts of their deposits, resulting in the bank keeping the difference.

 

In a federal class action lawsuit, lead plaintiff Todd Bowers Inc., a chiropractic office, cited one example in which the customer inadvertently recorded a deposit totaling $1,448.57, when in fact the amount was $26.50 more ($1,475.07). But instead of crediting the difference to Bowers’ account, the bank put the money into another account not controlled by the plaintiff.

 

“Citizens Bank affirmatively masks or hides the actual amount deposited and retains and diverts customer funds into at least two accounts Citizens Banks [sic] maintains and control,” the complaint states.

 

Bowers’ suit added: “Citizens Bank developed a policy and employs a practice whereby customer funds are being diverted daily for the benefit and use by Citizens Bank without the knowledge, consent or approval of the customer.”

 

The civil case comes just days after the bank agreed to pay $137.5 million to resolve another class-action lawsuit that alleged Citizens and other banks increased the amount they could collect in overdraft fees by processing the most expensive charges first rather than processing them in the order in which they were received..

 

Citizens Bank is part of Citizens Financial Group, which is a unit of the Royal Bank of Scotland, which is in turn owned (84%) by the government of the United Kingdom.

 

Citizens Republic bank received a $300 million bailout from the U.S. government in 2008 and RBS took £45.5 billion ($62.4 billion) in bailout money from British taxpayers.

 

-Noel Brinkerhoff

 

Bank Preys on Customers' Bad Math, Class Says (by Jack Bouboushian, Courthouse News Service)

Todd Bowers v. RBS Citizens Financial Group (U.S. District Court, Northern Illinois) (pdf)

Citizens Bank Is Latest to Settle Suit on Overdraft Fees (by Ann Carrns, New York Times)

$137.5 Million Settlement Announced in Citizens Bank Overdraft Fee Class Action (LexisNexis Litigation Resource Community Staff)

RBS Doubles Annual Loss in 2011, Fourth Since Bailout (BBC News)

For California to execute the more than 700 murderers on death row, the state would have to spend about $700 million to do so, according to the Bay Area News Group.

 

The review of capital punishment cases revealed just how costly, and time consuming, state executions have become.

 

Since reinstating the death penalty in 1978, the state has executed only 13 prisoners, due to lengthy appeals in state and federal courts that can drag on for years if not decades.

 

The cost of these appeals totaled almost $1 million for Stanley “Tookie” Williams, co-founder of the Crips street gang, who was executed in December 2005. That amount could have covered tuition for about 76 University of California students for a year.

 

Appeals costs for Clarence Ray Allen, the last man to be put to death in California, was $761,635.

 

Since Allen’s execution in January 2006, California has not executed any prisoners due to legal challenges to the use of lethal injection.

 

Opponents of capital punishment will likely use these findings to bolster their argument for voters to adopt an initiative (the so-called SAFE California Act) slated for the November ballot that would repeal the death penalty.

 

Critics point out that in some cases, it’s less expensive to sentence a convict to life without parole than it is to execute them. The Bay Area News Group investigation found the average cost of life-without-parole appeals is about $17,000, while the clemency appeal costs alone for Williams and Allen were $30,000 and $53,000, respectively.

 

Last year, another study by U.S. 9th Circuit Judge Arthur L. Alarcon and Loyola Law School professor Paula M. Mitchell concluded that California had spent more than $4 billion on capital punishment since 1978, which averaged out to about $308 million for each of the 13 executions performed. The costs of capital trials and of keeping someone on death row add $184 million to California's budget, and that price is just going to grow with time.

-Noel Brinkerhoff

 

The Cost of California's Death Penalty (by Howard Mintz, San Jose Mercury News)

Death Penalty Costs California $184 Million a Year, Study Says (by Carol Williams, Los Angeles Times)

To understand how the wealthy 1% more than doubled its share of the nation’s wealth in the past 30 years and holds onto it, just keep an eye on Wall Street and the corporate CEOs. Today, American CEO pay is about 231 times greater than average worker pay, which is 11 times more unequal that it was in 1965, when the CEO-to-worker compensation ratio was only about 20-to-1.

 

This trend has worsened in recent decades as CEO compensation exploded while worker pay stagnated: from 1978 to 2011, CEO pay grew more than 725%, and worker pay increased only 5.7%, according to a report released last week by Lawrence Mishel and Natalie Sabadish of the Economic Policy Institute (EPI).  

 

The Report, “CEO pay and the top 1%,” points out that from 1979 to 2005 executives and workers in finance accounted for 58% of the expansion of income for the top 1%, and for 67% of the increase in income for the top 0.1 percent. “CEOs have fared far better than the typical worker, the stock market and the U.S. economy as a whole since the late-1970s,” Mishel said. “Compensation growth for executives and for top-tier financial-sector workers has fueled the enormous growth of incomes at the top.”

 

How the 1% did it is explained in a second EPI Report, released just days earlier, on the yawning gap between productivity (the dollar value of goods or services produced in an hour) and median compensation growth. Growth in productivity provides the basis for better living standards, but only if workers are able to get employers to raise their wages, as they did from World War II to about 1973, when wages and productivity rose together. Since 1973, however, that pattern has been broken. Hourly productivity has gone up by 80.4%, meaning that if an average worker in 1973 produced $100 worth of widgets per hour, in 2011 he or she is producing $184 worth; but median hourly compensation increased only 10.7%, so if that 1973 worker was making $10 per hour, he or she is earning only $11.70 per hour now.

 

Where have the benefits of all that increased productivity gone? Mainly to CEOs and to Wall Street, as union membership declined, labor law became more pro-employer, and the tax code was re-written to give special low rates to investors. As AllGov has reported, the tax code is now such that in 2010 25 major companies paid less in taxes than they did to their CEOs.

 

According to Forbes, the CEO who currently leads the pack is John Hammergren of health care products and supplies giant McKesson, whose total compensation for 2011 was $131 million.

-Matt Bewig

 

CEO Pay and the Top 1%: How Executive Compensation and Financial-Sector Pay have Fueled Income Inequality (by Lawrence Mishel and Natalie Sabadish, Economic Policy Institute)

CEOs Made 231 Times more than Workers Did in 2011 (Economic Policy Institute)

25 Major Companies Paid More to CEOs than They Did in Taxes (by Noel Brinkerhoff and David Wallechinsky, AllGov)

Faced with runaway costs from housing too many prisoners, politicians in Georgia have decided to change the way the state deals with low-level offenders so that correctional facilities primarily house violent criminals.

 

Under landmark legislation approved by lawmakers and Republican Governor Nathan Deal, the state is expected to save about $50 million a year by reserving prison beds for murderers and other dangerous convicts.

 

“As we reserve more of our expensive [prison] bed space for truly dangerous criminals [we] free up revenue to deal with those who are not necessarily dangerous but are in many ways in trouble because of various addictions,” Deal told the Atlanta Constitution-Journal. “Our system is feeding on itself with our recidivism rate being as high as it is. We have the opportunity now to make a difference in the lives of future generations of Georgians.”

 

The plan calls for some increases in state spending, such as allocating $10 million for “accountability courts” that require drug offenders to get jobs, seek treatment and stay sober.

 

Georgia is not the only state taking measures to deal with the high cost of incarceration. On Wednesday the legislature of Missouri voted overwhelmingly to enact new rules intended to keep nonviolent offenders out of prison. A recent study revealed that 71% of the state’s prison admissions were caused by probation and parole violations and that about 43% were being sent back to prison for technical violations, such as missing a meeting with a probation officer. The new law will reward ex-prisoners on probation for good behavior by shortening the length of their supervision of they comply with the conditions of their probation.

-Noel Brinkerhoff, David Wallechinsky

 

Governor To Sign Sweeping Justice Reform Bill (by Aaron Gould Sheinin and Bill Rankin, Atlanta Journal-Constitution)

Missouri Legislature Passes Sentencing, Parole Guidelines (by Virginia Young, St. Louis Post-Dispatch)

The Obama administration has crafted a master plan for biotechnology that emphasizes economic opportunities while ignoring sufficient regulation of the industry.

 

The National Bioeconomy Blueprint, released by the White House, is part of the Obama administration’s shift from dependence on fossil fuels to a “green” economy. However, critics say that the blueprint focuses almost solely on economic concerns, and does not properly address social issues, the environment or risk assessment.

 

Eric Hoffman, with Friends of the Earth, said his environmental organization was “disappointed” with the report. “This report largely seems to be an endorsement for the biotechnology industry to rush ahead without any real oversight,” he told Inter Press Service.

 

Biotech companies, such as oil companies and seed producers, and among those that stand to gain the most from the blueprint’s policies.

 

Only one of the five main strategies offered in the document mentions the environment, and even then, the Obama administration wants to make sure the regulatory process doesn’t impede biotech products from reaching the market.

-Noel Brinkerhoff

 

In New U.S. "Bioeconomy", Industry Trumps Environment (by Carey Biron, Inter Press Service)

National Bioeconomy Blueprint (White House) (pdf)

Things were looking up for seniors until the last decade. During the 1980s and 1990s, poverty declined among older Americans. But this trend began to reverse, especially after 2005, with poverty levels increasing for both seniors and younger citizens.

 

In recent years, poverty rates have particularly worsened as seniors reach their eighties. A study by the Employee Benefit Research Institute found poverty rates rising for all sub-groups over the age of 64. The rate is lower for those 65-74, probably because they begin to collect Social Security benefits, but the poverty rate climbs sharply for those aged 85 and older.

 

The situation was also worse for older minorities and women. The poverty rate for women was double that of men, and blacks and Latinos struggled more than white seniors.

 

The author of the study, Sudipto Banerjee, attributes the rise in poverty to a variety of factors: “As people age, personal savings and pension account balances deplete. The total Social Security benefit received by a family is reduced with the death of a spouse. These factors potentially lead to rising poverty at older ages. Also, as people age, their medical expenditure increases steadily.”

-David Wallechinsky, Noel Brinkerhoff

 

After a year of analysis, the Government Accountability Office (GAO) concluded that the Department of Defense is still nowhere near developing a reliable defense against ballistic missiles.

 

About $80 billion was spent over the past 10 years building and testing various platforms for shooting down missiles. But the program continues to be plagued by all kind of problems, including repeated failures of interceptors, stated the GAO report.

 

Nonetheless, the Obama administration plans to sink more money into missile defense, approximately $44 billion over the next four years.

 

President Barack Obama remains committed to his goal of deploying interceptors in Europe by 2015.

 

According to the GAO, the Pentagon can’t even collect all of the necessary data to sufficiently assess the success of a missile test. Part of the problem stems from the difficulty of gathering information when interceptors must accurately strike an incoming warhead moving at speeds of up to 22,000 miles an hour

 

To date, the defense officials have collected only 15% “of the more than 2000 data points needed to create accurate models,” in the words of R. Jeffrey Smith of iWatch News, “and they don’t anticipate collecting the remainder for another five to ten years.”

-Noel Brinkerhoff

 

Missile Defenses Hobbled By Uncertainties (by R. Jeffrey Smith, iWatch News)

Opportunity Exists to Strengthen Acquisitions by Reducing Concurrency (Government Accountability Office) (pdf)

Inability to land properly was enough for the U.S. Navy to ground its most important unmanned helicopters. But the “mishaps” weren’t enough to stop Navy commanders from ordering a new-and-improved version of the aircraft.

 

About two weeks ago, the Navy had to stop using its MQ-8B Fire Scout helicopters after one crashed in Afghanistan and another failed to land on the USS Simpson missile frigate. The remaining 14 Fire Scouts were grounded. These troubles followed a Department of Defense audit produced last year that found the Fire Scouts failed to complete 46% of its missions aboard the USS Halyburton. The Navy argues that this figure is misleading because it potentially includes as an “incomplete mission” video dropout of ten minutes during a five-hour mission.

 

The Navy, however, refused to give up on the drone helicopter, and awarded a $262 million contract to Northrop Grumman to produce eight upgraded Fire Scouts using the Bell 407 airframe, apparently for use in Africa.

 

Fire Scouts have been used to locate Latin American drug smugglers, Indian Ocean pirates and Afghan insurgents, and they were used during the Libya civil war last year.

-Noel Brinkerhoff

 

Navy Grounds Drone Copters, Then Spends Quarter-Billion to Buy More (by Spencer Ackerman, Wired)