Tag: Republican Party

A Synopsis of ‘Conservatives for Single Payer’

Single-payer healthcare is back on the radar after the collapse of Trump’s attempt to “repeal and replace” the ACA. Senator Bernie Sanders announced that he would be introducing a “Medicare for All” bill soon. While pollsters have known for years that a majority of Americans support single-payer, universal heath care, including many Republicans, the conservative case for it hasn’t received much attention.

Conservative pundit David Frum writes:
“Whatever else the 2016 election has done, it has emancipated Republicans from one of their own worst self-inflicted blind spots. Health care may not be a human right, but the lack of universal health coverage in a wealthy democracy is a severe, unjustifiable, and unnecessary human wrong. As Americans lift this worry from their fellow citizens, they’ll discover that they have addressed some other important problems too.”  (http://pnhp.org/blog/2017/03/28/can-more-republicans-support-single-payer/)

The problems Frum lists range from hindered entrepreneurship, the struggles of the white working class, and a lack of racial equity. While not all of these problems weigh equally on the minds of conservatives, the understanding that universal health care coverage will make other goals easier to achieve.

Avik Roy of National Review argues that Republicans must “come to agree that it’s a legitimate goal of public policy to ensure that all Americans have access to quality health care” and that it is a mistake to “cede this moral ground to the Left”. He continues: “To credibly advance this approach, conservatives must make one change to their stance: They have to agree that universal coverage is a morally worthy goal…Ensuring that every American has access to quality health coverage is a legitimate goal of public policy, and it can be done in a way that expands freedom and reduces the burden on American taxpayers.” (http://www.nationalreview.com/corner/368772/conservative-case-universal-coverage-avik-roy)

Many past arguments against universal healthcare have revolved around a dislike of larger government, and the burden on taxpayers Roy mentions. In his article in IVM, Craig Burlin argues that neither of these have to be a reality in order to accomplish something along the lines of “Medicare for All”. He points out that:

“Unless someone is very poor or disabled and likely receiving disability or Medicaid benefits already, the tax base can be broad. This could be via a transaction tax, meaning everyone would pay including the underground economy and those who are at an age where they might forego coverage. The insurance pool would therefore be 100%, an actuarial benefit.” (https://ivn.us/2016/03/04/conservative-solutions-to-universal-health-care/)

He also references Australia’s system in which nearly half of the population retains private health insurance despite being entitled to free treatment, saying “Those of greater means can always afford things others cannot”.  Burlin also argues the moral stance, similar to Frum and Roy saying that “There is a compelling argument to be made that basing medical care entirely on the profit motive is likely going to produce the kinds of winners and losers that are hard to justify on an ethical basis.”

While such arguments from the right are unlikely to convert Republican Congress members any time soon, there’s evidence to suggest that movement is possible.

 

Gutting the Consumer Financial Protection Bureau

You know things have gotten bad for the banking industry when even the bankers themselves are beating up on their own. After the Consumer Financial Protection Bureau (CFPB) announced back in early September that it was fining Wells Fargo nearly $200 million—the largest fine ever levied by the Bureau—for the “widespread illegal practice” of opening dummy accounts, filling them with depositors’ funds without their knowledge or authorization, and then cashing in on the accounts by assessing consumers’ fees and other charges, you could almost hear the bankers of the world collectively throwing up their hands. “Not that Senator Elizabeth Warren needed more ammunition to protect the CFPB,” grumbled Jaret Seiberg of the Cowen Group, a leading financial services company, “but she has it now.” Camden Fine, president of the Independent Community Bankers of America (ICBA), put it even more bluntly. “Wells’ greed has made it much more difficult for ICBA to get much needed regulatory relief,” Fine groused.

An invention of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB was created to rein in the bottom-feeders of the financial community. But the revelation that the largest bank in the world by market capitalization had just been caught with its hand in the cookie jar was not what really bothered Fine and Seiberg. Rather, it was the extraordinarily poor timing of the news that rankled them most of all. On the very same day the CFPB issued its consent order against Wells Fargo, the House Financial Services Committee announced that it would begin hearings on a new piece of legislation, the Financial Choice Act, introduced by Republican Committee Chairman Jeb Hensarling of Texas. Hensarling, one of Wall Street’s most contentedly kept men on Capitol Hill (to the tune of $1.2 million in campaign contributions during the 2016 election cycle alone), drafted the Financial Choice Act in effect to gut or destroy the regulatory provisions put in place by Dodd-Frank, and especially Elizabeth Warren’s brainchild, the CFPB (no wonder, then, that Warren has called the bill “Congressman Hensarling’s wet-kiss to the Wall Street banks”). So when Wells Fargo CEO John Stumpf found himself hauled before the public to confess sheepishly that “we make mistakes,” just as Hensarling was beginning the campaign to bring the Financial Choice Act to a floor vote, the ICBA’s Fine grimly rued the inopportune coincidence: “Much-needed CFPB reform is basically DOA,” he acknowledged by way of a postmortem. A little more than a month later, Stumpf himself was DOA—victim of an unceremonious early retirement package that included a “claw back” of nearly $41 million in previously awarded stock bonuses.

If that turns out to be the fate of the Financial Choice Act as well—which, among other things, would replace the CFPB’s existing “consumer watchdog” executive structure with a bipartisan commission subject to the unpredictable currents of congressional appropriations, while repealing its ability to ban financial products deemed to be abusive—it will not have been the first attempt to curtail the Bureau’s regulatory effectiveness. Nor is it likely to be the last. Ever since the 2010 passage of Dodd-Frank, the CFPB has been a perennial target for the banks and financing companies that fall under its umbrella. And with the ready assistance of hired guns like Hensarling, a proliferating array of industries that manufacture increasingly novel (and frequently quite predatory) financial products, which often remain just outside of that umbrella, have been fighting toothand-nail to keep the CFPB out of its turf.

Take, for instance, the world of for-profit educational companies. A state-subsidized boondoggle of alarming proportions, the degree-mill industry has raked in as much as $32 billion annually in taxpayer dollars in recent years, even as the Department of Education reports that 72 percent of for-profit colleges produce graduates who earn less on average than the typical high school dropout in the overall population. For that dubious honor, another study concluded, the typical University of Phoenix or DeVry graduate leaves school “ripped off, unemployed, and deep in debt,” and six times more likely to default on her student loan than a graduate of a non-profit or public college.

This kind of track record of consumer abuse is exactly what the CFPB was created to address, so it was a salutary development when the Bureau secured a $530 million judgment against Corinthian Colleges, one of the industry’s worst offenders, in the fall of 2015, while forcing Corinthian out of business in the process. A similar outcome resulted when the CFPB went after the ITT Technical Institute, which announced it was closing its doors in September 2016. But when the CFPB attempted to push its regulatory authority still further into the workings of the for-profit education industry, the industry pushed back. Noting that forprofit institutions become eligible to participate in massively lucrative federal financial aid programs by being accredited by a recognized agency, the Bureau issued a civil investigative demand— effectively a comprehensive subpoena preliminary to a full investigation—to the century-old Accrediting Council for Independent Colleges and Schools (ACICS), requesting information on how the process had worked for low-performers like Corinthian.

The ACICS responded by refusing to turn over the requested information, while appealing the CFPB’s demand on the legal grounds that the Bureau was “delving into accreditation oversight, not consumer financing, and is overstepping its bounds into an area that is exclusively under the control of the Department of Education.” Meanwhile, the for-profit educational industry’s political allies swung into action as well. Two powerful Congressional Republicans—Tennessee’s Lamar Alexander, chair of the Senate’s Committee on Health, Education, Labor & Pensions; and Minnesota’s John Kline, chair of the House Committee on Education and the Workforce—sent a scathing letter to CFPB Director Richard Cordray, attacking the Bureau’s “unprecedented overreach” and insisting that it “immediately rescind” the information request.

Alexander and Kline explained their opposition to the CFPB’s move by arguing that “determining the role of accreditors for federal purposes is a congressional responsibility, not yours.” But their unacknowledged connections to the worst offenders in the for-profit college industry surely mattered. Eight of the leading for-profit education corporations, including Corinthian and ITT Tech, have been the subject of state- or federal-level investigations in recent years; Lamar Alexander has received substantial campaign contributions from all eight of them. During the last complete campaign cycle, in 2014, John Kline was among the top three congressional recipients of campaign dollars from five of the eight colleges (or from their ownership groups, if privately held). From three of them, Kline received more campaign contributions than any other individual member of Congress.

The political pressure had its intended effect. In April 2016, a conservative federal judge appointed by George W. Bush denied the CFPB’s civil investigative demand, throwing a significant obstacle in the way of the Bureau’s attempts to extend its watchdog duties into the accreditation process.

The for-profit education racket is not the only place where predatory financial companies and their lackeys on the Hill have been working to impede the Bureau’s more expansive ambitions. In recent months, the CFPB has also been trying to shine a light into the shadowy world of structured settlement purchasing—and with remarkably similar results.

Structured settlement purchasing is one of those ubiquitous industries you have probably never heard of. Recognizable for their familiar “get cash now!” television and radio ads, structured settlement purchasers are companies that give consumers immediate lump sum cash payments at discounted rates, in exchange for future streams of payments usually associated with a settlement in a lawsuit. For instance, Freddie Gray—the Baltimore man whose death while in police custody led to weeks of unrest and trials for six Baltimore police officers— had been the beneficiary of a lead-poisoning settlement when he was a child; by the time he was twenty-three, the Washington Post reported, Gray had sold a Maryland-based financial company called Access Funding $146,000 in future payments, in exchange for just $18,300 in lump sum payouts. And Freddie Gray is far from alone—according to the National Structured Settlements Trade Association, between $8 and $10 billion worth of settlement payments are purchased by companies like Access Funding every year, often at deeply discounted prices that leave desperate consumers like Gray with just pennies on the dollar for what their original settlements would have been worth. After the Post story broke, most of Maryland’s judiciary and the state’s attorney general joined Congressman Elijah Cummings in demanding a deeper investigation into “how private companies make profits buying and selling settlements that are meant to ensure victims have reliable incomes, and how we can best protect vulnerable individuals from predatory and abusive practices.”

The largest player in the structured settlement market, by far, is J. G. Wentworth, a Pennsylvania company that does business across the country under a few different brand names. In September 2015, the CFPB issued a civil investigative demand to J. G. Wentworth, which the company refused to comply with on the dubious grounds that, because the company does not lend money to consumers (i.e., provide them with credit) but rather purchases outright their future payment streams, structured settlement payouts are “not a consumer financial product” and, therefore, outside of the CFPB’s purview. The CFPB rejected J. G. Wentworth’s petition to set aside the information request, but the company still refused to comply, throwing the decision to the courts once again and hoping for a favorable ruling like the one that spared the ACICS.

At this writing, the outcome of the CFPB’s efforts to extend its regulatory oversight into the market for structured settlement purchasing also remains up in the air. And that is exactly why so much of the financial community was so frustrated with the poor timing of the Wells Fargo fiasco. By cutting the CFPB off at the knees, the Financial Choice Act is the banking lobby’s most significant effort yet to roll back the regulatory reforms that emerged from the financial crisis of 2008—a crisis that began, remember, because of the lawless and predatory behavior of an industry selling a particularly ubiquitous consumer product. No wonder, then, that JLL Partners, the private equity firm that has owned a majority stake in J. G. Wentworth since 2006, has given more money to Jeb Hensarling than any other member of Congress in each of the last two election cycles.

Assuming Wells Fargo and their ilk can avoid tripping over their own feet, Hensarling, Alexander, Kline, and the rest of their cronies on the Hill know exactly what they need to do to keep the money flowing.

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