Blogroll
Business Ethics Network
Consumerist
Corpwatch Blog
DavidSirota.com
Dirt Diggers Digest
Eyes on the Ties
Halliburton Watch
MonsantoWatch
Multinational Monitor
NYT's "The Card Game" Blog
Oil Change
Pharma Marketing Blog
POGO Blog
PR Watch
PrivatizationWatch
Real Times Investigations
Sunlight Foundation Blog
TPM Muckraker
Watchdog Blog
White Collar Crime Prof Blog
An investigation in 17 states shows that the companies that package and weigh frozen seafood are doing so in a way that frequently rips off American consumers. The U.S. Food and Drug Administration is reviewing the findings of its investigation and may take formal action. The Chicago Tribune reports:
The investigation ... found that a coating of ice applied to frozen seafood to preserve quality during storage and distribution was often wrongly included as part of the labeled weight of seafood. In some instances, the investigation found, ice accounted for up to 40 percent of the product's weight.
... "You're paying up to $23 a pound, according to the products that were tested by these states, and you shouldn't be paying for water," said Don Onwiler, executive director of the group, a nonprofit association of weights and measures officials, federal agencies, manufacturers, retailers and consumers.
Let's hope the FDA takes an appropriate response to this. No American should have to pay an inflated price for frozen seafood, especially in tough economic times like these.
In this recent op-ed, former Labor Sec. Robert Reich noted that by the end of last year, Americans' consumer debt averaged $43,874 per person. Many companies have tried to earn profits by collecting portions of that debt, and -- in the process -- some debt collectors have engaged in illegal or unethical practices.
Earlier this month, a debt-collection company called Credit Bureau Collection Services (CBCS) agreed to pay a civil fine in order to settle a complaint from the Federal Trade Commission that CBCS inaccurately reported credit information and pressured consumers to pay debts that in many cases they did not owe.
For more details on the FTC settlement order, click here.
The Center for Responsible Lending (CRL), a non-partisan group, doesn't mince words. CRL has studied the practices of pay-day loan companies and concludes that they operate in a way that "amounts to nothing more than legal loan sharking." Attempts to rein in the lending practices of pay-day firms have gone nowhere up to now.
Why? Partly because pay-day loan companies have invested heavily in lobbying to fight this kind of oversight. According to TPMMuckraker, a Senate bill designed to strengthen protections for consumers haven't made much headway in the area of pay-day loans:
The new consumer agency to be created by the bill will have the authority to enforce regulations for large pay-day lenders, according to a summary of the bill prepared by the Senate Banking committee.
... But what counts as large? There's the rub.
In order to define a pay-day lender as large, and therefore subject to enforcement, the new agency would have to conduct a rule-making process, according to consumer advocate Ed Mierzwinski of the U.S. Public Interest Research Group, who has examined (Sen. Chris) Dodd's proposal.
That's an arduous process that can take six months or more, and would require the agency to "jump through a number of hoops," Mierzwinski told TPMmuckraker. And even then, he said, the rule can be challenged.
Compare this to the bill that was approved by the House of Representatives late last year. The House bill gave the new financial-consumer agency complete authority to draft and enforce rules against all pay-day loan companies.
There's still time for a better bill to pass, but it's disappointing to see the direction the Senate bill has taken. Meanwhile, pay-day firms are still fighting any provision that would regulate any company in their industry -- large or small.
CREW has closely examined the tactics used by pay-day loan firms. Last April, we released the report Payday Lenders Pay Up, which studied the industry's all-out lobbying and PR campaign to fight off public scrutiny or regulation.
Another plant closing, another distressed pension plan abandoned by the private sector. As the Detroit Free Press recently reported, Toyota is shuttering a former joint-venture plant with GM in Fremont, Calif., leaving behind $131 million in unfunded pension liabilities and 5,800 United Auto Workers in the lurch.
Thankfully for them, the Pension Benefit Guarantee Corporation will step in to make up most of the missing money. But the automakers’ behavior extends a dangerous pattern with potentially frightening implications for U.S. taxpayers.
The Pension Benefit Guarantee Corporation (PBGC) is a little-known federally chartered organization that protects workers’ retirements when their companies fail to fully fund their pension plans.
Congress created the PBGC in response to private sector fraud. Companies — most famously the Studebaker Corporation — hired workers with promises of guaranteed lifetime retirement annuities, only to shut down without having set aside the resources to pay their obligations. Workers have been protected from such blatant corporate abuse since the Employee Retirement Income Security Act passed in 1974. But the law has not done much to change company behavior. In fact, looking at recent history, it seems like corporate abuse has only gotten worse.
As the Government Accountability Office has reported, major companies routinely offer multi-million dollar compensation packages to their executives while massively underfunding their workers’ pension plans. Some of the cases are outrageous.
The GAO report profiles an airline company that missed nearly $1 billion in pension plan contributions, leading to an unfunded pension liability of $7.8 billion. When the company declared bankruptcy in December 2002, some retirees saw their pensions evaporate. GAO investigators spoke to one pilot who saw his pension cut by two-thirds after the PBGC took over his plan.
While workers suffered, management thrived. As their company terminated retirement plans and broke pension obligations, the top three executives took home at least $55.5 million in compensation. Indeed, the CEO had only joined the airline after receiving a $3 million signing bonus and a special $4.5 million supplemental retirement trust “in consideration of retirement benefits foregone” as a result of switching jobs.
Although the GAO report does not use names, a CREW investigation strongly suggests United Airlines is the profiled corporate malefactor.
As if such hypocrisy weren’t bad enough on its own, this irresponsible behavior puts all American taxpayers at risk. Thanks to the multiple billions of dollars in unfunded pension liabilities abandoned by major corporations like Bethlehem Steel, the PBGC now operates at a $22 billion deficit. Although it is not explicitly backed by the full faith and credit of the U.S. government, analysts believe that letting the PBGC default would be politically unfeasible.
If Congress bails the PBGC out, taxpayers will be on the hook. Companies know this, and so can strategically underfund their pensions, relying on the social safety net to avoid accountability for their unethical behavior.
It’s a painful cycle. Until we find a way to break it, we can chalk another one up to the corporate exploitation of public virtue for private gain.
As this Politico article explains, the issues of financial regulation and health care reform have fueled spending on lobbyists to work the halls of Congress. Efforts to strengthen oversight of financial institutions are an example of what's driving this:
[JPMorgan Chase] spent more than $5 million lobbying Congress last year and has already doled out nearly a half-million dollars in campaign donations to curry favor with lawmakers from both parties.
Among the key issues for the Wall Street giant is to kill or substantially revamp President Barack Obama’s proposed bank tax, which could cost the company about $1.5 billion a year ...
JPMorgan is hardly alone in dispatching its lobbyists to limit the damage.
Bank of America has spent nearly $4 million on lobbyists and donated more than $650,000 to lawmakers. But it, too, is facing a more than $1 billion annual payout if the bank tax is approved.
In a global economy, corruption also becomes global. And a lot of that corruption occurs when corporations offer bribes or kickbacks to government officials or other influential people in countries where they're trying to sell their products or services. But according to the magazine Business Ethics, the Obama administration is devoting more resources to fighting this corruption:
“It’s my view that the U.S. government – and not just the Justice Department, but the U.S. government more broadly – is going to focus on international corruption in a more comprehensive and even more rigorous way than it has in the past,” said Mark Mendelsohn, the Justice Department’s lead criminal prosecutor for violations of the Foreign Corrupt Practices Act (FCPA).
... More cases are being built against individuals as well as companies, including senior and mid-level executives and third-party representatives. Total individual prosecutions increased to 44 in 2009 from only 6 in 2006, according to Mendelsohn.
... Investigators are no longer waiting for companies to voluntarily disclose FCPA violations and are instead using far more aggressive law enforcement techniques.
It's heartening to see tougher enforcement of laws against corruption internationally. Let's hope it's the start of a trend.
Data from an annual report by the IRS provides some interesting revelations about America's top 400 income-earners -- many of whom occupy seats in corporate office suites. To make the top 400, a taxpayer had to have an annual income of more than $138.8 million. In this blog post, Robert Borosage of the Campaign for America's Future offers his take:
Yes, there is a class war, Warren Buffett once said, and my class is winning. The IRS study of taxes paid in 2007 makes his point. The top 1% of taxpayers . . . paid taxes at a rate of 16.6%. As Buffett says, their secretaries pay a higher rate.
The Wall Street Journal points out that the share of the nation's income that these top 400 Americans earned is now "three times the slice they got in the 1990s."
A month ago, the Supreme Court's decision in the Citizens United case opened the door for corporations to dramatically increase their influence in elections. Now, according to TPMMuckraker's Zachary Roth, corporate officials are getting a primer on how to do so while staying below the radar screen:
In the wake of last month's Citizens United ruling, a powerhouse Washington lobbying firm is informing its corporate clients on how they can use middlemen like the Chamber of Commerce to pour unlimited amounts of money into political campaigns, while maintaining "sufficient cover" to avoid "public scrutiny" and negative media coverage.
Click here to read the rest of this blog post.
It’s hard to be surprised about anything that is done by Richard Berman, the over-the-top P.R. maven who has attacked the minimum wage, Mothers Against Drunk Driving, and various consumer health campaigns. But Americans who care about transparency and economic fairness should be concerned about the innocent-looking, national advertising blitz that one of Berman's industry-funded front groups is carrying out.
It's unknown how much corporate money is behind the "Defeat the Debt" ad campaign by Berman's Employment Policies Institute (EPI). But the campaign must have very deep pockets because it recently bought a premium-priced, 30-second TV slot during the Super Bowl. The Saints won that game, but there is nothing saintly about Berman's agenda. In fact, CBS's "60 Minutes" reported that Berman takes pride in being nicknamed "Dr. Evil."
Click here to continue reading this post.
When he was chief executive of Merrill Lynch, John Thain paid out $3.6 billion in bonuses to Merrill employees just before the investment bank was sold to Bank of America. Thain also spent more than $1 million to redecorate his office at Merrill — a redecoration that took place even as the company was sliding deeper into a financial hole.
So who would want to hire a CEO who had made highly disturbing decisions like these? CIT Group, that’s who. This week, Thain took the helm at CIT Group, and his new gig will pay him handsomely.
According to the Washington Post, CIT Group will pay Thain an annual salary and stock package worth $6 million. And that does not include the bonuses for which he will be eligible.
Thain’s new job is an example of the stories and events that explain why the American people view corporate officials as being so out of touch with reality.