Today, the House Financial Services Committee held a hearing to examine Rep. Carolyn Maloney’s (D-NY) Overdraft Protection Act of 2009, which would amend the Truth in Lending Act to address a spate of problems with overdraft protection programs.

Overdraft fees — which are incurred when a consumer overdraws a checking account — may climb to $38.5 billion this year, up from $10.3 billion just five years ago. According to the Center for Responsible Lending (CRL), at least 50 million Americans overdraw their accounts over the course of a twelve month period, and 27 million of those will incur five or more fees. The standard fee across the banking industry is currently $34.

But you wouldn’t know that there were any problems with overdraft fees if you listened to the representatives of the American Bankers Association, the Consumer Bankers Association and the Independent Community Bankers Association, who were singing the praises of such fees during the hearing. They said that overdraft fees are actually “a courtesy,” “very popular,” and ultimately keep customers “happy.” Watch a compilation:

Actually, 80 percent of consumers say that they would rather have their debit card rejected for a $5 purchase than be charged an overdraft fee, which only falls to 77 percent when the price of the purchase is increased to $40. And the fees tend to hit those who can least afford them, as CRL’s Eric Halperin told the committee:

The FDIC’s recent study of overdraft programs, consistent with CRL’s previous research, found that account holders who overdrew their accounts five or more times per year paid 93 percent of all overdraft fees. It also found that consumers living in lower-income areas bear the brunt of these fees. Seniors, young adults, military families, and the unemployed are also hit hard. Americans aged 55 and over pay $6.2 billion in total overdraft fees annually — $2.5 billion for debit card/ATM transactions alone — and those heavily dependent on Social Security pay $1.4 billion annually.

Confounding this problem is the fact that 75.1 percent of banks with overdraft programs automatically enroll consumers, according to the FDIC. In fact, Maloney’s legislation would mandate that overdraft protection be opt in instead of automatic. As Rep. Barney Frank (D-MA), a co-sponsor of Maloney’s bill, said, “We wouldn’t be in a situation where we’re considering legislation if you would have had an opt-in regime from the beginning…Don’t do people favors without asking them.”

Of course, there is serious merit to the point that consumers should take some personal responsibility and not overdraw their account. But, until fairly recently, banks were willing to discipline poor accounting by simply rejecting a debit card purchase at the point of sale. In fact, in 2004, 80 percent of institutions had a policy of rejecting a purchase if it would overdraw the account. Today, the percentage is exactly the opposite, with 80 percent permitting the purchase and charging an overdraft fee. Banks saw that overdraft fees were a significant profit center, and have now taken such fees to absurd heights.

Our guest bloggers are Lisa Gilbert, U.S. PIRG Democracy Advocate, and Nicole Tichon, U.S. PIRG Tax and Budget Reform Advocate.

The topic on everyone’s lips over the last three months has been health care: how the system will work, who will benefit from it, and how we will pay for it.

Congress is now considering important tax reforms that would not only help pay for health insurance reform, but also close offshore tax haven loopholes, which force American taxpayers to make up for over $100 billion per year in lost revenue.

One of the most vocal opposition groups to this reform has been the coalition called Promote America’s Competitive Edge, or PACE.

The U.S. Public Interest Research Group (U.S. PIRG) conducted an investigation into corporations who work with PACE and support their positions to better understand why it is so important to them to fight these tax reforms and maintain the status quo.

U.S. PIRG found that a group of 12 prominent corporations that have signed onto PACE letters to Congress rank among the top 100 largest publicly traded contractors that also maintain a significant presence in tax haven countries. In 2008, these 12 corporations received over $10 billion in government contracts, and they collectively have 443 subsidiaries in tax haven countries, where they pay minimal, if any, taxes.

So, why is the status quo important to these “dirty dozen”? Read more

This week, Sen. Max Baucus (D-MT) and Rep. Charlie Rangel (D-NY) unveiled the Foreign Account Tax Compliance Act of 2009, which “would require an array of new reporting by foreign financial institutions in an attempt to give the IRS more data to detect fraud and tax evasion.” “This bill offers foreign banks a simple choice — if you wish to access our capital markets, you have to report on U.S. account holders,” said Rangel.

The Baucus/Rangel bill does go a long way toward preventing another UBS situation, in which loads of individuals are able to shelter their money offshore. However, unlike a bill sponsored by Rep. Lloyd Doggett (D-TX) and Sen. Carl Levin (D-MI), the Baucus/Rangel legislation doesn’t go after multinational corporations that set up shell companies on foreign soil in order to avoid U.S. taxes. As Doggett said, it “stops short of targeting all fat cats.”

Dogget and Levin’s legislation, the Stop Tax Haven Abuse Act, “would require more scrutiny of shell corporations’ actual owners and create a ‘blacklist’ of countries in which certain transactions would be more suspect.” “U.S. corporations should not be able to dodge U.S. taxes simply by filing a piece of paper and renting a foreign mailbox,” Doggett said.

And providing evidence that the Baucus/Rangel bill doesn’t strike fear into the tax haven world is the fact that the Cayman Islands’ financial sector is celebrating it:

Cayman Finance, representing the financial industry based in the Cayman Islands, today congratulated Chairman Max Baucus of the Senate Finance Committee and Chairman Rangel of the House Ways and Means Committee on their plan to tackle offshore tax abuse through increased transparency and enhanced reporting requirements. The new comprehensive proposal does away with the damaging features of Senator Levin’s Stop Tax Haven Abuse Act…”Cayman Finance commends Chairman Baucus, Chairman Rangel and their colleagues for their leadership on this important issue,” said Cayman Finance Chairman Anthony Travers. “This proposal is entirely consistent with the approach suggested by Cayman Finance in our many meetings with these and other U.S. policymakers.”

The Cayman News Service described the feeling amongst the Cayman’s financiers as “relief.”

Of course, the Caymans are one of world’s most well-known tax havens. The Government Accountability Office actually found that 18,857 U.S. companies maintained a post office box in one five story building in the Caymans. That building has only one occupant, the law firm Maples and Calder. Morgan Stanley has 158 subsidiaries in the Cayman Islands, while Citigroup has 90, and Bank of America has 58. Exxon, Dell, Goldman Sachs, News Corp., Pepsi, and United-Health have all set up shop there, as well.

Citizens for Tax Justice (CTJ) estimates that the stronger tax haven crackdown in Doggett and Levin’s bill would result in revenues of $9 billion over ten years. The Baucus/Rangel bill, as a whole, raises $8.5 billion over ten years.

Today, the House Financial Services Committee began discussing how to create a resolution authority for dismantling large, complex financial institutions. Emerging as the most contentious aspect of the legislation — which was unveiled by Rep. Barney Frank (D-MA) this week — is how the money for dismantling these firms should be raised.

Frank and the administration have designed a plan under which the government loans money to a failing company to help it unwind, and then recovers that money by hitting up shareholders and then assessing a fee on other large banks. But some in Congress feel that the largest financial institutions should have to pre-pay into an insurance fund, which will then be accessed when a firm goes into a tailspin.

The administration prefers the post-failure assessment because it believes that the mere existence of a fund would create moral hazard, as large firms would take the knowledge of the fund as permission to excessively gamble. During the hearing, Rep. Luis Gutierrez (D-IL) let Treasury Secretary Tim Geithner know that he disagrees:

Let’s create the fund, just like the FDIC, so when we need to resolve [a financial institution], it stands. Your argument is, ‘oh, but Luis, moral hazard’…I don’t see banks racing to the precipice of destruction and bankruptcy because the FDIC exists. Nor do I go to an insurance company and take out a life insurance policy on myself, and the next day decide, wow, maybe I’ll just start smoking. Maybe I’ll start drinking, maybe I’ll start driving my car in a crazy manner. Maybe I really don’t care whether I live or die. I’ve got life insurance, what the hell if I die, everything is taken care of. No, that’s not the way it works.

Watch it:

I agree with Gutierrez that a fund should be built up, over time, to be used in the event that a large financial institution hits the skids. And FDIC Chairman Sheila Bair, who knows a thing or two about insurance funds, agrees as well, telling the committee that “Congress should establish a Financial Company Resolution Fund (FCRF) that is pre-funded by levies on larger financial firms — those with assets of at least $10 billion…We believe that a pre-funded FCRF has significant advantages over an ex post funded system.”

There are two reasons for this. The first is that, as Simon Johnson pointed out, “you should be paying in the good times –- not right after the crisis.” If one investment bank goes under, chances are that some others are in bad shape as well. Asking them to cough up money to facilitate their competitor’s failure could be dangerously pro-cyclical.

The second reason is political. Though it isn’t, the administration’s plan looks needlessly like the much reviled Troubled Asset Relief Program (TARP), because of the upfront loan by the government. And though the plan calls for all of the money to be recovered in 60 months, as Mike Lillis pointed out, “the provision also allows the government to extend that 60-month recovery window indefinitely.” “It could be 60 years,” said Rep. Brad Sherman (D-CA). Having a pre-paid fund would prevent any outlays on the part of the government.

As far the moral hazard argument, I think it is rendered moot so long as the legislation makes it clear that under no circumstances will a failing financial firm be saved. As Frank put it, the resolution authority has to be a “death panel” for banks. If use of the resolution authority always results in a firm ceasing to exist, that should eliminate any notion that the government will facilitate a bailout.

Today, the Select Committee on Energy Independence and Global Warming held a hearing investigating fraudulent letters forged by Bonner & Associates on behalf of the American Coalition for Clean Coal Electricity (ACCCE) to attack the Waxman-Markey American Clean Energy and Security Act (H.R. 2454). As the Wonk Room’s Brad Johnson has reported, ACCCE President and CEO Steve Miller lied under oath when he told the committee that his organization has never opposed clean energy legislation.

Later during the hearing, Rep. Jay Inslee (D-WA) asked Miller about the purpose of ACCCE. Miller replied that in addition to grassroots lobbying (astroturfing) and state-based lobbying, his front group has only began federal lobbying in “April of 2008″ in its “16 year history”:

INSLEE: Your entire goal of your organization is to influence Congress. Is that right?

MILLER: We do work at the state level, we do regulatory matters, we do general education to the public. So, the federal, direct federal lobbying has only been part of our portfolio since April of 2008 with a 16 year history of the organization.

Watch it:

Miller’s claim is another example of the coal industry’s perjury under oath. In a six month period of 2007 alone, ACCCE, under its previous name of Americans for Balanced Energy Choices, spent $2,660,000 lobbying the federal government. Senate disclosures show that the organization has spent millions more lobbying since 2001.

ACCCE was formed in 2008, according to its website, with the combined “assets and missions of the Center for Energy and Economic Development (CEED) and Americans for Balanced Energy Choices (ABEC).” So when Miller noted his 16 year history, he was referring to the lobbying efforts of the coal industry’s previous incarnations, ABEC and CEED.

Last week, the New York Times reported that Paul Volcker, the former Federal Reserve Chairman and current head of the President’s Economic Recovery Advisory Board, is having a hard time within the administration selling his view that banks should be forced to separate their depository functions from their investment banking wings. “People say I’m old-fashioned and banks can no longer be separated from nonbank activity,” Volcker said. “That argument brought us to where we are today.”

One of the manifestations of that argument was the repeal of the Glass-Steagal Act, which from 1933 to 1999 prohibited a bank holding company from owning investment arms. The prohibition was repealed by the Gramm-Leach-Bliley Act, after intense lobbying on the part of two companies that wanted to merge: Travelers (which owned the investment bank Salomon Smith Barney) and Citicorp. These two companies combined to create Citigroup.

Of course, Citigroup received $50 billion in TARP money, and is not likely to pay back anytime soon, which has evidently led to some soul-searching on the part of John Reed, the former Citi CEO whose “strenuous lobbying” helped lead to the Glass-Steagal repeal. Real Times Economics noted that Reed penned a letter to the New York Times saying that things were better the old way:

As another older banker and one who has experienced both the pre- and post-Glass-Steagall world, I would agree with Paul A. Volcker (and also Mervyn King, governor of the Bank of England) that some kind of separation between institutions that deal primarily in the capital markets and those involved in more traditional deposit-taking and working-capital finance makes sense. This, in conjunction with more demanding capital requirements, would go a long way toward building a more robust financial sector.

As Noam Scheiber wrote, “Wow. Maybe the consensus on this really is starting to change.”

Many economists blame the repeal of Glass-Steagal for inciting a casino-like mentality in a previously staid banking industry. “The culture of investment banks was conveyed to commercial banks and everyone got involved in the high-risk gambling mentality. That mentality was core to the problem that we’re facing now,” said Nobel Prize-winning economist Joseph Stiglitz.

Of course, separating investment banking from deposit-taking wouldn’t have solved all of the ills in the financial sector. After all, AIG, Lehman Brothers, and Bear Stearns would not have been any better off. At the end of the day, much stronger capital and leverage requirements and a resolution authority for unwinding any firm, no matter how complicated, will do a lot to ensure that a giant financial institution doesn’t need to be propped up in order to protect the wider economy.

That said, it’s surprising the extent to which the administration has ducked and dodged this question. At least, some discussion of a policy that ensures banks aren’t mixing risky with non-risky activities internally (even if it doesn’t amount to breaking the companies up) should be on the table.

A group led by Alliance Coal CEO Joseph Craft recently proposed donating $7 million to the University of Kentucky for a new dorm for the men’s basketball team. The catch, however, is that the dorm would have to be named after Craft’s true love: coal. The proposed change sparked intense protests from local environmentalists and students. One professor said that as universities become “models for new energy sources,” putting “coal” on a prominent building could “make it difficult to attract top students and faculty members to the university.” Last night, MSNBC host Rachel Maddow and Dave Zirin, sports editor for The Nation, discussed the controversy. Watch it:

This afternoon, the University of Kentucky Board of Trustees voted 16-3 to approve the proposal for the new dorm, which will be named the “Wildcat Coal Lodge.” Significantly, two of the “no” votes were from faculty representative Ernie Yanarella and Student Government President Ryan Smith, who said he opposed the motion “as a voice for the student body.”

Students in the audience were reportedly not allowed to speak at the meeting. After the vote, people began chanting, “Move forward, not backward,” forcing the trustees to temporarily recess. More on the events at the meeting:

The vote set off shouts from about 30 protesters, mostly students, who attended the meeting.

“Big Coal is about to go down, and the university’s going down with them,” said Cor de Jong, who described himself as “a Lexingtonian and a basketball fan.”

A statement from students was passed out to board members moments before the vote. “They did not read our statement,” said Katie Goldey, a senior majoring in international studies. “They weren’t even given a chance to read it.”

Ironically, because the building costs more than $5 million, it is required to “meet the U.S. Green Building Council’s Leadership in Energy and Environmental Design standards.”

The coal industry has been taking a greater “public role” in the University of Kentucky lately. While Craft has already donated millions of dollars and has a basketball practice facility named in his honor, this is the first time that coal is being specifically recognized. Last weekend, however, there was a “students only” basketball practice “sponsored by Joe Craft and the Friends of Coal.”

The battle over America’s clean energy future is increasingly being fought on college campuses. As Greenwire reported recently, environmentalists are turning to student activists to get the word out about dirty coal, while American Coalition for Clean Coal Electricity — the coal industry’s biggest lobbying group — “spent the summer sending activists to 264 cities in eight states, where they attended community events and visited college campuses.” More here and here on efforts to get dirty coal off U.S. campuses.

Yesterday, Senate Majority Leader Harry Reid (D-NV) announced that he would be including a version of the public option (with a state opt-out provision) in the Senate’s final health care bill. Although all of the details of the public plan are yet to be determined, progressives cheered the move. As Sen. Dick Durbin (D-IL) admitted, without all the pressure that progressives in and out of Congress put on legislators, it is unlikely there would have been a public option included in Reid’s final bill.

Yet this afternoon, Sen. Joe Lieberman (I-CT) broke with the Democratic caucus that he is a member of and vowed to join a Republican-led filibuster if the public option is not removed from the bill. In response, insurance company stocks — which plummeted Monday as Reid made his announcement — shot up after Lieberman made his announcement around 1:30 pm:

Lieberman’s opposition to the public option puts him completely out of step with Connecticut voters. As this polling from 538.com’s Nate Silver shows, voters in every single one of Connecticut’s congressional districts favor the inclusion of a public option in health care legislation by wide margins. The stated reason for Lieberman’s opposition to the public option — that it would increase the debt and create another entitlement — is misplaced. As ThinkProgress has noted before, the public option would be self-sustaining and would cut the deficit.

Insurance giant Aetna, represented by the blue line above, fared the best among all of the health insurance companies. Aetna is based in Hartford, CT. It is also the tenth largest single private contributor to Lieberman’s re-election committee.

Rep. Barney Frank (D-MA) is expected to reveal legislation (possibly today) creating a “resolution authority,” which would enable the government to negotiate an orderly unwinding of large, complex financial firms like AIG, Citigroup, or Lehman Brothers.

The banking industry has already begun to criticize the proposal and Republicans have taken to characterizing it as enshrining taxpayer-funded “bailouts.” Last night, Rep. Spencer Bachus (R-AL), the ranking member on the House Financial Services Committee, and CNBC’s Larry Kudlow went so far as to call resolution authority “TARP in perpetuity,” and “permanent bailout authority“:

KUDLOW: It’ll perpetuate TARP, in perpetuity. TARP will be used to somehow string these institutions along. Is that right, is that fair, is that your question? [...]

BACHUS: It’s a permanent bailout authority.

Watch it:

While it makes sense, politically, to invoke the unpopular TARP to oppose anything that the administration is proposing, Kudlow and Bachus are pretty far off the mark. In fact, resolution authority is meant to ensure that the government doesn’t find itself, as it did last year, having to choose between letting a company’s disorderly collapse ripple through the economy or infusing that company with money to prop it up, indefinitely.

And contrary to Kudlow’s positing, the resolution money will not come from TARP. That said, there is a legitimate question of how it will be raised, and Frank and the administration were looking at two options to find the answer.

The first was having the largest banks pay into an insurance fund that would be used in the event of a failure that required resolution. The second, which Frank and Treasury have reportedly settled on, is having Treasury loan the failing institution money, which will then be recouped from the company’s assets and from a fee on other large institutions, after the fact.

Unfortunately, I think Frank and the administration have this backwards. We already have a system in which the Federal Deposit Insurance Corp. assesses fees on banks, which it uses to pay depositors when an institution fails. I don’t see why a similar system wouldn’t work to build a fund for resolution authority.

The big banks are going to cry foul either way, but at least if they had to pay into a fund, it’d be simple to say that the fee was meant to guard taxpayers against any of them failing. Collecting fees post-failure means that one firm will have to pay for the mistakes of another, directly, with some undetermined formula for how much each institution should pay.

Simon Johnson, professor at MIT Sloan School of Management, said that charging banks after the fact was “a non-starter,” while Rep. Brad Sherman (D-CA) said that “the only way he could vote for the bill would be if it had large insurance premiums levied on the biggest banks.” Indeed, framing the fee as insurance, instead of forcing banks that didn’t fail to pay a penalty, seems like the better way to go.

Today, Council of Economic Advisers (CEA) Chair Christina Romer appeared at the Center for American Progress to discuss how health care reform is essential if we want to get the nation’s budget deficits under control. During her speech, Romer explained how rising premiums have contributed to the current three-decade long stagnation in wages for American workers, and said that if premiums are not controlled, wages will actually be pushed into a decline. This not only lowers the standard of living for workers, but also contributes to a loss in revenue (and thus less ability to address deficits), as taxable income disappears.

During an interview with The Wonk Room, Romer said she believes that if premiums come down, workers will actually see an increase in wages, as employers redirect savings:

We do know that what’s been happening to median income, to wages for workers in this country, is we have seen them stagnate…We do know that a bigger and bigger fraction of people’s compensation is taking the form of that health insurance benefit, as health insurance has been getting more and more expensive…Our projections, actually very reasonable projections for what might happen to the growth rate of health insurance costs, does say that take home wages — or that part of compensation net of insurance costs — would start to go down in the not so distant future. So that is a genuine worry. [...]

I do think that competition is a really important part of making sure that workers get their fair share and I think the fact that firms have to compete for workers is the main thing that helps to make sure that, if firms are spending less for health insurance, it does show up in people’s take home wages.

Watch it:

Here’s a chart from the CEA showing how wages will be affected if health care reform doesn’t occur. The top line is total compensation (in 2008 dollars) inclusive of insurance premiums, while the bottom line takes the premiums out. As you can see, even as compensation goes up and up, take home wages actually begin to decline in the next few decades.

But it’s not as if companies are just going to cough up savings in the form of higher wages instantly. In the short-term, it’s more likely that companies will just pocket the difference, particularly given the weakness of today’s labor market, which removes bargaining power from the worker. I’m not as optimistic as Romer that competition will be enough to boost wages in the short-term (though that would likely occur over the much longer-term).

Of course, simply getting back to a 1990′s style strong labor market, in which workers have more leverage, would help in this regard, but so would better collective bargaining abilities for workers — possibly in the form of a higher rate of unionization — which is what helped workers earn their fair share of productivity gains pre-1980.

Rep. Barney Frank (D-MA), after consulting with the Treasury Department, plans to introduce legislation this week that would create a resolution authority for liquidating large, complex financial firms. It’s widely acknowledged (though not universally) that one of the problems facing the government during the economic crisis was that it had no authority to unwind the likes of AIG or Citigroup. Thus, propping them up was the only alternative to the widespread economic pain that would have been caused by their collapse.

As federal Reserve Chairman Ben Bernanke said, taking AIG into some sort of receivership “would have been far preferable” to the recurring AIG bailout. To that end, resolution authority will legalize a systematic process “for the government to seize control of troubled financial institutions, throw out management, wipe out the shareholders and change the terms of existing loans held by the institution.”

According to the New York Times, the bill will also require corporations to set up “the equivalent of living wills” — their own procedure for being disentangled — which the administration says “ought to be made public in advance.” But like so many of the recent regulatory reform efforts, the banking industry is coming out hard against resolution authority, this time without even seeing the bill:

Even before Mr. Frank unveils his latest proposals, industry executives and lawyers say its approach could make it unnecessarily more expensive for them to do business during less turbulent times. “Of course you want to set up a system where an institution dreads the day it happens because management gets whacked, shareholders get whacked and the board gets whacked,” said Edward L. Yingling, president of the American Bankers Association. “But you don’t want to create a system that raises great uncertainty and changes what institutions, risk management executives and lawyers are used to.”

For the record, as Shahien Nasiripour pointed out, Yingling has been spectacularly wrong about, well, everything, when it comes to the effects of regulations. And it’s really not surprising that the banking industry wants to enshrine “too big to fail,” as the alternative is unappealing from a business point of view.

But resolution authority is arguably the most important part of regulatory reform, as it should seriously mitigate the “too big to fail” problem. If there is a mechanism for taking apart a firm, no matter how large, an implicit government guarantee goes by the wayside. Bernanke is even advocating some sort of assessment on financial institutions, to build up a fund that will be used when resolution authority is invoked, moving the taxpayer a step further away from funding an institution’s failure.

Of course, problems could still occur if regulators — for whatever reason — are hesitant to pull the trigger and take a firm into receivership. That’s why even the most robust resolution authority needs to be pared with much stronger capital requirements and leverage limits for the banks, which will disincentivize and discourage excessive size or risk-taking. That way, a bank failure will really constitute a management failure, as it occurred despite all the safeguards.

And as for “unnecessary” expenditures, I’d like to ask Yingling what he thinks of the $700 billion spent to pull the banking system back from the brink. I bet he thinks that was a very necessary expense.

The U.S. Chamber of Commerce has launched a PR offensive after a series of high-profile member defections due to the Chamber’s denial of climate science and its aggressive lobbying against clean energy legislation. Earlier this year, Chamber officials pledged to put climate change science on trial in a “Scopes monkey trial of the 21st century.” Not only has the Chamber spent millions trying to derail the clean energy bill in Congress, but a leaked memo also revealed that the Chamber has been assisting the oil industry in orchestrating astroturf “EnergyCitizen” rallies.

The PR strategy has been focused on lashing back at critics, while assuring the public that the Chamber actually does view climate change as a serious problem that must be addressed somehow. Chamber officials and representatives have been on a media blitz, seeking to rebuke the Scopes monkey trial comment and trying to strike a very different tone on the science of climate change:

Chamber Chief Lobbyist Bruce Josten called the Scopes monkey trial comment “unfortunate, regrettable, stupid.” “We have not, are not and will not” challenge the science behind climate change, added Josten. [Politico, 10/20/09]

Chamber spokesman Eric Wohlschlegel: “We’ve never questioned the science behind global warming.” [NYT, 9/28/09]

David Chavern, Executive Vice President: “We want a climate change bill.” [NPR, 10/22/09]

However, in a 75-minute, profanity-laced interview with Politico today, Chamber president Tom Donohue continued to deny the science underpinning climate change:

Donohue refused to say if he believes the science behind global warming. “Is the science right? Is science not right? I don’t know,” he said.

Of course, Donohue is being consistent. Donohue, who also sits on the board of a company that ships coal, has forced the Chamber into a denier position on climate change for years. He has run ads mocking cap and trade, touted books questioning climate change, and promoted a myth of a global “cooling trend.”

Despite the spin by more disciplined officials, the Chamber continues to spend unprecedented amounts of money lobbying against clean energy legislation. With climate change deniers like Bill Kovacs and Tom Donohue at the helm, it seems unlikely that there will be much of a change in position — even with local Chambers of Commerce joining the slew of businesses repudiating the national organization’s backwards stance on climate.

Sens. Blanche Lincoln (D-AR) and Jon Kyl (R-AZ) are leading a fight in the Senate to implement a cut in the estate tax that would lower the rate from 45 percent to 35 percent and bump the exemption (the amount to which the tax does not apply) from $3.5 million to $5 million ($10 million for a couple). Thanks to a Bush-era accounting gimmick, the estate tax is set to disappear in 2010, and come back with a much lower exemption and higher rate in 2011, thus necessitating Congressional action.

As we’ve noted here before, the Lincoln-Kyl plan constitutes a $250 billion giveaway to the rich. And not to be outdone in terms of bad bi-partisan proposals, the House now has it’s own version of the Lincoln-Kyl “compromise,” introduced by four members:

The stakes were raised today in the House, when Reps. Shelley Berkley, D-Nev., Artur Davis, D-Ala., Kevin Brady, R-Texas, and Devin Nunes, R-Calif., introduced legislation to set the rate at 35 percent going forward, with the exemption bumped up to $5 million from the current $3.5 million and indexed for inflation…Brady said it would exempt 99.8 percent of all estates from the “death tax,” calling it the “best option available today to preserve small businesses and family farms in America.”

As National Journal noted, the House measure “would be much more expensive than extending the 2009 rate.” For the record, under current law, 99.7 percent of households will be completely exempt from the tax. So by Brady’s own calculation, $250 billion will buy an exemption for .1 percent of households.

And as for looking to “preserve small businesses and family farms,” current law would only affect about 100 of them, and “all but a handful would have sufficient liquid assets on hand (such as bank accounts, stocks, and bonds) to pay the tax without having to touch the farm or business.” The House plan would drop that number to 40.

House Democratic leaders are pushing for a permanent extension of current law. But if there is wide disagreement, Congress may punt, install a one year extension, and revisit the issue before 2011. Can a better deal be worked out? I certainly hope so.

Today, in the wake of special master for compensation Kenneth Feinberg’s decision to significantly restrict compensation at the seven companies under his office’s purview, the Wall Street Journal reported that Sen. Chuck Schumer (D-NY) “is mulling a law to apply the new rules to all public companies.” CNBC picked up on the Journal’s claim, and has been reporting over and over that Schumer wants to cap pay at every company in the U.S. Watch a compilation:

This seemed like pretty earth-shattering legislation — essentially proposing a pay regulator for everyone — so I called Schumer’s press office to clarify. His spokesman called the Wall Street Journal’s reporting “incorrect” and explained that Schumer is actually advocating that Feinberg apply the “Shareholder’s Bill of Rights” to the seven companies that he oversees.

That makes a lot more sense. Schumer introduced the Shareholder’s Bill of Rights in May with Sen. Maria Cantwell (D-WA), and the bill lays out a series of provisions aimed at improving corporate governance — and hopefully reining in corporate excess — by empowering shareholders with more influence over their company’s decisions. The bill would:

- Implement “say-on-pay,” which mandates that shareholders hold a non-binding vote on their company’s compensation packages;

- Require that companies allow shareholders access to the company’s ballot if they want to nominate directors for the board, require board directors to receive at least 50 percent of the vote in uncontested elections in order remain on the board, and require all board directors to face re-election annually;

- Mandate that companies split the jobs of CEO and Chairman of the Board and that public companies create a separate risk committee comprised of independent directors.

“These companies are the poster children for the total breakdown in corporate governance and lack of effective board oversight that contributed to the recent crisis, and I believe these reforms are critical if the government is serious about turning these companies around,” wrote Schumer in a letter to Feinberg.

And applying these provisions to all publicly traded companies would actually be a great idea, since management incompetence seriously contributed to America’s last two business booms (and subsequent busts). During both the dot-com and mortgage bubbles, corporate managers failed to rein in excessive risk-taking and irrational speculation, or resorted to accounting gimmicks to hide massive losses.

And management was utterly unaccountable to shareholders, who under America’s corporate governance structure are all but powerless to exert influence. They have no say over compensation, and if they want to place directors on the board, they have to expend millions to send out their own, separate ballot, while the current board sends a ballot on the company’s dime.

My guess is that CNBC’s crew wouldn’t like this any more than the proposal that it’s imagining — but the criticism should at least be levied at something that actually exists!

Today, on the same day that the administration’s special master for compensation placed significant pay restrictions on the seven companies under his watch, the Federal Reserve released new guidelines regarding compensation practices at all banking organizations.

“Compensation practices at some banking organizations have led to misaligned incentives and excessive risk-taking, contributing to bank losses and financial instability,” said Federal Reserve chairman Ben Bernanke. “The Federal Reserve is working to ensure that compensation packages appropriately tie rewards to longer-term performance and do not create undue risk for the firm or the financial system.” According to the Fed, compensation practices should:

- Provide employees incentives that do not encourage excessive risk-taking beyond the organization’s ability to effectively identify and manage risk;

- Be compatible with effective controls and risk management; and

- Be supported by strong corporate governance, including active and effective oversight by the organization’s board of directors.

The guidelines apply to all banks, including regional and community banks, but the Fed will give special scrutiny (and require detailed descriptions of current practices) to 28 “large, complex banking organizations.”

The New York Times noted that the Fed’s principles “are less strict than plans suggested by some European leaders and some members of Congress. They do not impose caps on pay or prohibit multimillion dollar pay packages.” But more than that, they are simply devoid of specifics, and have no teeth behind them. So long as the banks make an attempt to conform with the principles above, it seems like the Fed will be willing to give them a pass.

Remember, as of late the Fed has been scrambling to issue various sets of guidelines, in an attempt to prove it’s taking regulatory reform seriously, as Democrats in Congress advance legislation stripping the Fed of some of its regulatory functions. This could easily be about symbolism, with little intention of following through on the substance.

One interesting aspect of the proposal, though, is that the Fed is soliciting comments on whether “formulaic limits [for compensation] be adopted for some or all banking organizations”:

[Some] have suggested consideration of an approach in which at least 60 percent of all incentive compensation received by senior executives of all large, complex banking organizations be deferred and at least 50 percent of incentive compensation be paid in the form of stock, options, or other equity-linked instruments. Would such formulaic limits on determining and paying incentive compensation likely promote the long-term safety and soundness of banking organizations generally if applied to certain types or classes of executive or nonexecutive employees across all or certain types of banking organizations?

I think the answer is undeniably yes, deferring payment is a smart move, so that pay is linked to the longer-term health of a firm (assuming the length of deferment is long enough to accurately determine how well a banker’s bets are paying off). And if a formula is indeed adopted, the Fed’s proposal will suddenly look a lot better.

For months, ThinkProgess has documented how the private health insurance industry has waged a duplicitous, “two-faced” campaign to kill health reform. Because the industry understands that the public views it in a largely negative light, the industry presents itself as proactively working hand-in-hand with legislators to produce reform. However, behind the scenes — using attacks from front groups, allied politicians, think tanks, lobbyists, and right-wing media — the industry is coordinating a massive effort to kill all reform.

As Congress approaches a final vote on health reform, the industry is having difficulty concealing its underhanded campaign. USA Today reports that Karen Ignagni, the President of the insurance industry trade group AHIP, fired off a letter reminding Democrats that despite releasing a deeply misleading report last week slashing the Senate Finance health bill, her companies are still “committed to bipartisan health reform”:

“You don’t turn against reform simply because people have declared you’ve turned against reform. That’s not what we’re doing.“

The self-conscious letter stands in stark contract with what Ignagni’s own lobbyists said today at an AHIP conference. According to the Huffington Post, Steve Champlin, a lobbyist for a firm representing AHIP, declared bipartisan health reform dead and urged GOP lawmakers to refuse to help pass a bill:

“There is absolutely no interest, no reason Republicans should ever vote for this thing. They have gone from a party that got killed 11 months ago to a party that is rising today. And they are rising up on the turmoil of health care [...] So when they vote for a health care reform bill, whatever it is, they are giving comfort to the enemy who is down.”

Private insurers have already been caught using a stealth lobbying firm to send employees to rowdy town halls (and radical tea party events), sharing lobbyists with slash-and-burn anti-health reform attack groups, and paying a number of conservative pundits who regularly appear in major media outlets to slam health reform. Almost immediately after AHIP issued its “hatchet job” report against the Senate Finance bill, Republican lawmakers began parroting the report’s talking points verbatim. The candid slip by Champlin today, whose firm has been paid hundreds of thousands by AHIP, underscores a larger effort by insurers to derail reform, even bills without robust measures like the public option.

Click here for ThinkProgress’ research page on the health insurers’ campaign against reform.

Today, Kenneth Feinberg, the administration’s special master for compensation, plans to announce that the seven companies under his office’s watch must cut pay packages for their top 25 executives by about 50 percent, including a 90 percent reduction in cash salary. Feinberg also plans to “curtail many corporate perks, including the use of corporate jets for personal travel, chauffeured drivers and country club fee reimbursement.”

An executive at one of the seven companies told the Wall Street Journal that “the terms came as a shock,” and that the restrictions “were clearly much worse than what had been anticipated.” And of course, CNBC, which never hesitates to defend bailed-out bankers and their sky-high bonuses, went to bat for the banks once again, arguing that Feinberg should make pay comparable “across the industry,” lest some bankers take such exception to their pay cuts that they go work at the DMV. Watch it:

CNBC also managed to blame the falling value of the dollar on Feinberg’s decision. But if Feinberg really applied compensation levels comparable to other Wall Street banks, his restrictions would be rendered moot, as Wall Street pay is headed for a record high this year, eclipsing the previous highs from 2007. (For the record, the average DMV employee makes $35,000 per year.) Goldman Sachs alone has already set aside $16.7 billion for compensation.

And this gets at the limitations of the administration’s action. While I think it is entirely appropriate that Feinberg crackdown on the pay at these seven companies, they represent only the tip of the iceberg when it comes to problems with Wall Street’s pay structures.

As Nomi Prins wrote, “by simply tying compensation caps to the TARP program (a year late), Feinberg and the Obama administration are completely ignoring the rest of the $14.6 trillion federal bailout and subsidization of the banking industry, which has helped propel many key banks to 2007 levels of compensation, unfettered.” And as evidenced by Goldman Sachs analyst Brian Griffiths’ comment yesterday that we must “tolerate” income inequality “as a way to achieve greater prosperity and opportunity for all,” Wall Street doesn’t seem too interested in changing things on its own.

The Fed took a step towards reform today, seeking comment on compensation formulas that would defer payment over a longer-term. Indeed, what has to happen — by regulation if necessary — is that a large percentage of any particular pay package needs to be tied to the long-term performance of the firm. This, along with a resolution authority that ensures that banks can fail without bringing down the rest of the economy, will correctly align incentives going forward, and hopefully help to prevent another situation in which Wall Street bankers run to the federal government for aid and then use that aid to line their own pockets.

The House Financial Services Committee continued to mark up legislation today creating a new Consumer Financial Protection Agency (CFPA), and it’s become increasingly clear that the Republicans’ aim is to find any way in which to render the agency toothless and incapable of actually influencing bank behavior.

After yesterday’s attempt to give all of the federal bank regulators complete veto power over the CFPA, the GOP today offered an amendment that would prevent regulators at the CFPA from imposing restrictions on bank fees or rates.

The justification was that such restrictions amount to “price controls,” which Rep. Jeb Hensarling (R-TX) said would result in rationing and lead to 1970s style gas lines for financial products. Instead, the GOP wants to leave responsibilities for regulating fees with the same banking regulators that didn’t (and still haven’t) reined them in. Watch it:

First, to think that fee restrictions would result in people lining up because they can’t find financial products strikes me as silly, since they’re not something with a finite supply. How would capping overdraft fees cut down on the number of checking accounts that exist, or could potentially exist in the future?

And it’s precisely because banks abuse things like overdraft fees that the CFPA needs to have power to impose and enforce restrictions. Banks are set to make $38.5 billion in overdraft fees this year, and as USA Today pointed out, overdraft fees are fine in theory, but banks have taken them to an extreme:

Bank of America, which announced changes in its program last week, has been charging up to 10 fees of $35 each in a single day. A majority of large banks — 54%, according to a government survey — reserve the right to process large transactions first, which empties accounts faster, squeezing more overdraft fees from customers.

Americans actually spend more on overdraft fees annually than they do on fresh vegetables. But it’s not just overdraft fees that the banks have abused. According to BankRate.com, this year “ATM fees and monthly service charges on interest-bearing checking accounts climbed to new highs, while bounced-check fees hovered near a high after adjusting for inflation.”

Some banks have even decided that they will charge customers fees for paying off their credit card on time or for not using their credit card enough. “You heard that right: You could be spanked for staying out of debt,” wrote Sandra Block. There are innumerable little ways in which the banks can unfairly take advantage of consumers, which makes it imperative that the banks be able to enforce restrictions. The committee will vote on the amendment when markup resumes tomorrow.

Last week, the Wall Street Journal reported that Wall Street banks are on pace to pay out a record $140 billion in compensation this year. “Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can expect to earn even more than they did the peak year of 2007,” the Journal found.

The New York-based investment bank Goldman Sachs has “set aside $16.7 billion for compensation and benefits in the first nine months of 2009,” which is a 46 percent increase from last year. But according to a Goldman adviser, Wall Street’s record pay is necessary “to achieve greater prosperity and opportunity for all”:

A Goldman Sachs International adviser defended compensation in the finance industry as his company plans a near-record year for pay, saying the spending will help boost the economy. “We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all,” Brian Griffiths, who was a special adviser to former British Prime Minister Margaret Thatcher, said yesterday at a panel discussion hosted by St. Paul’s Cathedral in London.

At the same time that Wall Street’s pay has skyrocketed, pay cuts in other sectors “are occurring more frequently than at any time since the Great Depression.”

While record bonuses may indeed spur spending on million dollar apartments in New York City, the growth in Wall Street pay — and the growing share of national income that is going to the richest Americans — has not translated into shared prosperity. Consider, “back in 1985, the average annual salary for all workers across the country was actually a bit higher than the average [Wall Street] bonus ($19,000 to $13,970),” but “while the average bonus soared almost 14 times higher (by 2006), the average salary has essentially been stagnant since the mid-1980s.”

Goldman Sachs is able to make its current profits ($3.19 billion last quarter) — and thus pay huge bonuses — because of government programs aimed at reviving the economy, which allow the company to make “big bets using cheap dollars.” As Simon Nixon wrote, the profits “aren’t the due rewards for exceptional skill but gifts from taxpayers.”