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Investigation Into Oil Industry Price Rigging Mirrors LIBOR Scandal

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Walmart And Gap Refuse To Sign Bangladesh Safety Agreement

U.S. Chamber Hires Bush’s Attorney General To Help Weaken Ban On Corporate Bribery

By Alex Seitz-Wald on Mar 15, 2011 at 4:45 pm

As ThinkProgress reported in October, the U.S. Chamber of Commerce is pushing to overhaul the Foreign Corrupt Practices Act (FCPA), the government’s main enforcement mechanism to stop American-based multinational firms from bribing foreign governments in order to win special business advantages. The Chamber thinks the law is too burdensome for American businesses and makes them less competitive compared to foreign companies, which are freer to engage in corruption.

The Blog of Legal Times reports the Chamber has now enlisted a powerful ally to fight the scourge of anti-corruption — President Bush’s Attorney General Michael Mukasey:

Debevoise & Plimpton, where Mukasey is a partner, filed lobbying registration papers on his behalf this month, according to Senate records. The registration is for the Chamber’s Institute for Legal Reform and is effective back to March 3. It covers possible FCPA amendments and other issues “related to criminal law and policies affecting U.S. corporations.” [...]

Harold Kim, senior vice president at the Chamber’s Institute for Legal Reform, said he’s pleased with Mukasey’s hiring. “He brings a wealth of experience on these matters given his past positions as attorney general of the United States as well as chief judge of the Southern District of New York,” Kim said in an interview. “I think he’ll be a good advocate as part of our overall efforts to secure some more clarity and certainty with respect to the current statute.”

The Chamber may have decided to take on the FCPA now because President Obama’s Department of Justice has decided to do what Bush’s Department of Justice under Mukasey didn’t — thoroughly enforce the law. Under Obama, the department collected more than $1 billion in fines during fiscal year 2010, the most the government has collected in the law’s 38-year history, and more than ten times the $87 million collected in 2007 by the Bush Administration.

As Energy Speculation Hits An All-Time High, CFTC Tries To Fend Off Budget Cuts

By Pat Garofalo on Mar 15, 2011 at 3:50 pm

The price of oil closed yesterday at $101.19 per barrel, and analysts have been predicting that rising gas prices may stunt America’s slow economic recovery and cause the loss of as many as 600,000 jobs. Unrest in the Middle East is just one of many factors behind the recent rapid rise in oil prices.

But as ThinkProgress’ George Zornick pointed out last week, “one question remains unanswered — to what extent are commodity traders influencing these high gas prices?” Many experts point to speculative trading, not simple supply and demand, as one of the causes of the 2008 spike in oil prices. And today, the Commodity Futures Trading Commission — which is responsible for policing energy markets — said that energy speculation is at an all-time high:

Hedge funds and other speculators have increased their positions in energy markets by 64 percent since June 2008 to the highest level on record, according to data released by U.S. Commodity Futures Trading Commissioner Bart Chilton. Speculative positions accounted for more than one million energy futures equivalent contracts as of January, according to the data.

CFTC Commissioner Bart Chilton said in a speech today that high speculation is skewing prices. “We could have helpful limits in place that could guard against markets being adversely impacted by excessive speculation. We could do that now if we wanted. And, as you can tell, I want,” Chilton said.

The CFTC was given the power to restrict speculation in the oil market by the Dodd-Frank financial reform law. But the agency has yet to implement the regulations, with its two Republican commissioners and one Democrat, Michael Dunn, expressing reservations. The CFTC actually missed the January 13 deadline to put speculation limits into place. As Zornick reported, Dunn’s term is ending this summer, giving the Obama administration an opportunity to appoint someone ready to fully implement the speculation restrictions included in Dodd-Frank.

However, even assuming the CFTC follows through with implementing the law, it will be hard pressed to enforce any limits if the budgets cuts envisioned by House Republicans are actually enacted. H.R. 1, the House Republican approved spending plan for the remainder of 2011, includes a nearly one-third cut in the CFTC’s budget. Such a draconian cut would require the CFTC to lay off more than 30 percent of its staff. “We’d have to have significant curtailment of our staff and resources,” CFTC Chairman Gary Gensler said. “We would not be able to police…or ensure transparent markets in futures or swaps.”

Education

Despite Budget Crisis, Arizona Lawmakers Propose Generous Tax Breaks For Subprime Schools

By Pat Garofalo on Mar 15, 2011 at 1:22 pm

For several months, Arizona has been grappling with a budget crisis, with its deficit for this year projected to be $825 million and next year’s standing at $1.4 billion. Gov. Jan Brewer (R-AZ) used the budget shortfall to cut off urgent transplant funding for sick Arizonans, some of whom died without their access to critical medical care.

Brewer has also proposed putting a dent in her budget gap by cutting funding for state universities by 20 percent and cutting half of the state’s funding for community colleges. However, not all education providers are feeling the pain of Arizona’s budget woes. The for-profit college industry, in fact, could receive a new tax break worth millions of dollars:

State lawmakers, who have to close a major budget gap, are considering a bill that would give University of Phoenix’s parent company as well as other companies a tax break worth millions, according to some estimates…Arizona Department of Revenue estimates that the new bill could cost Arizona $33.2 million annually in tax revenue.

The main beneficiary of the tax break would be the Apollo Group, which owns the University of Phoenix, one of the largest for-profit colleges. As we’ve been documenting, these subprime schools make the vast majority of their revenue from the federal government, pay their CEOs huge salaries, but leave their students with crippling debt and bleak job prospects. They use intimidation and fear to recruit students, while posting profits margins of more than 30 percent.

The University of Phoenix is actually the “granddaddy” of the for-profit college industry. It was created in 1976 by humanities professor John Sperling, who believed he could “mass produce education and run his school more like a corporation than a university.” Currently, the University of Phoenix makes 88 percent of its revenue from the federal government. It’s CEO, Charles Edelstein, was paid more than $11 million last year.

In 2009, less than half of University of Phoenix students were paying back their loans. The school was also forced to pay $78.5 million “to settle a federal lawsuit in California alleging that compensation for Phoenix recruiters violated restrictions on incentive pay.” At a time when they are slashing their state’s education system to ribbons, Arizona lawmakers might want to rethink lavishing tax breaks onto an industry that hasn’t proven it can give students an education that’s worth the price.

For more information, read our report, “For-profits, not students.”

Education

House Education Chairman’s Foot Dragging Has Real Consequences For Students And Teachers

By Guest Blogger on Mar 15, 2011 at 12:07 pm

Our guest blogger is Theodora Chang, Education Policy Analyst at the Center for American Progress Action Fund.

House Education Committee Chairman John Kline (R-MN)

Yesterday, President Obama called on Congress to reauthorize the Elementary and Secondary Education Act (ESEA), currently known as No Child Left Behind, before the start of the next school year. “I want every child in this country to head back to school in the fall knowing that their education is America’s priority. Let’s seize this education moment. Let’s fix No Child Left Behind.”

However, House Education and Workforce Committee Chairman John Kline (R-MN) ignored the President’s sense of urgency, saying:

We need to take the time to get this right — we cannot allow an arbitrary timeline to undermine quality reforms that encourage innovation, flexibility, and parental involvement.

The start of the school year is far from an “arbitrary timeline.” Districts and schools plan several months ahead for the next school year, so failure to reauthorize the law will have very real consequences for students and teachers.

The law’s accountability requirements, for example, have not kept pace with local efforts to meet higher achievement standards. McPherson School District in Kansas received a waiver earlier this month from the U.S. Department of Education because it wanted to develop student assessments that were more rigorous than the state assessment required under NCLB.

The law is also overdue for an overhaul of its Title I provisions. New research shows that several pieces of the Title I program are not serving the disadvantaged students they were meant to help. One key example is the “supplemental education services” provision, which mandates tutoring for students in schools that do not make adequate yearly progress. Although hailed as a central tenet of NCLB, studies now show that these tutoring programs are minimally effective, with small improvements for a small fraction of students who receive at least 40 hours of tutoring.

Thoughtful proposals from President Obama and several lawmakers acknowledge the limitations of the current law and identify specific revisions. Many of these ideas were first introduced back in 2010, and students should not have to wait any longer for Congress to act. It’s time to regain momentum and tackle reauthorization now — before the outdated provisions of the law render it entirely arbitrary and obsolete.

Maine Gov. LePage Asks For ‘Shared Sacrifice,’ But Is Exempt From His Own Pension Changes

By Pat Garofalo on Mar 15, 2011 at 11:10 am

Gov. Paul LePage (R-ME)

Gov. Paul LePage (R-ME) has called for “shared sacrifice” when it comes to balancing his state’s budget. “If you want prosperity, you have got to make sacrifices,” LePage said. However, as Zaid Jilani pointed out, LePage’s proposed budget asks the middle-class and public employees to bear the brunt of filling the state’s budget gap, while cutting taxes for the state’s wealthiest residents.

As part of his budget, LePage proposed raising the retirement age for public employees and freezing their cost-of-living adjustments. He also increased the amount that public employees are required to pay into their pension fund from 7.65 percent to 9.65 percent, which constitutes a cut in take-home pay for these employees. However, as Mike Tipping at the Kennebec Journal reported, the change doesn’t apply to LePage’s own compensation:

One public employee currently paying 7.65 percent, however, won’t see an increase.

The governor has exempted himself…If LePage faced the same increase as state employees, it would cost him $5,880 over his term.

LePage, upon leaving office, will be eligible for a $26,000 annual pension. A Maine teacher has to work for 25 years to receive the same benefit. Adding insult to injury, the money raised from increased employee contributions won’t even go towards immediately shoring up the state’s pension system, but “will instead pay for other budget priorities, including $203 million in tax cuts.”

The increased attention on LePage’s treatment of his own compensation led state finance commission Sawin Millet to say, “I won’t speak for where [LePage] would be on it, but I suspect that he’s not aloof from, or opposed to, considering that idea for himself.” “I intend to have that conversation, given the stories that have occurred over the weekend,” Millet added. As the Lewiston Sun Journal reported, “previous governors have reportedly sought separate statutory changes to their compensation to match their budget messaging.”

(HT: Dave Dayen)

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