Corporate Governance

  • August 1, 2012
    Guest Post

    By Kent Greenfield. Greenfield is a Professor of Law, and Law Fund Research Scholar at Boston College Law School.

    Before the end of the latest SCOTUS term, flush with the excitement of the right’s anticipated victory in the ACA case, a small bank in Texas and a few additional plaintiffs sued to contest the constitutionality of the Consumer Financial Protection Bureau (CFPB) and the Financial Stability Oversight Council (FSOB), two new agencies created by the Dodd-Frank legislation in 2010. 

    Few would have noticed except that the main lawyer for the plaintiffs is C. Boyden Gray, the White House counsel for George H.W. Bush. The Wall Street Journal printed an op-ed the day they filed suit, and several other right-leaning media outlets gave it mention. One commenter on the WSJ page said the lawsuit is more important for the future of the country than the presidential election.

    If the lawsuit were to be victorious, it would disembowel the most important innovations of the Dodd-Frank legislation, which, even with its numerous flaws, was an important legislative victory during Obama’s first term. [image of president signing legislation in summer 2010] 

    Should progressives worry? 

    I read through the complaint, and I don’t think we should. 

    If you separate out all the sturm und drang, the main focus of the constitutional claim is that Dodd-Frank created independent agencies that have too much discretion to regulate, especially using post-hoc adjudication. While the arguments against such independence, discretion, and post-hoc adjudication could occupy several hours of discussion in an introductory constitutional law class, they are hardly questions of first impression in the courts. On the contrary, the questions of whether administrative agencies (1) may be insulated from political control by the president, (2) may define operative regulatory terms, and (3) use adjudication to make law have been answered in the affirmative for decades. 

    So this lawsuit is not like the suits brought against the ACA that arguably raised new arguments about the scope of the commerce clause (action versus inaction, broccoli, and all that). This is a lawsuit wanting to re-litigate decades of settled law. 

  • June 27, 2012

    by Jeremy Leaming

    Up until the $2 billion trading loss debacle at JPMorgan Chase, right-wing lawmakers in Congress, primarily the House, were feverishly working to water down with new legislative measures Dodd-Frank, the financial reform law passed in the wake of the Great Recession.

    But, as CQ Today reported, House Republicans halted their efforts “at least for now” to undercut the law aimed at ending the shady tactics employed by financial industry giants that led to the financial meltdown of 2008. Part of Dodd-Frank created the Consumer Financial Protection Bureau or CFPB, which is tasked with trying to bring some sanity to the financial industry.

    As CFPB Director Richard Cordray (pictured) said during the ACS 2012 Convention the agency is the first ever “created with the sole purpose of protecting consumers in the financial marketplace. It is not an easy task, but it is crucial because the financial marketplace is no easy place for our fellow citizens as they seek to manage their affairs.

    Cordray continued, “Our task is so crucial because, as we saw with the recent financial crisis, unregulated or poorly regulated financial markets can undermine the stability of the economy and with it the promotion of the general welfare that, as specified in the preamble to the Constitution, stands as one of the basic purposes of the federal government. For that reason, the new Consumer Bureau was also created to help ensure that the recent financial panic and economic meltdown does not repeat itself.”

    But government efforts to help the nation’s less fortunate or vulnerable run counter to the interests of the nation’s super wealthy. Columbia University business school professor Joseph Stiglitz, author of Freefall, has noted that the nation’ top one percent has the greatest sway in the nation’s capital, and that it is largely not interested in progressive legislation.

    So like the efforts to reform the nation’s health care system, which includes tens of millions of uninsured, the Right is turning to the federal bench to try stymie progress. And as noted by the Constitutional Accountability Center’s Simon Lazarus the Right and libertarians have proven their acumen in advancing their views of a radically cramped Constitution and selling wobbly legal claims to the public. 

    Media Matters’ David Lyle in a post for the organization’s County Fair blog called “First Health Care, Now Dodd-Frank: The Tea Party Constitution Rises Again,” urges progressives to be better prepared.

    “Although the legal arguments made in the suit [lawsuit lodged in federal court last week challenging the constitutionality of Dodd-Frank] are questionable, the case should not be dismissed as harmless,” Lyle writes. “The right-wing media’s proven ability to move dubious legal claims into mainstream debate combined with a conservative federal judiciary sympathetic to corporate interests mean the CFPB suit bears close scrutiny.”

    Lyle notes experts doubt the challengers have standing to lodge the lawsuit, and that at least one “financial services regulatory lawyer” has concluded it doubtful “that a court would find significant provisions of Dodd-Frank unconstitutional because of ‘general vagueness considerations.’”

  • April 20, 2012

    by Jeremy Leaming

    Shareholders are ratcheting up pressure on corporate executives to reveal the extent of political expenditures, and, in at least one case, pushing back against over-the-top compensation packages for executives.

    Reporting for The Washington Post, Tom Hamburger notes that the massive health insurance company WellPoint is facing an “an increasingly aggressive campaign to force disclosure of corporate political and lobbying expenditures, including payments to the U.S. Chamber of Commerce ….”

    A coalition of institutional investors, Hamburger says, is calling for the resignation of board members for “allegedly failing to oversee ‘high risk political spending.’” In particular, the shareholder coalition is troubled by $86 million that a trade association, which WellPoint is a member, transferred to the U.S. Chamber of Commerce during its fight against the Obama administration’s health care reform work.

    The Post says that the coalition’s “effort to hold specific board members responsible represents a new militancy in the fight to require companies to reveal their political activities,” which has grown out of the aftermath of the high court’s 2010 opinion in Citizens United v. FEC, granting corporations unfettered ability to spend on political campaigns.

    Director of GMI Ratings Nell Minow told the newspaper that demanding action against specific shareholders “may be the only way you make any progress” on forcing corporate transparency of political spending.

    As The Post notes, political spending by corporations can be a risky endeavor. As noted on this blog, several public interest groups have demanded that corporations cut their ties to the right-wing group, ALEC, which has lobbied states to enact so-called “Stand Your Ground” laws, and onerous measures that hamper voters. ColorOfChange and the Center for Media and Democracy have successfully encouraged about a dozen corporations, such as Blue Cross Blue Shield and Coca-Cola to stop sponsoring ALEC.

    MarketWatch also reports that a growing number of shareholders are “agitating for corporations to disclose what they spend on political advocacy ….”

  • January 20, 2012

    by John Schachter

    Stephen Colbert gave new meaning to “Justice delayed is justice denied” when he interviewed a surprisingly game former Supreme Court Justice John Paul Stevens. Colbert apparently didn’t realize (wink, wink) that Stevens had retired from the high court but reluctantly forges ahead with the interview nonetheless.

    The meat of the interview was a discussion of the court’s controversial Citizens United decision, coming up on its two-year anniversary. While Colbert insisted that corporations are exactly like people and deserving of all the same rights, Stevens parried quite effectively. “As with natural persons as well as corporate persons, some have different rights than others do,” Stevens explained. “The same rights don’t apply to everyone in every possible situation.”

    At 91 years, Stevens makes 90-years old Hollywood star Betty White seem old by comparison. His quick wit and sharp legal mind were on full display during the nearly 7-minute interview. The highlight? Colbert asked Stevens if there were any decisions he made that he later regretted. Said Stevens in response, “Other than this interview? I don’t think so.”

  • December 8, 2011

    by Jeremy Leaming

    Republican senators, in brazen fashion, stepped up their obstructionism of the administration’s nominees this week. First, Republicans successfully blocked an up-or-down vote on one of the president’s judicial nominees, and now they’ve scuttled his selection to head the Consumer Financial Protection Bureau.

    The Senate voted 53-45 to invoke cloture, falling short of the 60 votes needed to force an up-or-down vote on the nomination of former Ohio Attorney General Richard Cordray (pictured) to head the agency, created to crack down on corporate malfeasance, and as The New York Times reports, “one of the administration’s main responses to the financial crisis.”

    Republicans have attacked the Bureau, whose creation was advocated by Harvard University professor and now Senate candidate Elizabeth Warren, since its inception, demanding significant changes to the agency, which would effectively hobble its oversight authority.

    Sen. Sherrod Brown (D-Ohio), The Huffington Post reports, blasted Republicans for their ongoing efforts to protect Wall Street power. Brown said his Republican colleagues are “almost always flacking for Wall Street. It never ceases to amaze me.”

    In comments at the White House, President Obama slammed Republican-led obstructionism, and suggested he may use a recess appointment to put Cordray to work, The Washington Post reports.

    Obama said, "We are not giving up on this. We will not allow politics as usual on Capitol Hill to stand in the way of American consumers being protected from unscrupulous operators."

    The president also knocked senators for denying "well-qualified" judicial nominees up-or-down votes.

    Taking to the Senate floor to push for Cordray's nomination, Sen. Al Franken (D-Minn.) lauded Cordray for “looking out for the middle class. He’s looking out for homeowners who have been scammed by mortgage servicers. He’s looking out for pensioners who’ve lost their pensions at the hands of Wall Street recklessness.”

    TPM reports that Democrats are making a “public issue out of the GOP’s vow to hamstring the agency,” noting that Sen. Charles Schumer (D-N.Y.) has “hinted at a recess appointment. Obama, Schumer said, should do ‘everything within his power to get Cordray on board.’”

    On Tuesday, Republicans successfully blocked the president’s nomination of Caitlin Halligan to the U.S. Court of Appeals for D.C. Circuit. ACS President Caroline Fredrickson blasted that action as “ushering in an unfortunate era of unprecedented obstructionism.”