Campaign News

When the Federal Reserve considers raising interest rates on July 28—and then again every six weeks after—MyAsia Reid, of Philadelphia, will be paying close attention. Despite holding a bachelor’s degree in computer science, completing a series of related internships, and presenting original research across the country, Reid could not find a job in her field and, instead, pieces together a nine-hour-per-week tutoring job and a 20-hour-per-week cosmetology gig. The 25-year-old knows that an interest-rate hike will hurt her chances of finding the kinds of jobs for which she has trained, and earning the wage increase she so desperately needs.

A Fed decision to raise interest rates, expected sometime this year, amounts to a vote of confidence in the economy—a declaration that we have achieved the robust recovery we need. “We are close to where we want to be, and we now think that the economy cannot only tolerate but needs higher interest rates,” the chairwoman of the Federal Reserve, Janet Yellen, told Congress during a July 15 policy briefing.

But for many millions of Americans, the recovery has yet to arrive, and for them, a rate hike will be disastrous. It will put the brakes on an economy still trudging toward stability; stall progress on unemployment, especially for African-Americans; and slow wage growth even more for the vast majority of American workers.

The general argument for raising interest rates is that it will prevent wage costs from pushing up inflation. However, there is no data suggesting price instability; nor is there any indication that wages have risen enough to spur such inflation. For the overwhelming majority of American workers, wages have stagnated or even dropped over the past 35 years, even as CEOs have seen their compensation grow 937 percent. During the same period, wage gaps between white workers and workers of color have increased, and black unemployment is at the level of white unemployment at the height of the Great Recession. Meanwhile, the labor-force participation rate is less than 63 percent, the lowest in nearly four decades, suggesting that many Americans have simply given up looking for work.

Yellen has herself often urged the Fed to look at the broadest possible employment picture. Yet, during her recent congressional testimony, shedownplayed the Fed’s ability to address racial disparities, saying that the central bank does not “have the tools to be able to address the structure of unemployment across groups” and that “there isn’t anything directly that the Federal Reserve can do” about it. She cited, rightly, a range of other factors, including disparate educational attainment and skill levels, that contribute to economic and social disparities between racial groups. But she also glossed over the importance of the economic environment in shaping workers’ unequal chances.

One defining metric in shaping workers’ chances is the unemployment rate. A high unemployment rate facilitates racial discrimination. When there are too many qualified job candidates for every job, employers can arbitrarily limit their labor pool based on unnecessary educational requirements, irrelevant credit or background checks, or straightforward bias. A tight labor market, by contrast, makes it much harder for employers to succumb to prejudices and overlook qualified workers simply because of bias. When the number of job seekers matches the number of job vacancies, African-Americans, Latinos, women, gays and lesbians, injured veterans, and formerly incarcerated workers finally get their due in the workforce.

The late 1990s, when unemployment was at about 4 percent, bear out this thesis. During that rosier era, black unemployment was 7.6 percent, and the ratio of black family income to white family income rose substantially.

As the guardian of monetary policy, the Federal Reserve has a number of tools for encouraging a tight labor market, and one of those tools is to keep interest rates low. By keeping rates low, the Fed creates a hospitable environment for job growth by lowering the borrowing costs for consumer and business spending—including hiring new workers. By contrast, raising rates deliberately suppresses spending by consumers and businesses. In the process, it slows job growth, holds down wages, and unnecessarily maintains racial disparities.

With so many workers still struggling, there is no need to cut off this recovery prematurely. Inflation remains below the Fed’s already-low 2 percent target, unemployment and underemployment are too high, and wage growth and labor-force participation are too low. In fact, the Fed should be doing everything within its power to keep nudging the recovery forward for the workers still caught in the slipstream of the Great Recession.

The Federal Reserve should not raise interest rates this week, nor when it meets again six weeks after that. It should not raise rates at all in 2015. Doing so would cause tremendous harm to the aspirations and lives of tens of millions of working families, and would disproportionately hurt African-Americans.

MyAsia Reid knows the difference that a full-employment economy can make. She is ready to participate in the economic recovery. And she will be watching as the Fed decides whether to hold to a strategy of strengthening the recovery or pursue a new strategy that jeopardizes her chances and her community.

Source: The Nation

USA Today - March 17, 2015, by Mark Weisbrot - Should the Federal Reserve raise interest rates in order to create more unemployment and keep wages from rising? If the question were asked that way, the vast majority of Americans would say, "No!"

It is not posed in this manner, even though economists — including Fed economists — and many journalists who write for the business press know that this is exactly what the Fed will be doing when it raises interest rates.

Of course, the justification is that we "need" to do this in order to keep inflation from rising to harmful levels. But the Consumer Price Index is actually down slightly for the year ending in January; in other words, inflation is in negative territory. Why should anyone want to increase unemployment just to keep inflation down?

OUR VIEW: Why it's good news if Fed loses 'patience'

When the Fed increases unemployment, it increases it twice as much for African Americans as for everyone else. And higher unemployment also reduces wage growth much more for African-American workers and lower-wage workers. Across the board, more unemployment translates very directly into more income inequality.

This is no time to be increasing unemployment and inequality, and pushing down wages. Median household income in the U.S. is still down about 3% since the recession ended in mid-2009. For the vast majority of the workforce, wages have stagnated or declined since 1979. Meanwhile, in the first three years of the current economic recovery, the top 1% of Americans received 91% of all income gains.

Fortunately, for probably the first time in the Fed's century of existence, there is a grass-roots movement to hold America's central bank accountable to the voters, citizens and working people of this country. A coalition led by the Center for Popular Democracy is "Fed Up" and trying to make sure that the Fed doesn't cut off wage growth before it even gets rolling.

If America is to shed the title of "Land of Inequality," this is how it is going to happen: by more people becoming aware of how the Fed's monetary policy affects them and demanding that it change.

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FORMER CALIFORNIA ATTORNEY General Kamala Harris on Wednesday vaguely acknowledged The Intercept’s report about her declining to prosecute Steven Mnuchin’s OneWest Bank for foreclosure violations in 2013, but offered no explanation.

“It’s a decision my office made,” she said, in response to questions from The Hill shortly after being sworn in as California’s newest U.S. senator.

“We went and we followed the facts and the evidence, and it’s a decision my office made,” Harris said. “We pursued it just like any other case. We go and we take a case wherever the facts lead us.”

Mnuchin is Donald Trump’s nominee to run the Treasury Department, and served as CEO of OneWest from 2009 to 2015. In an internal memo published on Tuesday by The Intercept, prosecutors at the California attorney general’s office said they had found over a thousand violations of foreclosure laws by his bank during that time, and predicted that further investigation would uncover many thousands more.

But the investigation into what the memo called “widespread misconduct” was closed after Harris’s office declined to file a civil enforcement action against the bank.

Harris’s statement on Tuesday doesn’t explain how involved she was with the decision to not prosecute, or why the decision was made. She also would not say whether the revelations would disqualify Mnuchin for the position of treasury secretary. “The hearings will reveal if it’s disqualifying or not, but certainly he has a history that should be critically examined, as do all of the nominees,” Harris told The Hill. She added that she would review the background and history of all Trump cabinet nominees.

Senate Democrats have vowed to put up a fight over Mnuchin — even creating a website inviting homeowners to list their complaints against OneWest. And yet not one senator has commented publicly on the leaked memo, which received media coverage in Politico, Bloomberg, the New York Post, CBS News, Vanity Fair, CNN, CNBC, and other outlets.

The Intercept has reached out to half a dozen Senate Democratic offices, including those of Minority Leader Chuck Schumer and leading Mnuchin critics Bernie Sanders and Elizabeth Warren, receiving no response.

Sen. Tammy Baldwin, D-Wisc., retweeted the story, as did the Twitter account of the Democratic National Committee. But another DNC tweet just hours later hinted at the bind Democrats are in when it comes to using the information against Mnuchin. That tweet praised Harris’s swearing-in. Her decision not to prosecute may make her new colleagues wary of pursuing it.

Progressive groups have not been so reluctant. Three groups — the Rootstrikers project at Demand Progress, the Center for Popular Democracy’s Fed Up Campaign, and the California Reinvestment Coalition – have called for a delay of Mnuchin’s confirmation hearing until he publicly discloses all settlements and lawsuits OneWest has faced from its foreclosure-related activities, responds fully to all questions submitted by members of the Senate Finance Committee, and publicly discloses his role in obstructing the California attorney general investigation, or any others.

The California Reinvestment Coalition followed that up on Thursday by asking OneWest to release the obstructed evidence, which involved loan files held by a third party then known as Lender Processing Services (it’s now called Black Knight Financial Services). “That’s something the Senate Finance Committee should ask him for, prior to scheduling their hearing with him,” said Paulina Gonzalez, executive director of the California Reinvestment Coalition.

Mnuchin has already declined to answer a detailed list of questions from Finance Committee member Sherrod Brown, which Brown sent before the release of the leaked memo.

After The Intercept story was published, Mnuchin spokesperson Barney Keller called it “meritless,” and highlighted OneWest’s completion of a foreclosure review with the Office of the Comptroller of the Currency (which involved completely separate issues from the California inquiry) and what he claimed was OneWest’s issuance of over 100,000 loan modifications to borrowers.

“Memos like this belong in the garbage, not the news,” Keller said.

Meanwhile, the Alliance of Californians for Community Empowerment, an organizing group that made headlines in 2010 by protesting on Mnuchin’s front lawn over OneWest’s foreclosure practices, expressed disbelief that he could now become treasury secretary. “My family lived first hand the fraud and unethical behavior under his leadership when I was told to default before they could help me, and (was) instead pushed into foreclosure,” said Peggy Mears, a OneWest victim.

ACCE plans to ask incoming California Attorney General Xavier Becerra to take up the prosecution of OneWest based on the newly released evidence. And the group vowed to fight the Mnuchin nomination. “No one who oversaw the defrauding of thousands of homeowners should be allowed to serve watch over our country’s money,” Mears said.

By David Dayen

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Times Online - October 2, 2014, by JD Prose - A day after Pennsylvania Cyber Charter School founder Nick Trombetta was in a federal courtroom as part of his ongoing criminal case, a new report cited him as an example of $30 million in fraud and financial mismanagement among Pennsylvania charter schools since 1997.

The report, “Fraud and Financial Mismanagement in Pennsylvania’s Charter Schools,” was done by three organizations, the Center for Popular Democracy, Integrity in Education and Action United.

It piggybacks on a national report on charter schools in May by the Center for Popular Democracy and Integrity in Education that claimed more than $136 million has been lost to waste, fraud and abuse by charter schools.

The Pennsylvania Coalition of Public Schools issued a statement saying allegations of fraud must be investigated.

“However,” the statement continued, “the report draws sweeping conclusions about the entire charter sector based on only 11 cited incidents in the course of almost 20 years, while ignoring numerous alleged and actual fraud and fiscal mismanagement in the districts over the same time period, which dwarf the charter school allegations in terms of alleged misuse of taxpayer dollars.”

To stem the loss of tax dollars by charter schools, the three nonprofit organizations make several recommendations, including annual fraud risk assessments, trained forensic auditors doing reviews, charter school authorizers doing comprehensive reviews every three years instead of every five years, and charter schools posting findings of internal assessments.

City and county controllers should also be authorized to perform fraud risk assessments and fraud audits on charter schools, the groups recommended.

They also suggested that the state attorney general’s office review all charter schools in Pennsylvania, that the Legislature pass a law to protect and encourage charter school whistle-blowers, and that the state declare a moratorium on new charter schools until reforms are implemented.

Trombetta, who faces 11 federal charges, including mail fraud and filing false tax returns, is cited as one example in the report. On Tuesday, he was in court trying to get recordings tossed in the case, in which he is accused of using various offshoots of PA Cyber to siphon away millions of taxpayer dollars.

The coalition said the report’s recommendations should be applied to traditional school districts as well as charter schools “in the name of intellectual integrity.” If not, it would just be an example of pursuing a political agenda, the coalition said.

Not surprisingly, the president of the National Education Association issued a statement trumpeting the report’s findings and blasting charter school supporters, especially Gov. Tom Corbett. “It’s time for lawmakers to stop providing charter industry players a blank check with little oversight and no accountability,” said Lily Eskelsen Garcia.

“Pennsylvania Gov. Tom Corbett and other politicians in the state continue to push for privatization, despite compelling evidence of fraud and abuse of taxpayer funds in the charter school industry,” Garcia said.

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