CPD IN THE NEWS

NEW YORK — Over a dozen activists descended on a building where Federal Reserve chair Janet Yellen and her three living predecessors were speaking on Thursday to demand that the Fed bail out Puerto Rico’s cash-strapped government.

The demonstrators, who are affiliated with the progressive Fed Up coalition, distributed Puerto Rican flags and empanadas as Puerto Rican music played outside Manhattan’s International House, a student residence. Yellen was there for an unprecedented panel discussion alongside past Fed chairs Ben Bernanke, Paul Volcker and Alan Greenspan, who participated via videostream.

The activists were joined by Puerto Rican lawmaker Manuel Natal, who was in town to participate in a panel discussion hosted by City Council Speaker Melissa Mark-Viverito on Friday.

“They have two mechanisms under their authority to help Puerto Rico: one is to provide a bailout to Puerto Rico similar to the one they did to banks, the same banks that are now in Puerto Rico making a fortune out of our fiscal situation,” Natal said. “And the second would be to buy our debt” and charge Puerto Rico interest rates that are lower than the market would offer.

The activists claim that since the Fed had the authority to buy trillions of dollars of bad debt from Wall Street banks after the 2008 financial crisis, it can do the same for the debt of Puerto Rico.

Economic observers with knowledge of the Fed’s functions consider that argument dubious. Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics who was an economist at the Fed Board of Governors for many years, said that the Fed is not allowed to buy municipal debt — of the kind Puerto Rico owes — that comes due over a period longer than six months. He also said such a purchase would be inconsistent with the Fed’s dual mandate of maintaining price stability and full employment.

The Fed has “never bailed out any insolvent entity as far as I know. They always demand collateral sufficient to cover any loan,” Gagnon said, as the Fed did when it provided aid to major U.S. banks.

Natal, the lawmaker, also believes some of Puerto Rico’s debt has been issued unconstitutionally and can therefore be nullified.

Greg Williams, a spokesman for Jubilee USA, a coalition of faith-based groups that advocates for global debt relief policies, declined to endorse a Fed bailout, but suggested the Fed could broker a deal instead.

“We support a proposal where the Fed facilitates a restructuring process,” Williams said.

More important than the details of the demonstrators’ demands, however, is the protest’s political symbolism in the midst of a heated battle over Puerto Rico’s future. The demonstration was perhaps the most colorful in a series of political moves and counter-moves by the Puerto Rican government and its sympathizers on one hand and the commonwealth’s bondholders and their allies on the other. Both seek to influence a congressional rescue plan that could enable Puerto Rico to restructure its debts.

Members of Congress from both parties are negotiating changes to the draft of a relief bill released last week by the House Committee on Natural Resources, which has jurisdiction over U.S. territories.

But many in Puerto Rico, and some progressives in the mainland United States, object to the Washington-based federal oversight board the bill would introduce to audit Puerto Rico’s finances and recommend reforms. Under the terms of the bill, Puerto Rico would pursue voluntary compromises with its creditors; failing that, the board could greenlight court-supervised debt restructuring that would force bondholders to accept the losses.

Those critics of the draft bill — including lawmaker Natal — view the board as having the trappings of American colonial rule over Puerto Rico.

Critics of the draft House bill say it has the trappings of American colonial rule over Puerto Rico.

They also argue that Puerto Rico should not have to meet any conditions to gain access to court-supervised debt restructuring. Puerto Rico, unlike the fifty mainland states, lacks the power to grant its municipalities and public corporations federal bankruptcy protections.

Puerto Rico is taking a multi-pronged approach to secure debt relief that appears designed to increase its leverage with creditors and win terms that are as favorable as possible.

The island’s governor, Alejandro Garcia Padilla, signed a bill on Wednesday that would empower him to declare a state of emergency and enact a moratorium on the island’s $70 billion debt. Puerto Rico’s next major debt payment — a $422 million tranche — comes due on May 1.

Daniel Hanson, a Puerto Rico specialist for the financial analysis firm The Height, wrote in an email newsletter that Puerto Rico’s creditors will likely challenge the moratorium in court, where Puerto Rico’s “playbook is not likely to be persuasive to American courts adjudicating the contracted rights of creditors.”

Garcia Padilla has said the island is incapable of paying its debts in full. Puerto Rico has enacted spending cuts and tax hikes in recent years that have stifled its economy and depleted its social services, creating a situation that many people already characterize as a humanitarian crisis.

Puerto Rico also argued for the right to enforce a local bankruptcy law that went before the Supreme Court last month after lower courts had blocked the island from putting it into effect. The high court is expected to rule in the case by late June.

In Congress, Democrats sensitive to Puerto Rico’s plight — and solicitous of the votes of former island residents living on the mainland — hope to dilute some of the proposed oversight board’s sweeping powers.

The Height’s Hanson, however, expects subsequent iterations of the House bill to be “more creditor-friendly,” he wrote.

Meanwhile, organizations representing Puerto Rico’s powerful creditors have stepped up their efforts to amend the legislation to limit the restructuring authority that the island would get. The commonwealth’s bondholders include a significant number of so-called vulture funds, which are hedge funds that have bought its debt from other creditors at discounted rates on the promise of recovering the obligations’ original full-dollar value.

A group called Main Street Bondholders, which claims to represent ordinary retirees, has created a web site attacking the draft House bill for granting Puerto Rico “super Chapter 9” bankruptcy protections.

Main Street Bondholders is associated with the conservative seniors group 60 Plus, which played an active role in the fight against the Affordable Care Act. The New York Times reported in December that 60 Plus is funded by a handful of large, anonymous donors and was recruited into the effort by a Republican public relations firm that also represents BlueMountain Capital, a creditor that has been outspoken against federal government help for the island.

The fight over whether to help Puerto Rico has reached the bottom rung of American discourse — cable news ads paid for by undisclosed donors. The ad, which ran on CNN and was paid for by the Center for Individual Freedom, urges Congress to “stop the Washington bailout of Puerto Rico.” The Virginia-based conservative group does not disclose its donors. It was founded in 1998 to combat government restrictions on smoking.

The CFIF did not respond to a Huffington Post question about whether any of its funders have a financial stake in the outcome of the Puerto Rico bailout.

By Daniel Marans & Ben Walsh

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This is the third post in a series about ballot measures to raise the minimum wage in Colorado and three other states. The first post introduced a restaurateur in Denver who supports the increase and the national organization that persuaded him to go public with that support, is here. The second looked at how the provision could widen inequality among servers and kitchen workers.

There are 32 mostly state and local business associations that have signed on to Keep Colorado Working, the coalition formed to fight Amendment 70, which would raise the state’s minimum wage through a constitutional amendment. Only one of them, however, has actually contributed money to fight the ballot measure: The Colorado Restaurant Association and its political action committee have spent $359,000, which makes it the single largest Colorado contributor to campaign, which has raised $1.7 million to date.

Indeed, while dozens of local food services businesses have chipped at least $105,000 to the effort, which has raised $1.7 million to date, more than $1 million has come into the coalition’s coffers from out of state, including $850,000 from a shadowy business group called the Workforce Fairness Institute. Other large national contributors include Darden, the Olive Garden’s parent corporation, and the National Restaurant Association.

But all this is far less than the $2 to $3 million that opponents had anticipated spending to try and defeat the amendment. And it is dwarfed by the $5.2 million that advocates for the vote, working under the name Colorado Families for a Fair Minimum Wage, have raised. Most of their money has come from national unions and union-backed organizations like The Fairness Project and progressive philanthropies like the Center for Popular Democracy and the Civic Participation Action Fund.

In a campaign awash with money, the efforts of Business for a Fair Minimum Wage, which has been organizing Colorado businesses to support the amendment, are fairly modest. Business for a Fair Minimum Wage founder and C.E.O. Holly Sklar won’t say how much her group is spending in Colorado, but the effort is being funded by Dr. Bronner’s, the organic soap-maker with a long history of activism. (She declines to further identify its funders, except to say that they comprise businesses and foundations.) Dr. Bronner’s has made raising the minimum wage a top company priority, even relabeling some of its soap bottles with “Fair Pay Today!” “People should be able to make ends meet on the wages they get,” says David Bronner, C.E.O. of his family’s company, which is registered as a benefit corporation. “They should not have to rely on inefficient government programs like food stamps and housing assistance. Taxpayers should not have to subsidize companies using the welfare system to keep wages low.”

Bronner says his company has given about $75,000 to Business for a Fair Minimum Wage. “We really like what they’re doing,” he says. “I think it’s really important that policy makers hear from business owners, that business owners too see value in raising the minimum wage, and it isn’t just about labor groups and worker rights.”

Outside of Colorado, business groups have mounted little more than token opposition. In each of Arizona, Maine, and Washington, where advocates have raised over $1 million to promote their respective ballot measures, opponents have raised $100,000 or less, according to state campaign finance records. The Arizona Restaurant Association sued to try and prevent the minimum wage from making the November ballot, but hasn’t spent any money combating it since then. (The group’s president and C.E.O., Steve Chucri, didn’t respond to requests for comment.) The state chamber of commerce has agreed to kick in $20,000.

In Maine, the state restaurant association has spent nearly $78,000 to fight the ballot amendment through its political action committee, but apart from small contributions from Darden ($7,500) and the National Restaurant Association ($2,500), the opposition has recorded no contributions from out of state.

It’s not clear — even to some of the principals — why Colorado became the battlefield of choice in the fight over minimum wage at the expense of media outlets in Arizona, Maine, and Washington. “Why they’re not putting money to fight it here is a mystery to me,” says Maine Restaurant Association president and C.E.O. Steve Hewins of the national organizations, though he allows that “Maine to a degree is off a lot of radar screens.”

The National Restaurant Association declined to respond directly to Hewins’s charge of neglect. But in an emailed statement, the organization’s spokesman, Steve Danon, wrote, “While we work in partnership, our state restaurant associations take the lead on these issues, as they know what works best for restaurateurs in their state. We’ve been vocal on opposing drastic increases to the minimum wage overall.” The Workforce Fairness Institute and Darden didn’t respond to a request for comment.

But Tyler Sandberg, who is managing the Keep Colorado Working campaign, suggests that perhaps national groups are drawn to the Colorado initiative because, as a constitutional amendment, it “is the worst-written of all of them.” But he also says he’s made a point of soliciting those contributions. “When we saw all the national money coming in on the other side, we realized we would have to fight fire with fire and seek national contributions as well.”

Sklar says her pro-wage-hike business group is focusing on Colorado because the Arizona and Washington measures also include paid sick leave, which is beyond her group’s scope, and in Maine a local small-business coalition is pressing the case.

In any event, the vast sums spent in Colorado appear to have made little difference. Polls in all four states show the wage increase winning by similar margins, with 55 percent to 60 percent of voters backing it.

By Robb Mandelbaum

Source

New York/Washington. Efforts to fill top positions at some US Federal Reserve regional branches are casting a spotlight on a decades-old process that critics say is opaque, favors insiders, and is ripe for reform.

Patrick Harker took the reins as president of the Philadelphia Fed this week, in an appointment that attracted scrutiny because he served on the committee of directors that interviewed other prospective candidates for the job he ultimately took.

The Dallas Fed has been without a permanent president for more than three months as that search process stretches well into its eighth month. And the Fed’s Minneapolis branch abruptly announced the departure of its leader, Narayana Kocherlakota, more than a year before he was due to go, with no replacement named to date.

The delays and reliance on Fed employees in picking regional Fed presidents can only embolden Republican Senator Richard Shelby to push harder for a makeover of the central bank’s structure, which has changed little in its 101 years.

A bill passed in May by the Senate Banking Committee that Shelby chairs would strip the New York Fed’s board of its power to appoint its presidents. And it could go further, given the bill would form a committee to consider a wholesale overhaul of the Fed’s structure of 12 districts, which has not changed through the decades of shifting US populations and an evolving economy.

The bill is part of a broader conservative effort to expose the central bank to more oversight, and some analysts saw the Philadelphia Fed’s choice as reinforcing the view that the Fed needs to open up more to outsiders.

Nine of 11 current regional presidents came from within the Fed, a proportion that has edged up over time. Twenty years ago, seven of 12 were insiders.

“The process seems to create a diverse set of candidates in which the insider is almost always accepted,” said Aaron Klein, director of a financial regulatory reform effort at the Bipartisan Policy Center.

Since it was created in 1913, the central bank’s decentralized structure was meant to check the power of Washington, where seven Fed governors with permanent votes on policy are appointed by the White House and approved by the Senate.

The 12 Fed presidents who are picked by their regional boards usually vote on policy every two or three years, and they tend to hold more diverse views.

Former Richmond Fed President Alfred Broaddus told Reuters the regional Fed chiefs have more freedom “to do and say things that may not be politically popular” because they are not politically appointed. “On the other hand, there is the question of legitimacy since they are appointed by local boards who are not elected.”

“Tone deaf”

Two-thirds of regional Fed directors are selected by local bankers, while the rest are appointed by the Fed’s Board of Governors in Washington.

Critics question how well those regional boards — mostly made of the heads of corporations and industry groups meant to represent the public — fulfill their mission.

Last year, a non-profit group representing labor unions and community leaders organized by the Center for Popular Democracy, urged the Fed’s Philadelphia and Dallas branches to make the selection of their presidents more transparent and to include a member of the public in the effort.

Philadelphia’s Fed in particular proved “tone deaf” in its head-hunting effort, said Lou Crandall, chief economist at Wrightson ICAP in Jersey City, New Jersey.

Harker was a Philadelphia Fed director when the board started looking to replace president Charles Plosser, who left on March 1, and he was among the six directors who interviewed more than a dozen short-listed candidates for the job, according to the Philadelphia Fed.

But on Feb. 18, Harker floated his own name, recused himself from the process and a week later his colleagues on the board unanimously appointed him as the new president.

While the selection follows Fed guidelines and was approved by its Board of Governors, it raised questions of transparency and fairness.

“The Philadelphia Fed’s search process might have made perfect sense in a corporate environment, but is obviously problematic for an official institution,” said Crandall.

The board’s chair and vice chair, Swathmore Group founder James Nevels and Michael Angelakis of Comcast Corp, respectively, declined to comment, as did Harker.

Peter Conti-Brown, an academic fellow at Stanford Law School’s Rock Center for Corporate Governance, and an expert witness at a Senate Banking Committee hearing this year, proposed to let the Fed Board appoint and fire regional Fed presidents or at least have a say in the selection process.

In the past, reform proposals for the 12 regional Fed banks have focused on decreasing or increasing their number and their governance.

Changes to the way the regional Fed bosses are chosen could strengthen the influence of lawmakers at the expense of regional interests.

For now, delays in appointments of new chiefs force regional banks to send relatively unknown deputies to debate monetary policy at meetings in Washington, as Dallas and Philadelphia did last month when the Fed considered raising interest rates for the first time in nearly a decade.

The Minneapolis Fed still has time to find a new president before Kocherlakota steps down at year end.

“For now the Fed criticism is just noise, mostly from Republicans,” said Greg Valliere, chief political strategist at Potomac Research Group. “But once the Fed begins to raise interest rates … then the left will weigh in as well.”

Source: Jakarta Globe

I'VE ALWAYS enjoyed talking with people, and, as long as I can remember, I wanted to work in the hotel industry. It's been my dream to work with guests at the front desk to make sure they have the best experience possible.

As an African-American woman, I knew that lucky breaks weren't going to be handed to me, so I did everything I could to achieve my dreams. I went to school and got my bachelor's degree in hospitality and hotel management in 2000 from the Indiana University of Pennsylvania.

However, apart from a brief internship after college at the Best Western and a year at the Hilton working at the switchboard, which was almost a decade ago, I haven't been able to find work in my chosen field - a field in which I have a degree.

I've heard people say the recession is over because the unemployment rate is about 5 percent. But I can tell you that things are still really bad in the black community. Currently, unemployment for blacks is about 9 percent.

I've always been politically active and serve as the judge of elections in my voting district. So when I heard about a campaign that calls on the Federal Reserve to ensure that everybody gets decent paying work, including black folks, I was eager to join.

When I got my degree 16 years ago, the economy was in decent shape. Armed with my degree, the internship experience and good recommendations, I didn't expect to have any problems getting a job in a hotel. I applied to two dozen jobs and, after being turned down at all of them, I had to take other kinds of jobs in food service or customer service.

Finally, after many years, I got my switchboard job at the Hilton. Even though I was getting only $10 an hour, I was excited to finally be working at a hotel and thought I would just stay there and work my way up. But the recession hit in 2008, and I was laid off a year later.

That's when things became really tough. The recession hit African-American women, even college-educated ones like me, particularly hard. I've worked on and off since 2008, but finding good work has become almost impossible. At one point, I was traveling two hours each way to get to my job at a state-run liquor store.

I eventually had to quit when I suffered severe medical issues. I was diagnosed with a neurological condition and uterine fibroids, all within a matter of months. A couple of years ago, I was able to work again and joined a job skills program. The program placed me at a job where I work part-time - only 20 hours a week - as a cashier and food server at a university dining hall.

The unemployment rate apparently counts people like me as employed, even though I don't work enough hours to pay my bills. I'm overqualified and underpaid (I earn $11.25 an hour), but since I'm working - even though I'm still on Medicaid and food stamps - I'm used as evidence to say the recession is over.

Involuntary part-time unemployment is a more accurate figure to look at. It's over 15 percent for blacks! That's a whole lot of people who aren't making ends meet, but are still being counted as working.

People need to know that the Federal Reserve has incredible power over the economy and people's lives. It might seem very abstract, but it's not. If the Federal Reserve keeps interest rates low, the economy will continue to grow and people like me will be able to find full-time jobs or better paying work. If it raises rates because it claims the economy is doing well, it will be tougher for everyone to find jobs.

I'm going to Jackson Hole, Wyo., next week to join a protest against the Federal Reserve, which holds a symposium there every year. We want the president of the Philadelphia Fed, Patrick Harker, and the rest of the Fed, to see what regular folks go through beyond the numbers in the headlines.

Every week, I still go online to look for jobs at large hotel chains. I know that one of these days I will work at a hotel again. I just need the economy to give me a fair chance.

Salwa Shabazz lives in Philadelphia and is a member of the Fed Up campaign, an initiative of the Center for Popular Democracy.

By Salwa Shabazz

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