From the Dispatch

Supreme Court 2009-2010: Pro-Corporate, But Continued Trend Towards Deferral to State Authority

Nathan Newman — Tue, 29 Jun 2010 11:26:57 -0400

Yesterday, the Supreme Court ended its term with a bang with a ruling in McDonald v. City of Chicago that state gun control regulations can be struck down by federal courts based on the Second Amendment. While the number and scale of blockbuster decisions was not so high this session, the singular impact of the Citizens United case earlier in the term unleashing unregulated corporate money on elections, combined with the dangerous implications of the Rent-A-Center, West v. Jackson arbitration decision, emphasizes the pro-corporate bias the Supreme Court has increasingly exercised in recent years.

As detailed below, other decisions on public university governance of student groups, property rights challenges to beach restoration programs and regulation of ballot initiative processes, did continue the trend in recent terms of the Supreme Court deferring to state authority in major cases. And criminal justice cases continued to be a mixed bag of protecting individual rights versus upholding state discretion.

Table of Contents:
- Citizens United and the Supreme Court’s Pro-Corporate Bias
- Supreme Court’s Deferral to State Authority
- Criminal Justice
- Conclusion

Citizens United and the Supreme Court’s Pro-Corporate Bias

There is little question that Citizens United will be one of the major cases that defines this year’s term—and in many ways will frame the legacy of the rise of Chief Justice John Roberts and Justice Samuel Alito whose presence on the court has led to the dismemberment of campaign finance regulation.

"A Massive New Threat of Corruption and Corporate Control": With Citizens United, the Supreme court has given corporations the same free speech rights as individuals and allowed unlimited election spending by corporations when not coordinated with candidates.

U.S. Senator Sheldon Whitehouse of Rhode Island said recently,

The Citizens United decision -- yet another 5-4 decision [opens] our democratic system to a massive new threat of corruption and corporate control. There is an unmistakable pattern. For all the talk of umpires and balls and strikes at the Supreme Court, the strike zone for corporations gets better every day.

To emphasize its hostility to restrictions on the power of the wealthy over our elections, the Supreme Court ordered a freeze of Arizona's public financing matching funds system which gives candidates participating in public financing additional funds when opponents spend above benchmarked levels of spending. This means that publicly-financed candidates will be eligible to receive only one-third of the money to which they'd otherwise be entitled.

Letting Corporate Arbitrators Decide if Their Own Decisions are Unfair: In Rent-A-Center, West v. Jackson, the Supreme Court - by the same pro-corporate 5-4 vote lineup of Justices - further closed the courthouse door for individuals abused by their employers. The Court held that employees cannot only be forced to have complaints about racial discrimination or other employer abuses decided by private arbitrators (a reality decided in previous terms), but also that where an employee feels the terms of the arbitration agreement are unfair and unconscionable, it is up to the corporate-chosen arbitrator to decide if the arbitration agreement is unfair. In this case, for example, the arbitration agreement limited claims an employee might bring against the employer, while exempting those claims that Rent-a-Center might raise, and restricted an employee’s ability to gather evidence.

Instead of allowing a judge to decide whether the agreement to arbitrate could be enforced, the Supreme Court majority leaves it to the arbitrator chosen by the agreement alleged to be unfair to decide the issue, cutting off access to the courts even for the most basic threshold issue of whether these arbitrators and the rules imposed are a fair substitute for a day in court.

Privatizing Democracy: So just as corporations now have unlimited rein to use their money without regulation to dominate elections, those same corporations now have de facto have authority to run private courts to decide the legal rights of their own employees without little or no judicial restraint.

Supreme Court’s Deferral to State Authority

However, beyond these pro-corporate decisions, the Supreme Court, often with surprising configurations of majorities, continued its trend in recent years of deferral to state authority in more cases where core corporate interests are not at stake.

States and the Second Amendment: The exception to the trend this year was McDonald v. City of Chicago, which extended the Second Amendment to restrict state gun regulations. But even in that case, the majority went out of its way to affirm that many traditional gun control regulations will still be upheld even where an individual right to keep firearms for self-defense in the home is protected. Since most states have their own constitutional and statutory reasonableness test for gun regulations, the practical effects of McDonald may end up being relatively limited.

Rejecting “Takings” Doctrine: While right-wing constitutional lawyers for years hoped to create a majority to limit most local government land regulations as illegal “takings” under the Constitution, the Court in Stop the Beach Renourishment v. Florida Department of Environmental Protection not only rejected a property rights challenge to a state beach-erosion statute, but Justice Anthony Kennedy refused to even give a fifth vote to the proposition that a court ruling could ever constitute a “taking” of private property, a sign that most reasonable land use regulations will be protected from federal judicial second-guessing in the future.

Universities and Groups Excluding Gay Students: In Christian Legal Society v. Martinez, state universities retained their authority to deny funding to student groups that exclude certain students, such as gay and lesbian students, from membership. The Court upheld the University of California-Hastings' policy of requiring student groups to take on "all comers" as a prerequisite to official school recognition as a reasonable and viewpoint neutral restriction.

Public Disclosure of Ballot Initiative Signers: Given increasing use of fraud by those promoting right-wing ballot initiatives, progressives won an important victory in Doe v. Reed, in which the Court held that disclosure of signers of political ballot initiatives did not generally violate the First Amendment (although they might be able to in the future argue that specific harms could lead to some restriction on disclosure in a future case). In a strong argument for respecting state regulation of ballot initiatives, Justices Sotomayor, Stevens and Ginsburg wrote:

These mechanisms of direct democracy are not compelled by the Federal Constitution. It is instead up to the people of each State, acting in their sovereign capacity, to decide whether and how to permit legislation by popular action. States enjoy “considerable leeway” to choose the subjects that are eligible for placement on the ballot and to specify the requirements for obtaining ballot access (e.g., the number of signatures required, the time for submission, and the method of verification).

Reviewing Public Employee Text Messages: In a slightly idiosyncratic case, the Court in City of Ontario v. Quon unanimously held that a police department’s decision to review the text messages of employees who exceeded the monthly limit on their office pagers in order to determine whether the monthly limit should be raised was reasonable under the Fourth Amendment.

Criminal Justice

Criminal justice decisions by the Supreme Court invariably combine a combination of invocation of individual rights, discussions of state authority and obscure procedural explorations. While cases this term had few singular disruptions of previous principles, they had a number of clear incremental changes effecting state criminal proceedings. (See this ACLU writeup for an extended list of additional cases).

State Convictions and Immigration: Of import for current debates on the role of states in immigration policy, the court ruled in two cases that courts had to carefully weigh how state criminal statutes interact with federal deportation rules:

In Padilla v. Kentucky, the Court held that attorneys have an obligation to carefully advise their clients of the immigration consequences of pleading guilty. In this case, the defendant– a lawful permanent resident for 40 years who pled guilty to drug trafficking – was incorrectly advised by his lawyer that he was unlikely to face deportation because of his long stay in the United States.
In Carchuri-Rosendo v. Holder, a unanimous Court ruled that defendant’s conviction for possession of a single Xanax tablet without prescription, following an earlier state court conviction for possession of less than two ounces of marijuana, could not qualify as an aggravated felony under federal immigration law, and thus did not render the petitioner ineligible for potential discretionary relief from deportation.

Restricting Miranda: The Court significantly limited restrictions the Miranda “right to remain silent” in a series of cases limiting the Miranda ruling:

In the most critical case, in Berghuis, Warden v . Thompkins, a 5-4 decision of the Supreme Court affirmed that a suspect did not properly invoke his right to remain silent, so statements were properly admitted in court. Justice Sotomayor, writing for four dissenters said, “the Court today creates an unworkable and conflicting set of presumptions that will undermine Miranda’s goal.”
In Florida v. Powell, the Court held that police warnings that a suspect had a right “to talk to a lawyer before answering any questions” adequately complied with Miranda, since the right does not require a particular set of words for police compliance.
In a 6-3 Graham v. Florida decision authored by Justice Kennedy, the Supreme Court found a Florida law unconstitutional under the Cruel and Unusual Punishments Clause where juvenile offenders could be sentenced to life in prison without parole for a non-murder.
In Maryland v. Shatzer, the Court held that police did not violate the law by collecting incriminating statements from a person who had invoked his Miranda rights two and a half years earlier, and that the right against interrogation lasts only 14 days after invocation.

In other key decisions effecting state proceedings:

In Bobby v. Van Hook, Wong v. Belmontes and Porter v. McCollum, the court created a series of new standards for when counsel is so ineffective as to warrant a new trial.
In Presley v. Georgia, the Court concluded that a defendant’s Sixth Amendment right to a public trial had been violated when the public was excluded from the jury voir dire proceedings.
In Holland v. Florida, a 7-2 decision authored by Justice Breyer, the Court agreed that an attorney could harm his client so badly that the defendant’s time to seek habeas must be extended.

Conclusion

Elana Kagan’s likely replacement of Justice Stevens on the Court is unlikely to change the broader trends on the Court and states will continue to face the challenge of reining in the corporate election spending unleashed by Citizens United and protecting access to justice in the courts eroded by the Rent-a-Center case. As People for the American Way wrote in a recent report, Rise of the Corporate Court: How the Supreme Court is Putting Businesses First, “the conservative-tilting Court has reached out to enshrine and elevate the power of business corporations.”

While deferral to state authority has emerged as an increasing consensus among the Justices on a number of issues, lurking in the dissents of the most conservative Justices are even more extreme pro-corporate and right-wing views that with one more ally could push legal doctrine in ways that would completely erode democratic decision-making over economic and social policy. So even the more positive trends on the Court warrant only partial relief, since small changes in personnel in the future could readily enable the more activist impulses of the block of the four most right-wing members of the Court.

Resources:
Progressive States Network - The Supreme Court and the States 2008-2009: Trend Defending State Authority Emerges this Term
Scotusblog - Everything you read about the Supreme Court is wrong
ACLU - ACLU Summary of the 2009 Supreme Court Term
People for the American Way - Rise of the Corporate Court: How the Supreme Court is Putting Businesses First
Alliance for Justice - The Corporate Court

Landline Phone Deregulation to Deny Protection to Illinois Consumers

Fabiola Carrion — Thu, 24 Jun 2010 13:19:02 -0400

Illinois has enacted a law that will take away a necessary protection for landline phone consumers. SB 107 strips away the authority of the Illinois Commerce Commission to ensure that landline phone users – residing in 78 percent of households in the state - receive reliable and affordable phone service.

Under the law, Internet-based phone services would be completely unregulated. The ICC has been instrumental in promoting universal access to telecommunications services in the state, as mandated by the state’s Telecommunications Act that was last updated in 2001. It required a service provider to offer high-speed Internet access to at least 90 percent of homes outside of the Chicago Metropolitan area. This newly enacted law eliminates such requirement and the ability of Illinoisans to access affordable High-Speed Internet services. Consequently, the law threatens to reduce investment in broadband that could make the state more competitive in the global market.

Supporters of the law say that it will create competition and profits that will in turn translate into the creation of new jobs and services. However, a review of the bill reveals that employment generation is nowhere in its contents. Labor representatives in other states have confirmed that deregulation of telephony has driven down employment in the industry.

Moreover, a decrease in oversight is likely to result in higher costs for phone usage. Even supporters have acknowledged that prices for services could increase. Quality will also be affected by the law. Instead of requiring repair of landline service within 24 hours, the waiting window will be extended to 30 hours. Further, consumers will be unable to lawfully demand service quality standards from telecommunications companies.

Other Deregulation Attempts Blocked in Colorado and Wisconsin: A similar bill in Colorado, which was thankfully vetoed by the Governor, threatened to deregulate basic telephone service and negatively affect pricing and service quality. HB 1281 would have removed all authority from the Colorado Public Utilities Commission to regulate phone services. The bill would have also stripped away price and service-quality guarantees overseen by the Colorado PUC. In Wisconsin, SB 469 was introduced to also deregulate landline telephone business and leave residents, especially from rural areas, without adequate service. Consumer groups in Wisconsin have also voiced their concern that less regulation could lead to less investments in broadband infrastructure.

Massive Rate Hikes in California Following Deregulation: After abandoning oversight of the telecommunications, California consumers experienced hikes ranging from 50 to 276 percent in the following features: select custom calling services, local directory assistance, fees for returned checks, local toll rates, fees for having an unlisted numbers, and fees for late payments. And the promise to a competitive playing field that would create jobs and increase customer choices has not occurred.

Resources:
Citizens Utility Board - Talking points on rewriting Illinois’ Telecommunications Act
Chicago Tribune - New Illinois Law Relaxes Phone Regulations
Denver Post - Consumer Group Fears Bill May Spur Phone-Service Deregulation
Public News Service - AARP Blasts “Future of Phone Service” Deregulation Bill on Gov’s Desk
Utility Consumers' Action Network - California's Telco Deregulation Fiasco: Finding Alternative Phone Service in a Competitive Wasteland
Stop the Cap! - Wisconsin Deregulation Follies: AT&T Wants State to Make the Same Mistake All Over Again

Payday Lending Abuses Reined In, As Colorado Joins Other States in Reform

Cristina Francisco-McGuire — Mon, 17 May 2010 12:37:16 -0400

The payday lending trap has been shorting working families to the tune of nearly $5 billion per year ever since the industry exploded onto the scene in the 1990’s. The number of payday lending institutions has jumped exponentially from 500 in 1990 to about 22,000 today (compared with 14,000 McDonald's), mainly targeting low-income African American and Latino communities.

But two weeks ago, Colorado enacted payday industry reforms, squeaking by with a one-vote margin in the Colorado House. Though lenders can still charge a $75 origination fee as well as monthly fees of up to $30 on top of interest, the bill addresses cycles of debt by capping APR interest rates at 45% and mandating that borrowers be given as long as six months to pay back loans.

Colorado’s joins sixteen other states and the District of Columbia which have already passed limits on interest rates for short-term loans, ranging from 17 percent to 60 percent.

Beyond Capping Interest Rates: A number of other reforms have been enacted or proposed in other states to prevent workers being bled dry by payday loans, including:

Oregon approved SB 993, which toughened existing predatory lending regulations by requiring any lender that derives more than 10% of its business from payday loans to acquire a license from the Dept. of Consumer and Business Services to conduct business, on top of the licenses already required by state and local law. The new law also creates new notice, reporting, and regulatory compliance requirements for payday lenders, the non-compliance of which can result in fines and other penalties.
Illinois’ HB 537 caps the APR on payday loans to 99%, indexes the loans based on the borrower’s ability to pay, and would require loans to be paid off in equal monthly installments with no balloon payments. After passing the House in April, it cleared the Senate in May and is waiting for a concurrence vote in the House.
The Ohio House passed HB209, which limits fees charged by payday lenders. Though Ohio already caps APRs at 28%, the fees were a way for lenders to get around regulations. Though it faces a tough battle in the Senate, Gov. Ted Strickland supports the legislation.
SB 193 passed both houses of the New Hampshire legislature, and establishes a 36% APR cap on all small loans under $10,000, including payday loans.
Though Iowa’s HF 2127, which would give payday lenders the option of capping the APR for loans at 36% or limiting the number of loans per borrower at six per year, was one vote short of moving out of a subcommittee, momentum is building. After 60 members of the Iowa Citizens for Community Improvement managed to shut down the operations of an Ace Cash Express in Des Moines in December 2009, Des Moines City Council members voted unanimously on May 13, 2010, to a six-month moratorium on new payday loan stores in the city.

Unfortunately, two states passed weaker legislation designed to appease the payday lending industry, throwing consumers under the proverbial bus in the process. Utah and Wisconsin both caved to threats that the industry would shed jobs with further regulation, approving bills that stopped short of requiring much-needed limits on interest rates.

Stopping Steps Backward: Advocates are also working to defeat legislation in California, AB 377, that would be a huge step backward, increases the maximum payday loan amount from $300 to $500 and allows lenders to charge consumers an APR as high as 459% for a two week loan. It would also establish de facto legalization of internet payday lending. It passed the Assembly in May 2009 and is awaiting a hearing in the Senate Judiciary Committee.

See the Center for Responsible Lending for more of the latest news on payday lending reform here. For a useful infographic on how payday lending works, visit The Consumerist.

Resources:
Center for Responsible Lending - Pay Day Lending
Coloradans for Payday Lending Reform
Consumer Federation of California, “CFC Opposes AB 377 (Mendoza) – Pro Payday Lenders, Anti Borrower”
Consumerist - How Predatory Lending Works, From Payday Loans To Rent-To-Own

Financial Reform: Keep State AGs and State Law on the Beat Against Predatory Lending Practices

Nathan Newman — Mon, 10 May 2010 12:22:39 -0400

As Congress debates federal financial reform legislation, a key priority for financial industry lobbyists remains gutting provisions that would strengthen enforcement by state attorneys general and stopping the partial restoration of state powers to regulate national bank abuses against consumers. As we detailed three years ago, much of the damage to communities from subprime lending might have been avoided if the Bush Administration had not been able to shut down most state anti-predatory lending laws early in the decade.

Strengthening state power to regulate abuses by national banks has been a priority for reformers from the beginning of the financial reform process. While the bill approved in the House and the current leadership proposal in the Senate are not as strong in preserving state enforcement powers as some early proposals, under them state attorneys general would still retain the power to enforce federal law against national banks. Federal authority to preempt state banking laws would also be more limited than under our current laws. One broad amendment to keep current bad federal preemption of state banking laws was rejected last Thursday, although most conservative Senators voted for it. (Note that "states' rights" inevitably lose out in conservative hands when corporate interests want federal power to trump state regulations).

Stopping Bad Senate Deals on Preemption: Newspapers continue to report on deals being negotiated between conservative Democrats and Republicans to undermine state regulatory authority, even as national consumer leaders continue to speak out against any further preemption compromises. A letter sent to Senators on Friday by Americans for Financial Reform, a coalition made up of over 250 consumer, labor and civil rights groups, highlights the key arguments for why expanding state authority is so critical, including:

"Help from state AGs is critical to ensuring that consumers have at least minimum protections against reckless Wall Street practices. In addition, consumers are much more likely to complain to, and get a response from, state-based enforcement agencies."
"States need to be able to address new problems before they spread nationally, without waiting for federal regulators to notice them and respond... States that had tough anti-predatory lending laws (until they were preempted) had lower foreclosure rates than states without those laws. After state laws were preempted, national banks made riskier loans."
"It is critical to require a case-by-case assessment of state laws for purposes of federal preemption rather than permitting state laws to be wiped out broadly without due consideration for each law... the protections in the bill against excessive preemption need to be strengthened, substantively and procedurally, to ensure that the [federal government] must undertake a serious inquiry and not a pro forma one."

With critical votes happening all this week, Americans for Financial Reform has an action page with key alerts and tools for contacting Congress to express the need for real financial reform, including keeping authority in the states to protect consumers from national bank abuses.

Resources:
Progressive States Network - The Predatory Lending Bubble and How the Feds Made it Worse
Progressive States Network - Protecting State Consumer Protection from Preemption in Federal Financial Reform
Americans for Financial Reform - Elizabeth Warren and Attorney General Lisa Madigan Speak Out Against Preemption Deal
Americans for Financial Reform - Keep State Attorneys General On The Predatory Lending Beat: Oppose Amendments To Further Preempt State Authority

Banks Take Advantage of States in Fiscal Crisis

Altaf Rahamatulla — Thu, 04 Mar 2010 12:13:02 -0500

The same large banks whose unregulated actions were primary contributors to the economic downturn have also been manipulating state and local governments to profit from budget deficits for years.

Essentially, banks are alluring states with the promise of a means to cut borrowing costs and increase returns through the use of an interest rate swap. The mechanism is a derivative that allows cash-strapped municipalities and states to exchange interest payments on a variable bond deal for an allocation of funds from a bank. So, the bank would establish a fixed rate on the bond and swap for the variable "interest rate of the bond that was set by larger macroeconomic forces, such as the Federal Reserve." Unfortunately, the results have been disastrous.

These type of deals are losing propositions for states and municipalities. Under unfavorable marketing conditions, interest payments and fees associated with these deals can jump dramatically. Since the federal government decreased interest rates to shore up financial institutions, the banks were able to profit tremendously while budget gaps at the local and state level continue to grow. As Mike Elk from the Campaign for America's Future explains:

"While banks are still collecting fixed rates of from 4 percent to 6 percent, they are now regularly paying state and local governments as a little as a tenth of one percent on the outstanding bonds...Banks and states were supposed to be paying equal rates. However, with the Fed lowering interest rates, which was anticipated, now states and local governments are paying about 50 times what the banks are paying...To make matters worse, these state and local governments have no way of getting out these deals. Banks are demanding that state and local governments pay tens or hundreds of millions of dollars in fees to exit these deals."

The deals have cost state governments and taxpayers almost $28 billion in interest and fees at a time when states are already collectively facing billion dollar deficits and considering huge cuts to essential public services.

Some of the areas in the country that are being hit the hardest have amassed massive debt as a result of similar deals. For instance, Detroit, with an unemployment rate of almost 15 percent, entered a derivatives deal with UBS and other banks that supposedly permitted $2 million in annual interest savings on $800 million worth of bonds. In order to protect against losses, the deal carried a stipulation that if Detroit's credit rating dropped, the banks could negate on its obligations and charge a breakup fee. As the city's credit rating plummeted during the recession, it found itself in a position of owing over $400 million. Now, the city is using casino revenue to pay $4.2 million in monthly payments to the banks. The city must pay the banks before considering funding other services.

Similar to U.S. Representative Elijah Cummings' (D-MD) comments on the use of bailout funds, the banks are basically "slapping these American taxpayers in the face by continuing the...business-as-usual attitude." Fortunately, states are taking proactive steps to confront these issues.

Pennsylvania State Auditor General Jack Wagner called on the legislature to prohibit municipalities and school districts from entering interest rate swap contracts. He stated, "[q]uite simply, the use of swaps amounts to gambling with public money. The fundamental guiding principle in handling public funds is that they should never be exposed to the risk of financial loss. Swaps have no place in public financing and should be banned immediately.”
Tennessee Comptroller of the Treasury Justin P. Wilson recommended the state place limitations on variable rate debt for financing projects.

Some states are even considering the creation of state-owned banks to protect against the abuses of private banks, foster public accountability and fiscal integrity, increase local economic development investments, promote competition, and expand lending to small businesses. North Dakota, with a 4.4 percent unemployment rate and a $700 million budget surplus last year, is home to the country's only state-owned bank.

Legislative and gubernatorial candidates in Florida, Oregon, Idaho Illinois, and California have floated the idea of creating a state bank.
Massachusetts Sen. President Therese Murray and Virginia Del. Bob Marshall each advanced initiatives in their respective states to study the creation of a state bank.
Washington Rep. Bob Hasegawa introduced HB 3162 this year, a bill that would create a state-owned bank.

Resources:
Bankster USA
Business Week - Wall Street Plays Hardball
Campaign for America's Future - How Big Banks' Interest Rate Schemes Bankrupt States
YES! Magazine - Whose Bank? Public Investments, Not Private Debt

States Act to Limit Judicial Ruling Allowing Corporations to Spend Directly to Elect or Defeat Candidates

Christian Smith-Socaris — Thu, 28 Jan 2010 13:12:10 -0500

Portending a sharp increase in corporate political spending, the Supreme Court has ruled (Citizens United v. FEC) that corporations enjoy the same speech rights of citizens when it comes to advocating the election or defeating political candidates. Elected officials, including U.S. President Barack Obama, have denounced the ruling as striking at the heart of our democracy by putting corporations on an equal footing with real people when it comes to basic constitutional rights. Progressives who are trying to counter the oversized influence of giant corporations on our democracy have long viewed the granting of full first amendment rights to corporations as the moment when these creations of the state would end up rampaging on the political scene like Frankenstein's monster. That day has now arrived and a forceful response is being pursued by policymakers at all levels of government.

Most States Don't Even Have Basic Disclosure Requirements: As expected, much of the early debate has focused on the ability of the federal government to write new rules which will stem the tide of corporate cash likely to flood the political landscape in the mid-term congressional elections and beyond. Yet, only 24 states currently prohibit corporations from spending their treasury funds to promote or attack a candidate for state or local office, and many lack the disclosure and disclaimer requirements that serve as a last line of defense for citizen control over our elections. And even if the federal government does respond forcefully, state and local elections will not be covered in federal statute, meaning that states must act independently to protect their own democratic processes. Given this, there clearly is an imperative for states to strengthen their campaign finance laws, placing limits on corporate spending where possible and allowing access to information on corporate spending to support or oppose which candidates.

Using Corporate Accountability to Rein in Spending: Lawmakers at both the federal and state levels are developing and moving forward with a series of proposals that will seek to directly counter the impact of the ruling by protecting the interests of shareholders, remove tax benefits for political spending, prevent foreign-owned corporations from electioneering, and ban political spending by government contractors, among other things. These are in addition to measures to strengthen current disclosure and disclaimer requirements. The first state to act has been Maryland, where Senators Jamie Raskin and David Harrington, and Delegate Brian Frosh have introduced a package with the following measures:

Require any corporate executives to obtain a two-thirds vote of the shareholders ratifying the specific expenditure. (This is the same percentage of the shareholders required for mergers and acquisitions.)
Prevent "pay to play" corruption (and its appearance) by forbidding state contractors to make campaign expenditures on behalf of political candidates and their campaigns.
Mandate that corporations disclose their expenditures to the Board of Elections just as any other campaign expenditure would be reported.

Speaking to the critical need for these reforms Sen. Raskin commented that:

"[a] strong democracy requires a wall of separation between corporate money and public elections, but five justices on the Supreme Court last week took a sledgehammer to that wall. In Maryland, we are beginning to explore ways to contain the damage of this devastating opinion. By assuring that corporate political expenditures only occur when two-thirds of the shareholders agree, that all such expenditures are disclosed, that state contractors not participate in partisan campaigns at all and that corporate political expenditures not be tax-deductible, we have started to spell out a program that can be used nationally to make sure that 'we the people' doesn't turn into ‘we the corporations."

Corporate Transparency in State Budgets as a Tool: Another key part of campaign spending accountability is making clear how different companies are benefiting from government spending, whether from direct subsidies, government contracts or various corporate loopholes. State lawmakers working with Progressive States Network on our Corporate Transparency in State Budgets campaign are seeking to make sure that key information on all of that corporate largesse from government is publicly available. Any time corporations are seen spending money on elections, information on the spending and tax deals they receive from state governments should be instantly available to voters to put any election claims in perspective.

See here for model corporate transparency legislation and a resource page for the campaign.

Challenging Judicial Bias Towards Corporate Power: In addition to his legislative response, Sen. Raskin and others are also working to generate pressure for a federal constitutional amendment through the website FreeSpeechForPeople.org. Several other groups are moving in the same direction as well (see here, here and here). And moving on another track are advocates from the Fair Elections Now Coalition who have brought together over 40 business leaders to denounce the corporate takeover of campaigns and pledge to not engage in political speech with corporate treasury funds. Members of this coalition are also emphasizing that while these are some basic rules we can lay down to reduce the flood of corporate cash, it is clear that without alternative, clean, funding mechanisms there is no way to free our democracy from the grip of corporate power.

What does the future hold for campaign laws? Likely more change is coming. The current court has taken every opportunity (and even created the most recent opportunity) to strike down restrictions on independent expenditures. In a case argued just yesterday, the DC Court of Appeals made clear that they will strike down the $5000 cap on contributions to political non-profits. This trend makes it even more important that states develop robust disclosure and disclaimer requirements, restrictions on government contractors, requirements for corporate accountability, and clean elections campaign finance reform.

Resources:
Citizens United v. FCC
The New York Times - Justices, 5-4, Reject Corporate Spending Limit
Maryland Corporate Campaign Package Press Release
Fair Elections Now
Free Speech For People
Public Campaign - Clean Elections Overview
Progressive States Network - Corporate Transparency in State Budgets

Foreclosure and Anti-Predatory Lending Reforms

Julie Bero — Mon, 07 Dec 2009 11:54:08 -0500

There will be 2.4 million foreclosures in 2009 along with 9 million foreclosures between 2009-2012, according to the Center for Responsible Lending (CRL). CRL also estimates that 69 million homes will lose property value because of nearby foreclosures for a total property value loss of $502 billion.

As part of our Multi-State Shared Agenda, the Progressive States Network is working with its partners and leading experts to promote reforms to stem the foreclosure crisis and put in place reforms to discourage predatory lending practices in the future.

Through coordinated, strategic support, PSN and our allies will be working to introduce and advance legislation to address foreclosure and predatory lending reforms, providing model legislation, policy analysis, messaging and more - all of which has been gathered and will be constantly updated on our Foreclosure & Predatory Lending web page.

Our policy staff are also available to answer questions and supply information not on the website. Legislators and advocates can contact us about supporting the Foreclosure Reform and Anti-Predatory Lending campaign through our website or by emailing foreclosure@progressivestates.org.

Table of Contents:

- Summary of Policy and Why It Matters

- Messaging on Anti-Foreclosure Policy

- Building a Campaign

- PSN Support in Your States

Summary of Policy and Why It Matters

Although record foreclosures are currently wreaking havoc in communities across the nation, the federal response has been weak and has so far failed to stem the rising tide of foreclosures. Many borrowers have little or no contact with their creditor prior to foreclosure, not to mention attempts to modify the mortgage.

Why Anti-Foreclosure Policy Matters: Mandating foreclosure mediation will bring the parties together, which will lower the number of foreclosures without allocating scarce resources. Requiring lenders foreclosing on homes to maintain those properties and giving foreclosed homeowners the right to remain in their homes as renters for a specific amount of time will keep vacant homes from contributing to blight, and help prevent homeowners from having their families' lives disrupted. By cracking down on illegal practices by predatory lenders, particularly giving whistleblower protection to front-line banking employees, states can stop the exploitation of moderate- and low-income communities.

Based on the best of state policies enacted and recommendations of national experts, the following are some key model provisions for alleviating the crisis for families and communities due to the foreclosure crisis.

Bill Summary: Summary of Foreclosure Prevention and Mitigation Legislation
Model Legislation: Mandatory Mediation Provision Tenant Rights in Foreclosure Whistleblower Protection for Employees of Financial Institutions Maintenance of Property The Right to Rent Act of 2009 from CEPR

Bill Summary:

Summary of Foreclosure Prevention and Mitigation Legislation

Model Legislation:

Key Provisions include:

Mediation Before Foreclosure: Mandatory mediation increases the chance that a mortgage will be modified so that the borrower can stay in their home, while not reducing the ability of the lender to refuse a modification request. By getting the opinion of a neutral party and forcing the lender to the table, foreclosures can be avoided.
Maintenance of Properties Before and After Foreclosure: Legislation would require banks to repair properties before a home can be foreclosed upon, a key measure to preserving communities. Requiring new owners to upkeep foreclosed property will contain the effects of the subprime foreclosure crisis since lack of upkeep on foreclosed homes brings down the appearance and property values of the surrounding area. Upkeep requirements and penalties can offset this burden on communities.
Notice to Tenants of Foreclosure: Legislation would require that tenants and others with interests in any building would have to receive notice of any pending foreclosure action. They would be given notice and greater protection from summary eviction with greater due process.
Right to Rent after Foreclosure: Instead of foreclosure leading to millions of vacant properties, this legislation would allow homeowners facing foreclosure the option of renting their home at fair market rate. People facing foreclosure would be allowed to stay on as renters even if the foreclosure goes through, helping them keep a roof over their heads. The proposal requires no tax payer dollars and would help preserve neighborhoods by keeping community members in their homes as long-term renters.
Whistleblower Protection: Legislation would protect the employees of financial institutions from retaliation when they reveal criminal or unethical conduct by their employers, which can help bring predatory practices to light. Such free speech protection is essential to bringing these practices to light. States should also empower workers to resist pressure to engage in illegal or unethical conduct when an employee reasonably believes the company "to be in violation of any law, rule, or regulation, or to be unfair, deceptive, or abusive and likely to cause specific and substantial injury to one or more consumers.” This will empower the employee to stop the bad practice right away by refusing to cooperate.

Messaging on Anti-Foreclosure Policy

Address the Financial Insecurity of American Families: Homeowners who thought themselves financially secure are now vulnerable in a way most never even contemplated.

Because federal reforms have been slow, state leaders have a political opening to take strong action to address these concerns.
Indeed much voter discontent is the result of anxiety from economic problems and voters should respond favorably to actions that are low cost, but effective, in reducing foreclosures and bankruptcies.

Tap the Public Anger Against Financial Institutions: Average Americans are absolutely incensed about what appears to be a rigged financial system where businesses destroy jobs and wealth, only to be rewarded with government bailouts.

74% of the public believes "The greed and risky decisions of banks and financial companies led to the financial crisis and recession" and that the government should crack down on them through regulations.
The current economic turmoil has also sparked a significant increase in populist sentiment, which continues to grow as major bad actors in the financial industry swing quickly to profitability and reinstate obscene pay structures.
A direct push on wayward financial institutions will bring predatory practices to light, reinforcing sentiment in favor of reform.

Requiring Buyers to Maintain Foreclosed Properties and Allowing Former Owners to Rent Them can Preserve Communities.

Foreclosures have a "spillover" effect by depressing the value of nearby homes—most owned by families who are paying their mortgages on time. This results in lower property values for homeowners and a reduced tax base for communities. During the period 2009-2012, the Center for Responsible Lending projects that foreclosures will cost 92 million U.S. families some $1.9 trillion in lower home values--an average of $20,300 in lost wealth per household.
Requiring lenders to maintain foreclosed property, and fining them if they don't, is a strong way to decrease the blight that the foreclosure crisis has brought to many communities. These laws also help cash-strapped municipalities that have taken on the burden of maintaining these homes themselves in order to preserve their neighborhoods and property values.
The potential costs of maintenance may deter foreclosures from happening in the first place.
As Dean Baker of the Center on Political and Economic Research wrote in the Los Angeles Times, "By keeping homes occupied, "right to rent" also would be a boon to communities that have been especially hard-hit by foreclosures. Often foreclosed homes are abandoned, with unkempt lawns, broken windows and other property damage." Keeping former owners in their homes as renters is a big step towards maintaining communities.

Whistleblower Protection for Bank Employees can Deter Bad Bank Practices: Protecting the employees of financial institutions from retaliation when they reveal criminal or unethical conduct by their employers can help bring predatory practices to light. Many tellers, loan officers and other retail banking employees report a culture of corruption with managers firing workers who don't engage in predatory practices. Many of these employees want to do the right thing and put a stop to these practices, which undermine the financial well-being of their clients, but fear of losing their jobs keeps them from doing so.

Building a Campaign

There are a few broad-based archives of policies adopted around the country to ease the foreclosure crisis, including:

Other Key Organizations Supporting Foreclosure and Predatory Lending Reforms: Americans for Fairness in Lending (AFFIL), National Consumer Law Center Foreclosure Prevention, ACORN Stop Foreclosures Campaign, DEMOS.

Key Information on the Foreclosure Crisis: The Impact of Bad Lending State-by-State (CRL), State by State Foreclosure Fact Sheets (CRL), Snapshot of a Foreclosure Crisis: 15 Fast Facts (CRL).

Overall Analysis of Reform: Beyond the Mortgage Meltdown: Addressing the Current Crisis, Avoiding a Future Catastrophe (DEMOS), Assets & Opportunity Special Report: Net Worth, Wealth Inequality and Home Ownership during the Bubble Years (CFED).

Malfeasance of Subprime Brokers: For more specific information on the worst of the scams against home loan borrowers, see Steered Wrong: Brokers, Borrowers, and Subprime Loans (CRL), Predatory Lending Scams Targeting First-Time Homebuyers (NEDAP).

Effects of Subprime Mortgages on Communities: A number of reports detail the broad-based damage to communities from the foreclosure crisis, including Soaring Spillover: Accelerating Foreclosures to Cost Neighbors $502 billion in 2009 alone; 69.5 million homes lose $7,200 on average (CRL), Neighborhood and Individual Impact of the Subprime Mortgage Lending Crisis: Reporter’s Guide (AFFIL), Home Insecurity: A set of reports on neighborhoods in trouble due to foreclosure (ACORN).

On Importance of Whistleblower Protection for Banking Employees: For more on why free speech rights for bank employees can help blow the whistle on predatory lending practices in the future, see Protecting Whistleblowers (Public Citizen), Protecting Consumers and Workers Fact Sheet and Whistleblower Protections Archive (SEIU).

Racial and Other Disparities in Subprime Lending: A number of reports detail the racial and gender disparities involved in the lending industry, including:

Unfair Lending: The Effect of Race and Ethnicity on the Price of Subprime Mortgages (CRL)
The Impact of the Home Equity Lending Market on Latino Consumers (NCLR)
Women are Prime Targets for Subprime Lending (Consumer Federation of America)
Foreclosure Exposure: A study of racial and income disparities in home shortage lending in 172 American cities (ACORN)
Foreclosure Exposure 2: The Cost to Our Cities and Neighborhoods (ACORN)
Paying More for the American Dream: The Subprime Shakeout and Its Impact on Lower-Income and Minority Communities (California Reinvestment Coalition)

PSN Support in Your States

PSN has already begun working with legislators and advocates to provide support for them as they introduce foreclosure reforms around the country. We'd like to work with many more!

Our policy staff are also available to answer questions and supply information not on the website. Legislators and advocates can contact us about supporting Foreclosure and Anti-Predatory Lending campaigns through our website or by emailing foreclosure@progressivestates.org.

As bills are introduced and sessions begin, PSN will provide ongoing resources and updates on foreclosure reform and anti-predatory lending legislation, as well as help coordinate strategy and information sharing with our partners among sponsors and advocates.

Compromise Preserves State Power to Protect Consumers from Abuses by National Banks in Proposed U.S. House Bill

Nathan Newman — Thu, 22 Oct 2009 12:31:07 -0400

Yesterday, the U.S. House Banking Committee defeated amendments that would have gutted provisions in law to restore state powers to protect consumers of national banks. Instead, the Committee approved compromise language that, while not as expansive in the protection of state legislation as the Obama administration had urged, is still a significant victory overall against large financial interests. By a vote of 29-38, the committee defeated a proposed amendment by Rep. Jeb Hensarling (R-Texas) that would have preempted all state regulation of national financial institutions.

As we detailed last month, the provisions to restore state authority to enforce consumer protections against abuses by national banks have been one of the most contentious parts of the new legislation (see also our conference call on the issue). The amendment that was approved would give the Office of the Comptroller of the Currency, which regulates national banks, the optional power to override the states, but only if it found that the state law “significantly” interfered with federal regulatory policies. Since under the Bush Administration, the Office of the Comptroller had claimed the right to preempt state law automatically without any evidence of interference with federal policies, this will be a significant change in legal standards.

Especially given the stated Obama administration strengthening of state regulation, this amendment should preserve the ability of states to promote stronger consumer fraud law, repossession, foreclosure, and collection law reforms applied to national banks in coming years.

Resources:
Progressive States Network - Protecting State Consumer Protection from Preemption in Federal Financial Reform
Americans for Financial Reform - Summary of Preemption and Relation to State Law Provisions in The Consumer Financial Protection Agency Act of 2009: H.R. 3126

Food Policy and Security: from Farm to Table and Classroom

Caroline Fan — Tue, 13 Oct 2009 12:16:48 -0400

Food is at the center of our lives - the average American spends 1 of every 8 dollars on food and public policy plays a crucial role in whether that food is healthy and safe for our families. Disease outbreaks due to unsafe food, rising obesity rates and environmental concerns about wasteful agricultural practices have all focused attention on advancing new policies to improve both food safety and better nutrition in our communities.

Improving healthy eating is also a budgetary issue for many states. In 2000, state-level medical expenses attributable to obesity topped $75 billion. Across the country, state obesity rates range from a high of 32.8% in Mississippi to a low of 18.5% in Colorado. The epidemic of obesity is contributing to our costly and inefficient health care system, adding to state budget deficits.

Even as Congress debates increased funding for the federal food stamps program and nutrition aid, this Dispatch will outline the steps states are taking on a wide array of policies that impact working families in urban centers and on rural farms, from food safety and regulation to access to local foods to improving health and nutrition in our communities.

Resources:
Food and Water Watch
Center for Food Safety
Rep. Henry Waxman -- Weaknesses in FDA's Food Safety System
Food and Drug Administration -- FDA Science and Mission at Risk
National Family Farm Coalition

Table of Contents:

- Food Safety and Regulation

- Access to Local Foods

- Improving Health and Nutrition

- Conclusion

Food Safety and Regulation

In looking at food policy and safety, one of the major means of providing safe consumables is by ensuring that poultry and livestock are grown in safe conditions and not on factory farms.

Failure of Federal Inspections: During the past eight years, federal food inspection and regulation has largely been dormant, with routine outbreaks in ground meat, and even in unlikely foods including peanuts and tomatoes. It is no surprise that food poisoning seems to be on the rise, as a report by the Subcommittee on Science and Technology, FDA Science and Mission at Risk, makes the alarming admission that the "FDA does not have the capacity to ensure the safety of food for the nation":

During the past 35 years, the decrease growth of imported products in FDA funding for inspection of our food supply has forced the FDA to impose a 78 percent reduction in food inspections, at a time when the food industry has been rapidly expanding and food importation has exponentially increased. FDA estimates that, at most, it inspects food manufacturers once every 10 years, and cosmetic manufacturers even less frequently. The Agency conducts no inspections of retail food establishments or of food-producing farms.

Between the FDA's limited capacity, and the Center for Disease Control's findings that the prevention of food-borne illness in the US has stalled, there is some renewed hope with an increase in the FDA budget for 2009. The Food Safety Modernization Act (HR 2749), which has passed the House, would mandate an increased frequency of FDA inspections, give the agency mandatory recall authority, permit inspectors increased access to record-keeping, and calls for a registration fee to help pay for the new program.

State Action on Food Regulation: In the meantime, states have been taking the lead on self-policing and inspections to provide for the safety of their residents. Food safety can be enhanced by various methods including:

Regulating Factory Farms: 2008 AZ S.B. 1373 gives the department of agriculture sole authority over poultry husbandry; 2008 CO S.B. 201 requires that veal calves and breeding pigs be given enough room to stand up, lie down and turn around; 2005 PA H.B. 1646 (Act 38) is aimed at helping farmers and communities avoid protracted litigation over large-scale "factory farms" by setting standards and allowing the attorney general to review disputes over local farming ordinances.
State Regulation of Food Safety: This year, following a salmonella outbreak in peanuts that was ascribed to a Georgia producer, state legislators hurried to pass a first in the nation law that requires food manufacturers (with the exception of meat, poultry, and other manufacturers under the jurisdiction of the the FDA) to report internal tests that find tainted products within 24 hours. The bill, GA SB 80, also sets up food safety plans and allows the Commissioner access to facilities at any time. Colorado also enacted H 117 that gives the Commissioner increased investigatory authority over meat processing plants and establishes more stringent standards for safe handling of meat. OR S 188 was enacted and authorizes the Department of Agriculture to impose civil penalties for violations of various food safety laws or related administrative rules.
Preventing the Use of Growth Hormones and Non-necessary Antibiotics: In a win for food safety advocates and family farmers, former Kansas Gov. Kathleen Sebelius vetoed a bill which would have made it harder for dairy farmers who do not use rBGH to label their milk as being rBGH-free. Additionally, California SB 416 was introduced and would require state and local governments to favor purchasing meat and poultry produced without the common practice of giving antibiotics to healthy animals, which decreases the efficacy of antibiotics in humans.
Mandating Inspections: 2008 VA SB 272 requires most foods sold in the Commonwealth to undergo inspection while ME H 709 allows a poultry producer to sell uninspected poultry at the farm, at farmers' markets and to restaurants under specified circumstances; establishes labeling requirements and requires identification of uninspected products on restaurant menus; and provides that an employee of the Department of Health and Human Services is authorized to enter a restaurant for purposes of inspection. Indiana H 1524 establishes the State Egg Board to determine standards and regulate commerce and violations.
Transparency and Licenses: MT HB 331 was enacted and revises laws relating to licensed food establishments for health purposes; provides for license fees and funding of local boards of health to fund food establishment health inspections. Washington, DC B 131 allows for transparency in restaurant food inspection ratings. Proposed CA SB 602 requires food facilities to have an owner or employee who has passed a food safety certification examination and requires a food handler to obtain and maintain a food handler card.
Food Recalls: CA SB 550 would require a grocery store to ensure that when it is notified that a product is subject to a recall and a recalled product is scanned, the store's point-of-sale system will prevent the sale and notify the employee who will tell the consumer that the purchased item is subject to recall. SC H 3524 would require a grocery store to contact customers who purchased recalled foods within 30 days of the recall.

Reining in Factory Farms: Many forms of factory farming create a disparate environmental and economic impact on communities, with thousands of livestock crammed into small spaces and unsustainable practices.

Large scale farms are often unable to process the large amounts of manure generated by their livestock, with the spillover sometimes running into local water, causing health problems for workers and neighbors.
Instead of sourcing their products locally and promoting the local economy, they often buy from large multinational corporations with few ties to the land.
Finally, in order to minimize costs, factory farms keep their livestock in cramped quarters and some provide hormone-enhanced feed, which can have negative impacts once consumed by humans. The European Union found in a 1999 report that residues in meat from injected animals could affect the hormonal balance of humans.

A broad coalition has been challenging the practices at factory farms, from locavores to low-wage worker advocates and populists, and state level initatives have been successful at reining in factory farms. In 1998, Colorado voters succeeded in passing Amendment 14, which placed stricter regulations on hog factory farms and mandated better waste control.

Deceptive "Leafy Greens" Reforms: In 2006, in response to an e.coli outbreak in spinach, the leafy greens industry pushed through a "leafy greens" marketing bill in an attempt to clean up its image. The California marketing agreement board developed voluntary standards which were most suited to large factory farms and not to family farmers who were trying to preserve wildlife, protect water quality, and farm organically. Now, the industry is sponsoring a nationwide leafy greens marketing agreement that would be implemented by the USDA through memorandums of agreement with states. However, these changes are superficial and progressives should demand actual reforms including better working conditions for farm workers and increased regulation and inspection of produce.

Access to Local Foods

State policy is increasingly working to help communities buy locally and sustainably by encouraging farmers' markets, increasing the numbers of groceries in under-served areas, and requiring localities, states, and schools to buy locally. States and localities have facilitiated access to local foods for seniors and low-income residents by adopting bills that would allow food stamps to be used at farmers markets and linking existing farmers markets to electronic benefits transfer systems; enacting farm to school policies that allow schoolchildren to learn about and eat healthier food from a young age; and by changing zoning to facilitate more groceries in dense urban areas lacking reliable and quality access to fresh produce, as well as changing tax requirements on farmers' markets.

Creating Food Policy Councils: At least 21 states have taken a proactive stance by setting up food policy councils that bring together a broad array of public and private stakeholders to investigate every stage of the food process from seed to table. Food policy councils have implemented policies to help both consumers and producers of food, including:

Food Stamp Eligibility Changes: Development of a simplified application for food stamp benefits and changes in the motor vehicle requirement for food stamp eligibility;
Expanding Consumption of Locally Grown Food: Implementation of EBT (Electronic Benefits Transfer) equipment at farmers' markets, procurement rule changes allowing correctional facilities to purchase locally grown food, and implementation of "Farm to School" and "Farm to Cafeteria" programs.
Helping Local Producers: Creation of new forms of insurance for small producers, "Agricultural Inventories" of city-owned property to identify city-owned land which may be available for community gardens or other agricultural uses, and identification of economic opportunities created by direct marketing and local purchasing to support new and beginning farmers.

Bills this year to coordinate food policy at the state level include: MD H 1158 to create the Maryland Food and Hunger Policy Council within the Dept of Agriculture, MA H 718 to create a food policy council within the Governor's Office; and VT H 231 to create a farm to plate corporation to coordinate and provide support to all levels of the food system. Oklahoma even has the Mvskoke Food Sovereignty Initiative to work with tribal and inter-tribal food policy councils and alternative policy councils to better represent small growers instead of the state's agribusiness council.

Financing Fresh Food: Pennsylvania's Fresh Food Financing Initiative has been successful in addressing urban "food deserts" by opening 70 new grocery stores, and is a model for other states, including New York and Illinois which both have $10 million programs to finance the construction of new markets.

Having access to fresh and healthy foods is not simply about opening up or improving existing markets -- either traditional groceries or green markets -- but also about educating communities, particularly in underserved areas where poor residents have few options in terms of buying groceries, and the options that exist are 49% more expensive than in other areas. This type of food "redlining" in urban food deserts makes it difficult for families to buy healthy food at affordable prices.

Encouraging "Buy Local" Programs: State laws to encourage public agencies and schools to purchase more local produce helps to strengthen, and expand local farm and food economies throughout the state. A model bill for sourcing locally is the (30 ILCS 595/) Local Food, Farms and Jobs Act that Illinois Gov. Quinn signed earlier this year to require that 20% of food bought by agencies is sourced locally where possible. This year, Georgia also enacted GA SB 44 that requires schools to source locally for amounts under $100,000, and Montana encourages schools and colleges to buy locally through SB 328.

Food Stamps, WIC and Farmers Markets: Part of the conversation around access to healthy foods has been about providing means for low income communities to afford local, organic produce. Through the Farmers Market Nutrition Program (FMNP), 38 states and the District of Columbia allow lower-income women with children to use Special Supplemental Nutrition Program for Women, Infants and Children (WIC) at farmers markets. Several states have instituted provisions where food stamps and electronic benefit transfers (EBTs) can be used at the local farmer's market.

This year, Indiana enacted H 1535 while MA S 393 and CA AB 537 were introduced to ease use of EBTs. Vermont's H 192 even provides that a portion of American Recovery and Reinvestment Act funds given to the Department for Children and Families for 3SquaresVT for the purpose of helping state farmers' markets cover the costs of electronic benefit machines; creates a milk and meat pilot program for purchasing local milk and meat for school meals; and provides technical assistance to schools to help maximize the use of local fruits and vegetables.

However, the FMNP program is not as extensive as the WIC program, which serves 3.5 times as many people and also provides greater amounts of benefits (the typical FMNP allocation is $20 or $30 per year versus $72-$120 annually for WIC, as detailed in a 2009 report by the Community Food Security Coalition.) Thus from 2009-2010, fifteen states are piloting or implementing changes to allow farms to receive WIC vouchers directly to increase access to locally grown foods for needy communities.

2009 Action on Farmers Markets Included:

Virginia H 1331 was enacted and will develop a farmers market system
NY S 1676 was introduced and vetoed due to budget constraints. It would have defined green markets as the equivalent of farmers' markets, provided grants for urban green markets and established a regionally based urban green market facilities construction program under the urban development corporation.
AR S 442 would remove taxes on food sold at farmers market.
Wyoming enacted HB 16 to broaden the range of foods that are allowed to be sold at farmers markets.
Montana enacted HB 290, which raised the small farmers exemption on needing a license to sell at farmers markets and HB 478 reduced required fees on small farmers who sell plants at farmers markets and created a sliding scale of fines.
IN H 1309 defines farmer's markets and roadside stands.

Other bills introduced included bills to allow use of food stamps at farmers markets (ME H 251, MO H 1080, and TX S 1088.) Texas also introduced a bill allowing a farmers market nutrition program for seniors: TX H 482.

Using Tobacco Settlement Funds: One of the more innovative policies that state governments have implemented has been to use part of the anti-tobacco settlement monies to fund more farming initiatives and to keep former tobacco farmers in agriculture by providing assistance for them to produce new crops. These innovative proposals increase farm income and stimulate markets for locally grown agricultural products. Kentucky, Ohio, Tennessee, North Carolina and Maryland are amongst the states that have provided grants to former tobacco farmers who are now producing eggs, wine, fish, and pork.

Resources:
Community Food Security Coalition -- State by state list of farm-to-school legislation
Community Food Security Coalition -- State Implementation of the New WIC Produce Package: Opportunities and Barriers for WIC Clients to Use Their Benefits at Farmers Markets
Drake University Law School- State & Local Food Policy Councils
Western Region Organizing Review -- July 2009 newsletter
Humane Society of the United States -- State legislation

Improving Health and Nutrition

With the rise in the consumption of fast food and the increase of portion sizes, Americans are growing increasingly overweight, with 67% of adult Americans considered overweight or obese. And the trend only seems to be picking up pace - a June 2009 study found that adult obesity rates rose in 23 states this year, with no decrease in any state. According to the Center for Science in the Public Interest, Americans spend $147 billion a year on medical expenses related to obesity, half of which is paid by Medicaid and Medicare.

Disturbingly, it is possible that for the first time in 200 years, the current generation of kids in America may have shorter lifespans than their parents, according to a 2005 report in the New England Journal of Medicine. In response, cities and states have designed programs to provide nutritious foods in schools alongside nutrition education.

Farm to School: Farm to school bills address the persistent problem of school cafeterias serving quick and easy foods that are not always nutritious or delicious. Because nutrition education starts at very early stages of a child's life, states and school districts are increasingly trying to foster good eating habits through purchasing locally grown produce for use in school cafeterias. Farm to school programs allow children to eat the freshest, highest-quality food available. These programs deliver food that not only nourish children immediately, but also increases knowledge that enhances their educational experience and cultivates long-term healthy eating habits. The programs are a win-win for kids, farmers, communities, educators, parents, and the environment. Part of the difficulty is the rigorous requirements of what can be served in the cafeteria and the need to be able to cook cost-effectively for a wide audience, but another difficulty is the federal reimbursement for school meals -- $2.57 for a free lunch, $2.17 for a reduced-price lunch and 24 cents for a paid lunch -- an issue that celebrity chefs like Alice Waters are trying to address. Currently 24 states have farm-to-school policies.

Model bill 2005 CA SB 281 establishes the Fresh Start Pilot Program to ensure that schools provide non-fried fruits and vegetables to schoolkids, and encourages school districts to buy Californian-grown produce when possible. Additionally, urban school gardens allow children to learn about agriculture directly. States are also working to incorporate agricultural education into the classroom, with NH H 48 as just one example.

Food Deserts in Local Communities: A study by the Boston Consulting Group found that prices at corner stores in inner city neighborhoods may charge 49% more than supermarkets, while providing fewer fresh foods. Some states have had success with opening new markets or improving what is offered in small corner or convenience stores in underserved areas, which also revitalizes local economies.

Philadelphia launched a $10 million initiative to open new supermarkets in underserved communities that not only improved the quality of foods that area residents could choose from but also provided new jobs to local residents.
OR S 908 authorizes cities and counties to request that the state Department of Agriculture designate a specified number of nutrition improvement zones in urban and rural areas; provides incentives for retail grocery stores to locate in nutrition improvement zones and for food stamp recipients to go to participating grocery stores; and appropriates money to establish nutrition improvement zones and participating grocery stores within zones.

Key changes that states can implement to bring healthier foods to underserved communities include providing training and assistance to open new groceries or improving existing groceries, sharing information on the local population to convince supermarkets that building in needy communities is profitable, reclaiming brownfields or abandoned properties and subsidizing the costs of adding new products. Other initiatives include a curb on junk-food marketing schemes in schools, creating standards for nutritional quality of food and beverages available on school grounds, and establishing school wellness programs to promote nutrition and physical activity.

Restaurant Food Labeling Laws: Just as we have come to rely on the nutritional information listed on the packaging of store-bought foods, listing calories on menus can help patrons size up the nutritional content of restaurant foods and make healthier choices. This year, Maine lawmakers enacted LD1259 to require chain restaurants with 20 or more locations and at least one in Maine to post calories on menus, menu-boards, and drive-throughs. New York, San Francisco and Washington's King County, which includes Seattle, have also passed menu-listing laws.

Banning Dangerous Chemicals and Food Additives from the Food Supply: Several cities, including New York City, have banned partially hydrogenated oils, or trans fats, from food preparation because of their role in significantly increasing consumers' risk of heart disease. Trans fats are used in numerous prepared and packaged foods like French fries, margarine, crackers, and doughnuts. A 2008 Zogby poll found that more than 7 of 10 New York voters want a statewide ban on partially hydrogenated oils, which are the only source of trans-fats.

Debates on Taxing Junk Food: A number of states are debating whether to combat rising budget deficits and rising obesity rates by taxing soft drinks and other foods or beverages lacking any nutritional value. The Center for Science in the Public Interest calls soda "liquid candy, providing nothing of positive benefit to the diet, just empty calories." Just as cigarette taxes have cut smoking rates while raising revenue for state public health initiatives, taxes on soda could have a similar effect. Nationally, a tax of 12 cents per 12 ounces of soda would raise $16 billion annually and cut consumption by 13%, helping to slow the obesity and diabetes epidemics. The Center has created a Liquid Candy Tax Calculator to demonstrate how much money states and the federal government could raise from soda taxes. 25 states have taxes on soda and snack foods, but these are reportedly small.

A major drawback to these types of taxes is they are regressive, disproportionately impacting low-income consumers. Therefore, if lawmakers choose this track, revenue raised should be reserved for health care reform and public health initiatives that specifically address the needs of low-income communities, such as eliminating the food deserts discussed earlier and improving health education in schools.

Resources:
USDA economic Research Service - Access to Affordable and Nutritious Food—Measuring and Understanding Food Deserts and Their Consequences
PolicyLink - Healthy Foods, Healthy Communities
The Food Trust - The Need for More Supermarkets in Philadelphia
Center for Science in the Public Interest (CSPI) - Menu Labeling: Resources and Background
CSPI - Q&A: Trans fat
CSPI - Model School Foods Reform Legislation
CSPI - Model School Wellness Policies
NCSL - Childhood Obesity – Legislative Options

Conclusion

States are vigorously addressing food security and access with innovative policies that provide residents safe and healthy options through policy coordination, increased regulation, and increased information about the foods that they eat. By paying increased attention to food safety and buying locally, states can ensure that residents have improved health and promote local economies.

Protecting State Consumer Protection from Preemption in Federal Financial Reform

PSN — Thu, 10 Sep 2009 13:22:24 -0400

As Congress moves to enact new federal laws governing financial institutions, Progressive States Action is teaming up with Americans for Financial Reform, a coalition of nearly 200 national, state and local consumer, labor, retiree, investor, community and civil rights groups to sponsor a conference call on why state leaders need to mobilize to protect state consumer protection laws from federal preemption. Currently, proposed federal legislation includes language that safeguards the ability of states to take independent action to protect consumers, but the banking industry is seeking amendments that would override state consumer protection laws and eliminate the ability of state and local prosecutors to act on behalf of consumers defrauded by financial institutions.

Please join us Tuesday, September 15th at 12 noon EST for this important discussion to highlight the need for state leaders to call for federal reform that treats states as partners in reform and honors a tradition of collaborative federalism in consumer protection. The call will bring together legislators and state organizational leaders from around the country to highlight the importance of including strong non-preemption language in federal financial reform legislation.

Please RSVP at www.progressivestates.org/conferencecallrsvp.

We also urge you to call and send a letter to your Congressional Representative urging that federal reforms include strong provisions to strengthen state authority to protect consumers from financial industry abuses. Send a letter to your Congressperson here.

The context of this call is that, in the wake of the financial meltdown that engulfed the country last year largely caused by fraud and predatory lending, Congress is now debating the Consumer Financial Protection Agency Act (CFPA Act, H 3126). The act would create a consumer product protection agency for financial products analogous to the Consumer Product Safety Board.

Crucially, in the current proposed version of the legislation, the ability of states to also enforce their own tougher lending laws against national banks will be explicitly protected. Keeping this provision in the bill is shaping up to be the big fight as the legislation moves through Congress. As the CFPA Act goes to markup this month in the House Financial Services Committee, the major goal of banks and their legislative allies is stripping states of the power to enforce not only federal law, but also their own state lending laws. Now the banks and their allies, which includes a large block of moderate Democrats on the House Financial Services Committee, want to block the robust state regulation that could have helped prevent the financial crisis from exploding in the first place.

The crucial non-preemption provisions in the current version of the CFPA Act include:

Federal law would preempt only inconsistent state laws and regulations, and only to the extent of the inconsistency. State laws and regulations that provide greater protection are not inconsistent.
Concurrent state attorney general enforcement authorized. State AGs can bring any action in court to require bank to produce records relating to investigation of state or federal consumer laws or to enforce applicable state or federal law as authorized by such law.
Bush-era rules preempting state regulation of national banks would be overturned. State consumer laws of general applicability, including UDAP laws, consumer fraud law, repossession, foreclosure, and collection law, would apply to national banks.
It would assure that states could, for example, limit negative amortization and protect the right of states to regulate terms such as prepayment penalties on all mortgages, including ARMs.

In order to preserve the anti-preemption language in the CFPA Act, state lawmakers and advocates will need to make clear to House Financial Services Committee Members that retaining the power of the states to enforce their own consumer protection laws against nationally chartered banks is imperative. Efforts to strip states of this power will be central to the committee markup process soon to begin. Without strong progressive support for states' rights in this area, we can expect any new national protections to come at the expense of what the states are already doing.

Progressive state legislators have a critical role to play in convincing their counterparts at the national level how important state enforcement of state laws is to your constituents. House members must be educated about the regulatory failings that led to the current crisis, how states were hamstrung and couldn't step in to protect consumers, and how this scenario will repeat itself if the financial services industry gets its way. Because state legislators are closer to the ground and are likely more aware of predatory lending practices and products in their districts, they have an important perspective to impart.

Resources:
Consumer Financial Protection Agency Act (CFPA Act, H 3126).
Americans for Financial Reform - Summary of Preemption and Relation to State Law Provisions in The Consumer Financial Protection Agency Act of 2009: H.R. 3126
Center for Responsible Lending
National Consumer Law Center
Consumer Federation of America - Testimony on the Consumer Financial Product Agency Act
Center for Responsible Lending - Making Consumer Protection Work

Table of Contents

- Why State Action is Crucial for Consumer Protection in the Financial Industry

- State Strategies for Protecting Borrowers in 2010

- Conclusion

Why State Action is Crucial for Consumer Protection in the Financial Industry

As we've written about before, aggressive federal preemption of state laws, especially those designed to protect consumers, is one of the legacies of our conservative governance that we must reverse if we are to make real strides in protecting Americans from a variety of corporate abuses.

For years before the recent mortgage meltdown, states were canaries in the coal mine, sounding warnings of fundamental problems in the mortgage market. But during the Bush administration the Office of the Comptroller of the Currency (OCC, which supervises national banks) began asserting that the National Bank Act preempted state enforcement of state lending laws against national banks. This created a regulatory vacuum in which sub-prime and other predatory lending practices grew largely unchecked. The Supreme Court overturned part of that ill-conceived theory in a case last term, Cuomo v the Clearing House Association and the Office of the Comptroller of the Currency, where, in a landmark ruling the court found that while the law prevents states from regulating the internal operations of nationally chartered banks, they remain free to enforce criminal statutes against subprime abuses and other predatory lending practices. The CPFA Act would build on that court decision to strengthen state oversight roles.

Why does state oversight matter?

States can catch problems early, before they become nationwide: States are closer to the ground, and have been better able to see emerging issues and problems. For years before the recent mortgage meltdown, states were canaries in the coal mine, sounding warnings of fundamental problems in the mortgage market.
State laws provide useful data-points for federal policymakers: Congress has often looked to the states for workable solutions to take nationwide in consumer protection, as in other arenas. Iowa, for example, pioneered a legal framework for electronic funds transfers that was used as a model for the federal Electronic Funds Transfer Act in the 70s. Congress has looked to those state laws in crafting some of the current proposals. This is more than just saving Congress work. Without the creative input and local action of states protecting consumers we can expect financial institutions to remain several steps ahead of regulators, just where they have been for the years leading up to the current financial crisis.
States must be able to address local problems: Not all problems that arise locally are destined to metastasize to national problems. But that does not mean that states' hands should be tied by preemption. While a higher federal "floor" for regulation is needed, that federal floor should also assure that states have the right – and the responsibility and accountability – to address local problems. State enforcement of financial protections are necessary therefore because even when a predatory practice is identified by the feds, action is only taken when the problem becomes regional or national in scope, so the majority of predatory practices will not be curbed by the feds until many local families have already suffered.

Federal Enforcement is not Enough: Opponents use false arguments that "patchwork regulation" will add costs to banks which will then pass these costs to consumers, yet these are the same opponents who justify abusive fees imposed on consumers by those same banks. The egregious overdraft practices that strip an estimated $17 billion (and rising) from deposit accounts (hitting the elderly especially hard) have become industry standard. The reality is that the federal banking regulatory agencies issued “guidances” and “best practices” for these unfair, deceptive and wealth-stripping “conveniences," but did nothing to enforce them.

If we have learned anything from the recent financial meltdown, it is that trusting any single institution to safeguard the financial system is misguided. More eyes, both at the state as well as federal level, are the best guarantee that malfeasance and illegal activity will be stopped before the damage gets out of control. Even with a renewed federal effort to prevent abuses by national banks, there are almost 20 times as many enforcement personnel in the offices of state attorney general than there are at OCC. As a comprehensive report produced on behalf of the nation's state attorneys general details in analyzing the need to allow greater state enforcement in new legislation:

Like the existing federal regulators, no new agency created to protect consumers will ever have enough resources to comprehensively reform the financial marketplace across the entire nation. State authorities can maximize resources and bring a more localized focus to ensure widespread compliance with the new rules.

States therefore have a critical role to play in adding cops on the financial protection beat. It is clearly impossible for federal regulators to monitor the local practices of every national bank, so strengthening the role of the states is a key step to cracking down on consumer abuses across the nation.

Resources:
Progressive States Network - The Predatory Lending Bubble and How the Feds Made it Worse
Progressive States Network - Restoring State Authority: An Agenda to Restrict Preemption of State Laws
Center for Responsible Lending - The CFPA and Preemption: The Federal Floor and the Need for States to Be “First Responders"
Center for Responsible Lending - Respecting the Role of the States: Maintaining State Law as Backstop Protection Against Local Abuses
National Attorneys General Training and Research Institute - Sharing Enforcement of the New Financial Regulations

State Strategies for Protecting Borrowers in 2010

In addition to helping make sure that states' prerogative to enforce their own laws is protected in the CFPA Act, lawmakers should also consider improving their own states mortgage finance and predatory lending laws. The effects of the Great Recession will continue to be felt for years to come, but there are many steps that states can take, regardless of the outcome of CFPA Act negotiations, that will both help to ameliorate the current foreclosure and debt crisis, and prevent new damage from financial predators. Here are some of the most promising reforms.

Mandatory Mortgage Mediation: Requiring that banks or servicers go through a mediation process to attempt a workout of delinquent mortgages is a no-cost reform that should greatly increase the number of loan workouts lenders make. Most borrowers never have any direct contact with their lender before foreclosure is begun, in these situations there is little opportunity for a resolution short of losing one's home. Miami recently began such a program, and Philadelphia has kept thousands in their homes with mandatory mediation.
Anti-Blight Measures: Requiring lenders to maintain foreclosed property, and fining them if they don't, is a strong way to decrease the blight that the foreclosure crisis has brought to many communities. These laws also help cash-strapped municipalities that have taken on the burden of maintaining these homes themselves in order to preserve their neighborhoods and property values.
Own to Rent Statutes: Requiring lenders to allow borrowers whose homes have been foreclosed on to remain in their homes as renters for a specified number of years is another no-cost solution to the collateral consequences of the crisis - displaced families, broken communities, joblessness, and homelessness. Under this law owners would become tenants if they could afford market rent as determined by an independent appraisal.
Whistle blower Protection for Financial Services Workers: Protecting the employees of financial institutions from retaliation when they reveal criminal or unethical conduct by their employers can help bring predatory practices to light. Many tellers, loan officers and other retail banking employees report a culture of corruption with managers firing workers who don't engage in predatory practices. Many of these employees want to do the right thing and put a stop to these practices which undermine the financial well-being of their clients, but fear for their jobs keeps them from doing so. Statutory protection against retaliation for workers who file administrative or legal complaints, or testify in an administrative or legal proceeding regarding prohibited practices by the employer, are essential to bringing these practices to light.
Protections Against Engaging in Predatory Practices: States can go even farther in empowering workers to resist pressure to engage in illegal or unethical conduct by giving workers specific protection when they refuse to participate in, any activity, policy, practice, or assigned task that the employee reasonably believed to be in violation of any law, rule, or regulation, or to be unfair, deceptive, or abusive and likely to cause specific and substantial injury to one or more consumers.” This would empower the employee to stop the bad practice right away by refusing to cooperate, instead of having to wait until they made an official complaint to receive whistle blower protection.

Resources:
ACORN - Road to Rescue: How the Philadelphia Model Can Reduce Foreclosures
Chula Vista, CA - Abandoned Residential Property Program
Dean Baker, The Guardian - How to Solve the Housing Crisis
SEIU - Protecting Consumers and Workers Factsheet

Conclusion

One of the greatest problems contributing to the current crisis in the credit markets has been federal obstruction of state authority to protect consumers. New federal legislation should ensure that the states serve as a backstop against weak federal rules or lax enforcement in the future. States are more connected to conditions on the ground than a centralized federal agency. When one state passes a more protective law, that should be a red flag to the federal government that they need to evaluate whether there is a problem that requires a federal rule.

Ultimately, collaboration between states and the federal government leads to more effective oversight. Leaders in the states need to deliver that message to Congress.