Let's start with a cartoon from Pat Bagley:
Over at the New York Times, we have story arguing that the culture that led to the bank's recent scandal of bogus accounts has echoes of their practice during the mortgage crisis in 2008:
During the financial crisis, Wells Fargo was at a remove from Wall Street and was not a big player in creating toxic and complex mortgage securities that were engineered to fail. But the bank’s ability to emerge from the crisis with a relatively good reputation is something of a mystery to anyone who paid attention to its aggressive foreclosure activities.
There were enough problematic foreclosure cases involving Wells Fargo moving through the courts that the bank’s dubious practices seemed as pervasive then as the questionable account-opening scheme does now. And some of the elements of both scandals — improper fees and forgeries — are the same.
Also in the NYT's Dealbook, Michael Corkery and Stacy Crowley say the departure of Wells Fargo CEO John Stumpf is unusual in these types of scandals.
Despite the industry’s many troubles, relatively few banking chiefs have stepped down under outside pressure... But Wells Fargo’s transgressions were unusually blatant and straightforward, which contributed to the still-mounting public outcry. This time, there were no exotic financial instruments, complicated trades or complex mortgage trickery. The bank’s misdeeds were fundamentally simple: Under intense pressure to meet aggressive sales goals, employees created sham accounts using the names — and sometimes, the actual money — of the bank’s real customers. And in some cases the customers did not discover the activity until they started accumulating fees.
We's got a couple of others on the naughty list: Navy Federal Credit Union, which serves both military employees and defense contractors, has been hit with a $23 million fine for "violating the law by blocking debit cards, ATM machines and online accounts, and making empty threats to contact clients’ military superiors about overdue debts." And unhappy Volkswagen shareholders are trying to recoup more than $9 billion in losses following news that the company has been falsifying air quality data for their diesel engines.
Meanwhile, the Consumer Financial Protection Bureau, which issued fines in the case of Wells Fargo and Navy Federal, has been ruled unconstitutional by a federal judge, reports Gillian White in the Atlantic:
[T]he court took issue with the inability for other arms of the government to review or rebuke the Bureau’s judgements or actions and the unilateral power imbued in the CFPB’s director—currently Richard Cordray...
The Consumer Financial Protection Bureau—which was brainchild of Senator Elizabeth Warren—was created in the wake of the financial crisis by the Dodd-Frank Act, the legislation meant to reform the financial sector and protect the public from predatory and dangerous practices. Title X, the section of the Act which calls for Bureau’s formation, states that a director will be appointed by the President and confirmed by the Senate. The Bureau then has the ability to “administer, enforce, and otherwise implement federal consumer financial laws, which includes the power to make rules, issue orders, and issue guidance.” But in those endeavors, the Bureau and its director are not directly subject to oversight from any of the branches of government. The autonomy of the CFPB is, in some ways, singular. But in others, the setup of the CFPB is similar to that of the Federal Reserve. The Fed’s goals and purpose—to establish maximum employment and stable prices—are set by Congress, but its funding and operation remain autonomous in order to prevent being swayed by political pressure.
Meanwhile, two Wall Street firms seem to have made millions off of Chicago's financially-strapped school system reports the Wall Street Journal's Matt Wirz and Heather Gillers:
J.P. Morgan Chase & Co. and Chicago-based Nuveen Asset Management have made realized and paper profits exceeding $110 million on purchases this year of $763 million in Chicago Public Schools bonds. The school system has said it needed the money to replenish its dwindling coffers before the new school year and to build and repair facilities.
The terms of the bond sales highlight the choices the school district faces after years of pension shortfalls and relying heavily on borrowing. The 397,000-student school district struggled to sell municipal bonds in February until Nuveen bought about one-third, and the district decided in July to borrow directly from J.P. Morgan for fear that investors might balk again, a spokeswoman for the Chicago Board of Education said.
You might be interested in this series of charts showing racial disparities criminal justice system related to stops, fines and incarceration rates, here is a sample:
Apparently being in prison is expensive with the formerly incarcerated facing high amounts of debt from doing their time, reports Larry Schwartztol and Abby Shafroth:
[A] criminal sentence is no longer a singular penalty pronounced by a judge as a proportionate response to a criminal conviction. These convictions often spark a cascade of economic consequences that persist for years after the formal sentence is over and threaten a person’s ability to successfully and self-sufficiently re-enter society. These debts force individuals to navigate a maze of onerous systems and actors—criminal courts and prisons, but also private debt collectors, DMVs, credit reporting companies, and bankruptcy courts...
Policy reform should also aggressively displace the streams of revenue that tie budgets of police departments and courts to the outcomes of criminal cases, leading to conflicts of interest. Individuals should enjoy robust procedural protections to ensure that they are not saddled with debt they can’t afford or are punished for failing to pay impossible sums, and courts should be equipped with workable alternatives, such as well-designed community service programs, for individuals too poor to pay.
What will the U.S. workforce look like in 2060? The World Economic Forum offers nine charts that show how things will change and finds that "America's labor force in 2060 could be smaller, older, and more racially diverse than it is now":
The meal kit firm Blue Apron's facility in Richmond, Va.--where the average person makes about $12 an hour-- isn't a nice place to work, reports Buzzfeed's Caroline O'Donovan:
In the 38 months since Blue Apron’s facility opened, the Richmond Police Department has received calls from there twice because of weapons, three times for bomb threats, and seven times because of assault. Police captains have met twice with Blue Apron to discuss the frequency of calls to the police...
As the company raced to keep up with demand, the hiring process wasn’t as stringent as it should have been, according to two former employees. “An email would go out asking managers to help interview people...Blue Apron came to rely on temporary hourly employees, hired through various local staffing agencies, who could be called in as needed to build boxes or move pallets on busy days. Though permanent employees are required to undergo background checks, the company said it allowed the staffing agencies to vet temp workers independently.
Speaking of food, Whole Foods is opening up stores in low-income neighborhoods, and this New York Times photo essay of large factory farms is an eye-opener. The Mall of America will be closed on Thanksgiving to allow 15,000 workers time with their families. And the NYT's Anahad O'Connor looks at why soft drink giants Coke and Pepsi give to some public health efforts and then lobby against others. “'The beverage industry is using corporate philanthropy to undermine public health measures,' said Kelly D. Brownell, dean of the Sanford School of Public Policy at Duke."
In the Financial Times, Michael Skapinker and Scheherazade Daneshkhu look at the efforts of Unilever's Paul Polman to make big business more socially minded:
Unilever has a long history of social activism. William Hesketh Lever (later Lord Leverhulme) founded the company by manufacturing and branding Sunlight Soap, helping to improve the health and hygiene of Victorian England. A pioneer of shorter factory hours and workers’ pensions, he also built Port Sunlight, a model village for his workers in the north-west of England. It was here that Polman chose to hold his first meeting in an early indication of his own desire to deepen his company’s conscience. But the questions remain: can the chief executive of any profit-seeking multinational truly help to save the world? And what happens when business and sustainability clash?...
Many shareholders who have stuck with Unilever appear to like the combination of do-gooding and business expansion.
Meanwhile, the Atlantic has a pair of stories looking at the economic aspects of many women's life choices. Adrienne Green looks at the economic risks of being stay-at-home mom. And Emma Green examines the economic choice of rejecting marriage:
For poor, uneducated women, especially those who have kids, the question of whether to get married looks a lot different: It's the choice between raising children on one or two incomes, between having someone to help with household chores and child-rearing alone while working multiple jobs.
And that's the big difference: For a poor woman, deciding whether to get married or not will be a big part of shaping her economic future. For a wealthier woman, deciding whether to get married is a choice about independence, lifestyle, and, at times, "fighting the patriarchy."
In Appalachian Magazine, we have a proposal to bring back the New Deal's Civilian Conservation Corps, "a Federal work program in which unskilled and unemployed young men were paid $30 a month to serve in various work projects across the nation."
New research shows that when looking across multiple generations in America, the economic mobility picture is worse than previously thought, reports the Washington Post's Ana Swanson:
The new calculations suggest that these one-generation blips have obscured a lot. Adding in data about past generations, Ferrie and his colleagues find that conventional measures of immobility, which just look at parents and children, have underestimated mobility by 20 percent compared to looking at three generations or more.
Presidential hopeful Hillary Clinton announced her plan for reducing "deep poverty" by targeting the child tax credit and the way it applied, reports Vox's Dylan Matthews:
Clinton is calling for a change in the refundability threshold of the child tax credit. That sounds like a technical change, but it has tremendous ramifications. Currently, the poorest American families can’t claim the credit, which is a mainstay of the tax returns of most middle-class families. That’s because households that make less than $3,000 a year — the truly, desperately poor — are excluded entirely, and households making under $9,666.67 can’t get the full credit.
Clinton would change the law so that families start getting the credit with the first dollar they earn. That would effectively increase the tax refunds of the poorest families with children. In addition, Clinton would double the credit for children 4 and under, something that helps both poor and middle-class families with young kids, and she’d make the credit phase in much faster for families with kids in that age range.
Are mobile homes a good choice for affordable housing? Paul Mayyashi, in Priceonomics argues they are, despite issues with hiddens fees for loans and land rentals and oppostion from communities fearing crime and blight:
[U]sed mobile homes only cost $10,000-$20,000. They make it possible for someone to buy a home but not the earth it’s parked on. As a Times profile of Rolfe reported, his average tenant pays $250 to $300 in monthly rent. If the tenant doesn’t own her home, she might pay another $200 or $300, with the option to apply half of that toward purchasing a mobile home.
“We’re the cheapest form of detached housing there is,” says Rolfe. “You can’t do cheaper.”
Harvard's Joint Center for Housing recently reported that one in five renters earns less than $15,000 a year. For this group, paying more than $400 a month in rent is unaffordable. Especially for a family, finding an apartment is tough, and renting a typical house may be impossible—the Harvard report notes that “single-family homes have among the highest median rents of any type of rental housing.”
Speaking NIMBY, Queens residents temporarily won their fight against NYC's attempt to shelter homeless people in their neighborhoods.