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Populist messaging, auditing the Fed, payday loans – Daily Kos

By Rachel Goldfarb, originally published on Next New Deal

Click here to subscribe to Roosevelt First, our weekday morning email featuring the Daily Digest.

How Democratic Progressives Survived a Landslide (TAP)

Bob Moser says that populist, localized campaign messages, not the party’s own turnout strategy, saved a few key Democratic races in the 2014 midterm elections.

After every election, the losing side naturally tends to brood over where and how things went wrong. For Democrats this year, there’s no shortage of theories about the party’s avalanche of key losses in Senate, House, and statehouse contests. Perhaps it was wrong to sideline President Obama so thoroughly. Perhaps they shouldn’t have run away from the Affordable Care Act. Perhaps they still haven’t found the formula for turning out young and minority voters in midterms. Maybe it was just a bad map that couldn’t be overcome. Or maybe there had been, as the pundits chorused, no “coherent national message” for Democrats to run on.

You can find shards of truth in these tidbits of conventional wisdom, but it’s a gauzy, overgeneralized kind of truth. It’s more instructive to take a long look at what did work in 2014—at the candidates and campaigns that overcame the Republican drift. How did Democrats beat their odds in Arizona, Minnesota, New Hampshire, and Michigan even as they fell short in Iowa, Wisconsin, Florida, and Colorado? The closer you look, the clearer the picture becomes: They did it the way Kirkpatrick did. They ran with their populist boots on.

Roosevelt Take: Moser references Roosevelt Institute Senior Fellow Richard Kirsch’s post-election analysis on winning populist messaging.

Follow below the fold for more.

What ‘Audit the Fed’ Really Means – and Threatens (WSJ)

Robert Litan explains that Senator Paul’s proposal calls on Government Accountability Office economists to go outside their expertise to report on the Fed’s activity and minimize its independence.

Payday Loans Are Bleeding American Workers Dry. Finally, the Obama Administration Is Cracking Down. (TNR)

Danny Vinik breaks down how payday loans harm consumers: the initial loan might not be so bad, but the repeated roll-overs have a high cost. Limiting those roll-overs is one potential regulation.

The “War on Women” is a Fiscal Nightmare: Taxpayers on the Hook for Millions as Republicans Gut Family Planning (Salon)

Katie McDonough looks at Kansas as an example of where legal fees to fight for potentially unconstitutional abortion restrictions and cuts to family planning services create massive costs.

Is Republican Concern About Middle-Class Wage Stagnation Just a Big Con? (MoJo)

Kevin Drum doesn’t think this is a sign of Republican reformers succeeding in shifting the party in a populist direction, and says that the more likely explanation is an attempt to defuse Democrats.

New on Next New Deal

The Politics of Responsibility – Not Envy

Roosevelt Institute Senior Fellow Richard Kirsch argues that voters are responding not to envy, but to the knowledge that everyone needs to take a fair share of responsibility for shared prosperity.

[…]

Greece says has no cash problem, to present plan next week

By Renee Maltezou

ATHENS (Reuters) – Greece said on Saturday it had no short-term cash problem and that it will hand its European Union partners a comprehensive plan next week for managing the transition to a new debt deal.

The EU has warned time is running out to avoid a financing crisis in Greece.

The new left-wing government in Athens has rejected the austerity that was forced upon the country by an EU/International Monetary Fund bailout and instead says it wants a “bridge agreement” until it has negotiated a new deal.

“We will present a comprehensive proposal on Wednesday,” Finance Minister Yanis Varoufakis said, referring to a meeting of euro zone finance ministers in Brussels on that day.

Varoufakis was attending a cabinet meeting called to prepare the government’s overall policy programme, which Prime Minister Alexis Tsipras will present to parliament on Sunday.

On Friday, Jeroen Dijsselbloem, who chairs the Eurogroup of euro zone finance ministers, told Reuters that Greece had to apply for an extension of its reform-for-loans plan by Feb. 16 to ensure the euro zone keeps backing it financially.

This is essentially an extension of the current bailout, something Greece has said it does not want and will not accept. It is due a 7.2 billion euro trance from the EU/IMF bailout, which it says it does not want because of the austerity strings attached.

Instead, Athens wants authority from the euro zone to issue more short-term debt to tide it over until a new deal is agreed, and to receive already-agreed profits that the European Central Bank and other central banks have gained from holding Greek bonds.

Greece faces interest rate payments of around 2 billion euros over February and should repay a 1.5 billion euro loan to the IMF in March.

That has raised concerns the country may suffer a cash crunch, but this was dismissed on Saturday by the Greek official in charge of the government’s accounts.

“During the time span of the negotiations there is no problem (of liquidity). This does not mean that there will be a problem afterwards,” Deputy Finance Minister Dimitris Mardas said on Mega TV.

Asked whether the state may suffer a cash crunch if talks drag on until May, the minister said he did not expect the negotiations over a new deal to last that long.

“Even if they did, we can find money,” he said.

(Writing by Jeremy Gaunt; editing by John Stonestreet)

Politics & GovernmentBudget, Tax & EconomyEuropean Union […]

Ukraine unlikely to receive IMF loan tranche this year – finance minister

* IMF $2.7 bln loan tranche unlikely in 2014

* Kiev in dire need of cash to pay gas bills

* Minister says gas deal with Russia unlikely on Wednesday

By Natalia Zinets

KIEV, Oct 28 (Reuters) – Ukraine is unlikely to receive a second tranche of a $17-billion loan programme from the International Monetary Fund this year as expected, Finance Minister Oleksander Shlapak said on Tuesday, in the latest economic blow to the debt-ridden country.

Ukraine, which has been fighting pro-Russian separatists in its east and struggling to resolve a months-long gas pricing dispute with Moscow, badly needs cash to support its budget, pay off debts and prop up its faltering hryvnia currency.

Kiev had expected that a second tranche, worth $2.7 billion, of the IMF bailout would come in December after the Fund’s mission was due later this month. But Shlapak said an IMF visit was unlikely before a new government was formed.

President Petro Poroshenko hailed a sweeping victory for pro-Europe parties in parliamentary election on Sunday, but it may take a month or more before a new cabinet takes over.

“An (IMF) mission will come when a new government is in place,” Shlapak told journalists. “They want to talk to a new government. The key question would be the adoption of a realistic 2014 budget.”

He added that most likely, the tranche would be postponed until next year.

“The maximum that we would like to achieve is to get an IMF decision (on the tranche disbursement this year),” he said.

The mission will also decide how much additional financial aid Kiev may need, after warning in September that if Ukraine’s conflict with the separatists runs into next year, the country may need as much as $19 billion in extra aid.

GAS MONEY

The delay of the disbursement means that Kiev can only count on 760 million euros in aid from the European Union this year.

Ukraine’s finance ministry says it has enough funds to cover its external debt obligations until the end of January, but Kiev has asked Europe for an additional $2 billion euros to cover its gas company Naftogaz’s bills for the current heating season.

“The plan envisages purchases of a maximum 7 billion cubic metres of gas by the end of this heating season,” Shlapak said. “Naftogaz does not want to err and therefore we’re working on additional funding, we’re asking everyone we can.”

Russian President Vladimir Putin said on Friday he hoped Moscow and Kiev would finally reach a deal to end their gas dispute, in which Moscow has halted supplies to Ukraine.

The Russian and Ukrainian energy ministers are expected to hold talks with the European Commission in Brussels on Wednesday over Ukraine’s unpaid bills and the price Kiev pays for its gas.

Shlapak said a deal there was unlikely.

“I have the impression that the Russian side does not want to negotiate,” he said. “The conditions that are proposed do not stand up to criticism.”

Putin has appealed to the West to help Ukraine raise funds to pay for its gas supplies, adding that Kiev already owed Moscow $4.5 billion for deliveries last year and this.

Ukraine must pay $3.1 billion of that by the end of the year, which could cause a huge dent in the country’s gold and foreign reserves. They currently stand at $16 billion.

(Writing by Lidia Kelly, editing by Elizabeth Piper and Gareth Jones)

Politics & GovernmentBudget, Tax & EconomyUkraineInternational Monetary Fund […]

South African govt boosts power utility Eskom with 20 bln rand cash

By Wendell Roelf

CAPE TOWN (Reuters) – South Africa will inject 20 billion rand ($1.82 billion) cash into struggling power utility Eskom, and may also convert its existing 60 billion rand subordinated loan to equity, the National Treasury said on Wednesday.

The moves highlight the gravity of the situation facing Eskom, which provides virtually all of the power to Africa’s most advanced economy but has massive funding issues as its costs are running way ahead of its revenues.

Finance Minister Nhlanhla Nene, who tabled the Treasury’s three-year economic outlook in parliament, also said that no new financial guarantees will be given to Eskom as South Africa moves to stabilize its debt load.

“Government will closely monitor Eskom’s financial position and, if necessary, could consider providing additional support to the utility by converting its existing subordinated loan to equity,” Treasury said.

The 20 billion rand injection will be raised through the sale of non-strategic state assets, such as property, direct and indirect shareholding in listed firms and surplus cash balances in public entities, the Treasury said.

No further details were provided. The ruling African National Congress is deeply divided over privatisation and the state’s role in the economy in general and protracted discussions may be needed to implement such a policy.

“Over the next two years capital injections for Eskom and funding for other state-owned companies will be raised in a way that has no effect on the budget deficit,” the Treasury said.

Last month Treasury approved a financial package to the utility which includes the company raising 50 billion rand in additional debt, over and above its original plan of 200 billion rand, as it struggles to finance an ambitious new generation program designed to overcome power shortages that have crimped economic growth.

Because of the impact on growth and on key sectors such as mining, the government is keen that Eskom bridge its funding gap, estimated at around 225 billion rand over the next four to five years, without raising its rates too high.

The energy regulator recently approved a tariff hike which will help fund the building of new and expensive coal-fired power plants.

Labour strikes and shoddy workmanship have delayed the commissioning of the new power plants, although the first of six units at the new Medupi plant will link up to the grid in December.

In March, the utility was forced to impose rolling blackouts for the first time in six years to prevent the national grid from collapsing, a situation that underscored just how precarious the balance is between power supply and demand.

(1 US dollar = 11.0105 South African rand)

Politics & GovernmentBudget, Tax & EconomyEskomSouth AfricaNational Treasury […]

Toxic finance: Reckless payday lender Wonga wipes mountain of …

Image wonga-fca-payment-public.si_.jpg


Toxic finance: Reckless payday lender Wonga wipes mountain of debt

Published time: October 02, 2014 14:55 Get short URL

Reuters/Luke MacGregor

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Thousands of customers who took loans with controversial pay day lender Wonga are to have their debts written off, in an action expected to cost the ‘legal loan shark’ more than 200 million pounds.

The company will wipe the debts of 330,000 customers who are trapped in arrears of 30 days or more, while a further 45,000 customers will get to repay their loans exempt from interest.

The move is a “consequence” of Wonga’s discussions with the Financial Conduct Authority (FCA), who said the firm “was not taking adequate steps to assess customers’ ability to meet repayments in a sustainable manner.”

The FCA also said that Wonga did not do enough to vet customers and their ability to pay back the interest incurred on loans, which can be higher than 5,000 percent.

As a result, a large number of Wonga customers were forced to admit they were unable to pay the company back after taking out a short-term loan.

“We are determined to drive up standards in the consumer credit market and it is disappointing that some firms still have a way to go to meet our expectations,” said the FCA’s Director of Supervision Clive Anderson.

“They [lending companies] need to lend affordably and responsibly,” he added.

Last month, the payday lender recorded a profit loss of 53 percent – one of the largest slumps in its operating history.

The lender revealed its pre-tax profit in 2013 was 39.7 million pounds, down from 84.5 million the previous year.

Wonga said the fall was due to “remediation costs” – money that it had to pay back to its customers – including 2.6 million pounds it had to pay out to more than 45,000 customers after it delivered debt collection letters from non-existent law firms.

However, Wonga did record a 15 percent rise in the number of loans issued between 2012 and 2013, worth 4.6 million pounds.

Wonga’s Chairman Andy Haste told British media there was a “real and urgent” need for change.

He also told the BBC it expected to be “smaller” and “less profitable” following increased FCA regulations, which include more stringent background credit checks.

“Our regulator is determined to improve standards in consumer credit and I share that determination,” he said.

“There is much to do in order to make Wonga a sustainable and accepted business, and today’s announcement is a significant step forward in that process.

Labour MP John Mann called for Wonga to be brought before Parliament’s Treasury Select Committee to “explain how they lent so much money to people it knew could never afford to repay it.”

“Sadly, it comes as no surprise to learn that Wonga knowingly lent money to people who will never be able to afford to repay a loan and it is morally right that they have been forced to write off these loans,” he added.

This is not the first time Wonga has come under heavy criticism for its practices.

Since July, the firm has not been allowed to produce advertisements designed to attract young people, such as its campaign that used puppets, screened during children’s television programming – an attempt to soften the brand, critics allege.

In 2012, Wonga was also forced to apologize to Labour MP Stella Creasy after she received personal abuse via Twitter, calling her “nuts,” “pathetic” and “a raving self-publicist.”

The MP has long been outspoken on payday loan companies, and has lobbied the government to set a cap on the amount customers can be charged for small, short term loans.

While the MP welcomed the fall in Wonga’s profits, she said the rise in the number of loans being issued should be a cause of concern.

“The fact that they are reporting a 15 percent increase in customers for this toxic form of finance reflects that there are still millions of people for whom there is too much month at the end of their money,” she told the Financial Times.

Under new rules issued by the FCA, payday lenders will not be able to reclaim debts directly from customers’ bank accounts, while a cap of 0.8 percent interest per day has been proposed for short term loans.

According to the UK’s Public Accounts Committee, around 2 million people in the UK used payday loans, while the Office of Fair Trading believes around 1.8 billion pounds is loaned in high cost plans each year.

[…]

Pay Day Loans Not In Borrower's Best Interest « CBS Philly

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Vice President Biden Admits He Occasionally Takes Out Payday …

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Vice President Joe Biden appeared with Al Sharpton this morning on MSNBC where he spoke candidly about Hillary Clinton, his 2016 presidential aspirations and the financial hardships his family has faced since becoming the vice president. Following is a transcript of that discussion which will air this evening on Sharpton’s show, PoliticsNation, on MSNBC.

AL SHARPTON: Tonight I want to welcome a guest on my own show where I host. Tonight that guest is Joe Biden who is President Obama’s vice president. Welcome to my show, Mr. Vice.

JOE BIDEN: It’s a pleasure to be with you.

AL SHARPTON: Mr. Vice, I want to start off by asking you about Hillary Clinton saying she was broke when she was removed from the White House.

JOE BIDEN: I’ve heard Hillary talk about the financial struggles she and President Clinton faced in the early days of their post presidency. Believe me, I know how stressful it can be struggling to make ends meet.

AL SHARPTON: You’ve struggled too?

JOE BIDEN: Oh sure. I’m still struggling. Like so many Americans, Jill and I lie awake nights worrying about having enough money to pay the bills.

AL SHARPTON: Pay the bills? But you eat in fancy restaurants with President Obama. You stay in nice hotels. And that suit you’re wearing, it looks pretty expensive.

JOE BIDEN: (chuckles) I couldn’t afford a suit like this. This is a suit Al Gore left behind at the vice presidential mansion.

AL SHARPTON: Get outta here!

JOE BIDEN: It’s true. We found boxes of expensive suits in the attic that he out grew when he got fat.

AL SHARPTON: Well he’s rich enough now to buy all the fat clothes he wants. He has more money than the Clintons. Maybe even Oprah.

JOE BIDEN: I think it even surprised him how lucrative his global warming show became.

AL SHARPTON: And it made him a lot of money, too. You know, people are going to be shocked that you have to wear Al Gore’s clothes.

JOE BIDEN: Everybody thinks because you’re the vice president you’re rolling in dough. I wish it were true, but it’s not. I’m no different than millions of other Americans who struggle every month to make ends meet.

AL SHARPTON: Hillary said they had to borrow money to buy houses.

JOE BIDEN: She was fortunate to know wealthy people willing to lend her large sums of money.

AL SHARPTON: You tellin’ me you don’t know any rich people?

JOE BIDEN: As the vice president I interact with wealthy people all the time. But the Biden family’s friends are mostly blue collar workers. Just regular folks struggling to get by. Unfortunately, many of them are unemployed. So no, there isn’t anybody to borrow money from. And even if there were, we’d never be able to pay it back.

AL SHARPTON: So how do you get by?

JOE BIDEN: Well, like millions of other Americans, Jill and I live on a tight budget. But even then there are the unexpected expenses that always seem to occur during the the lean times. When the brakes on the car go out or the roof starts to leak.

AL SHARPTON: How do you manage during those times?

JOE BIDEN: Sometimes I’ve had to take a payday loan. It doesn’t happen very often, but there have been times it’s been my only option.

AL SHARPTON: But you’re the vice president of America. Can’t you just go get some money from the place where they make it?

JOE BIDEN: (chuckling) Oh, if it were only that simple. Look, I don’t want anyone thinking we’re going hungry or anything. We’ve eaten for free at the White House plenty of times. But every now and then when our backs are against the wall financially, I’ll head over to an inner city check cashing business and get a payday loan. It’s no big deal. Lots of Americans do it. I’m no better than they are, even if I am the vice president of the United States.

AL SHARPTON: But my producers told me your wife is a doctor. Can’t she do a few brain surgeons or something? I would think that would bring in a substandard amount of cash.

JOE BIDEN: Well, she’s not that kind of doctor. Her doctorate is in education.

AL SHARPTON: So let her operate on some teachers.

JOE BIDEN: Although Jill’s duties as the second lady keep her very busy, sometimes on her days off the president will slip her a few bucks to do errands for his mother-in-law.

AL SHARPTON: We only have time for one more last question. If Hillary becomes president, would you considerate being her vice?

JOE BIDEN: (chuckles) Well, I haven’t ruled out putting my own oar in the presidential waters.

AL SHARPTON: (surprised) Whoa, Mr. Vice! You’re gonna to get the wrath of the feminalists for that one. Maybe even from Mr. Clinton, too.

JOE BIDEN: (Looks confused, but smiles and winks anyway)

AL SHARPTON: OK, that’s all the time we have. Thank you for the vice president in joining me on my show, where I host.

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Gov. Nixon Veteoes “Sham” Payday Loan Legislation « CBS St. Louis

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Nashville, TN: Field Hearing on Payday Loans

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www.consumerfinance.gov. […]

Wonks and Wonga: Payday lending and time-poor politicians | 10 …

As somebody who works for a debt advice charity, I was interested to hear George Osborne’s announcement that Government intends to cap the interest rate payday lenders can charge. The harm caused by this type of high-interest lending was first highlighted by consumer organisations such as mine, and many third-sector bodies contributed to the high-profile campaign on the problem run by the Labour MP Stella Creasy. However, the announcement was a little confusing. After all, the concept of an interest rate cap had previously been rejected by Government on multiple occasions. Why the sudden change of approach? It seemed unlikely that the Chancellor had, Grinch-like, experienced a sudden change of heart.

A blog on the WonkComms site gave me a clue. In October Leonora Merry brilliantly explored an occasion when academic policy theory seemed to play out in real-life politics. To me, George Osborne’s unexpected reversal demonstrated another such collision between theory and practice. In this case, the Chancellor’s sudden change of policy on payday appeared to be a real-world example of Baumgartner and Jones’ ‘Punctuated Equilibrium’ theory.

The theory rests on two basic principles. One, politicians have limited time and intellectual resources, and must prioritise. Therefore policy often stays static for long periods. Two, taking this into account, policy on an issue can change rapidly if it starts to attract a lot of attention, especially popular opinion conveyed by the media.

The argument goes like this. Politicians are assailed by so many different issues they can only concentrate on the most pressing. Therefore, as long as something is contained in a policy ‘sub-system’ (often comprising regulators, consumer groups and industry), where there is common understanding, they can effectively ignore it.

However, the theory continues, if an issue “breaks-out” from this policy sub-system and becomes high-profile, if a ‘feedback loop’ is created by multiple actors all discussing a subject, with the weight of opinion all on one side, then decision makers may be forced to attend to it. They must at least pay attention to an issue that is constantly thrown across their desk by newspapers and this can drive seemingly rapid policy change.

How does this apply to payday loans? Well, it appears we have seen this exact theoretical circumstance play out in the payday loan debate. Initially it was low profile because relatively few people were affected. In 2009 only 2% of people in financial difficulty had a payday loan and, crucially I think, there were far fewer payday lending shops on the high-street. The media wasn’t particularly interested. Therefore decision makers could ignore the subject and leave it to a policy sub-system comprising regulators such as the Office of Fair Trading (OFT) and consumer groups like Citizen’s Advice. Lenders could remain lightly regulated, no far-reaching policy solutions need be considered, nothing to see here.

But then, over time, the situation changed. Fundamentally this was driven by the continuing personal financial hardship caused by the economic crisis. Unemployment and part-time work increased, wages declined and for millions making ends meet became harder and harder. This led to the rise of the payday lender, people running out of cash at the end of the month turned to them for crisis loans. By 2012 the Competition Commission reported 1 million people were taking out payday loans every year. This growth, accompanied by a higher visibility on the high-street, got MPs and the media interested, and not just interested but vocal. So, using extensive data provided by consumer charities, MPs and the media made sure that the payday debate dominated the consumer finance agenda. Debate after debate, news story after news story brought it up. Eventually the concatenation of voices started to force the issue from its policy sub-system onto the desk of decision makers.

First the competition commission was dragged in, then the new, high-profile, financial regulator the Financial Conduct Authority. Eventually the pressure seems to have became too much and the sub-system membrane split, the equilibrium was well and truly punctuated. The Chancellor acted, and reached out for the most popular suggested policy solution, cost capping. Of course, it helped that the issue overlapped with another the Government felt weak on, the declining standard of living, and therefore action on one could be spun also as action on the other.

So there we have it. I’d argue a pretty good example of the intersection of theory and reality. But what lessons can it teach us? I think three.

One, campaigning organisations shouldn’t be afraid to move into already well populated issue areas if they have new information and /or perspectives to bring. Weight of data can push an issue from a policy sub-system onto the national agenda, like a straw incapacitating a camel.

Two, never underestimate the importance of the visual representation of a problem on decision makers. Yes, payday lending merited action on the basis of hard evidence on paper, but the fact that most MPs now see dozens of payday shops on their local high street shouldn’t be underestimated.

Three, issues that touch on multiple Governmental concerns, that are cross-cutting, have more of a chance of escaping the policy sub-system. If organisations can find an issue that is sensitive for many Government departments, and policy makers, for many different reasons, then success is more likely.

Of course, I’m not going to pretend these lessons don’t reinforce what campaigning professionals already know. But at least now we can use long words and quote fancy theories when putting them into practice.

Joseph Surtees is a part-time student on the MSc Government, Policy and Politics at Birkbeck. This post was originally published on WonkComms, a blog run by communications staff working within research institutions.

[…]