Corporate Money in Government: What does it mean for Human Rights?

Whether in the realm of environmental oversight, subsidies and tax abatements, consumer labeling and protection, or financial regulation, the human rights impacts of corporate lobbying are extensive.  In the United States, much has been made of the impact of campaign financing on elections following the Citizens United ruling by the US Supreme Court in 2010.  The ruling ostensibly paved the way for vastly increased financial contributions to political action committees, commonly known as ‘Super-PACs’.  But while Citizens Unitedsensitized the public once again to the role of money in elections, this issue has been around for a long time and plays a very big role in the realization of human rights.

For example, as highlighted recently by Bill Moyers in his televised interview with Sheila Krumholz (Center for Responsive Politics) and Danielle Brian (Project on Government Oversight, ‘POGO’) on May 19, the role of lobbyists well-funded by corporations plays an integral role in reducing regulatory protections against human rights harms. In the interview, they discussed ProPublica’s online piece on March 13 of this year, which documented the reversal of a decision by the Environmental Protection Agency (EPA) to prevent Uranium Energy Corp. from threatening the water quality of neighbourhoods in Golaid County, Texas. The agency’s backflip came after the mining company hired Heather Podesta, a lobbyist and high-profile Democrat party fundraiser, to press senior staff in the EPA, including the Deputy Administrator, Bob Perciasepe, to reconsider their decision.

Typically not seen as a human rights concern, instances such as these demonstrate the human rights risks that come from unchecked influence of private money in the activities of government.  In this case, the EPAs reversal exposes the residents of Goliad County to violations of their rights to health and water because corporate influence intervened to undermine peoples’ safeguards against mining waste.

Financial corporations provide another illuminating example of corporate corruption of government functioning. Finance firms and government agencies, often regulators, are said to share a ‘revolving door’, an apt term that represents the back and forth of people being employed by finance firms, then government agencies, and vice versa.  One recent example was the former Citigroup executive, Jack Lew, who recently was appointed as Treasury Secretary by President Obama.  As highlighted by POGO, Lew is just one in a long line of former bankers and investors who have received substantial financial bonuses rewards from their former Wall Street employers for securing a seat inside the US Government.

POGO’s recent report on the ‘revolving door’ between the Securities and Exchange Commission and Wall St financiers concluded with the following:

The revolving door is constantly spinning at the SEC. Between 2001 and 2010, more than 400 SEC alumni filed nearly 2,000 disclosure statements saying they planned to represent employers or clients before the agency. These alumni have represented companies during SEC investigations, lobbied the agency on proposed regulations, obtained waivers to soften the blow of enforcement actions, and helped clients win exemptions from federal law.

Roughly the same time period was renowned in finance circles as an era of softening approaches to regulatory oversight.  The repeal of the Glass-Steagall Act of 1933, by the ‘Financial Services Modernisation Act’ in 1999, allowed for the consolidation of commercial banks and investment banks. Many institutions at the center of the financial crisis were formed on the back of consolidations made after the Act became law.  Another example of regulatory softening was the passing in 2000 of the ‘Commodity Futures Modernization Act’, which ensured that certain financial products (i.e. derivatives) offered by commercial or investment banks would not be regulated under existing laws governing futures contracts.  Credit default swaps tied to the real estate market were a primary example of these unregulated derivatives, which together with mortgage-backed securities, helped to trigger the financial meltdown.

This assessment was echoed by the UN at a conference they held in 2009 in the wake of the crisis. The outcome document from the conference concluded that the crisis was in large part caused by “regulatory failures, an over-reliance on self-regulation, overall lack of transparency, financial integrity and irresponsible behavior.” In October 2008, former president of the U.S. Federal Reserve, Alan Greenspan, admitted to the US House Committee on Oversight and Government Reform that he had placed too much faith in self-regulation. This testimony is striking for many reasons, one being that it was Alan Greenspan himself who successfully opposed tougher oversight on derivatives trading in 1994.

The human rights impacts of the global financial crisis have been enormous.  The World Bank estimated in 2010 that ‘the crisis will leave an additional 64 million people in extreme poverty by the end of 2010…And as a result of the crisis, 71 million fewer people will have escaped poverty by 2020’.  Furthermore, between the years 2007-2009 suicide rates increased in nine of the ten European countries for which data was available in those years, with larger increases measured in those countries hardest hit. In Greece, suicide rates spiked up sharply by 40% from 2010-2011.

The Dodd-Frank Act of 2010 contains the primary set of post-crisis regulatory measures that were introduced in the US to tighten oversight of trading in credit default swaps and other derivatives, as well as asset-backed securities.  However, observing the passage of the bill through the Senate demonstrates the susceptibility of the legislative process to financial sector lobbying efforts. Analysis of campaign finance reports released after passage of the Dodd-Frank bill indicated that large contributions from financial firms to Senator Scott Brown (R-MA) resulted in a watering down of some of the key protections in the legislation, including removal of the Volcker Rule.  The Boston Globe reported afterwards that during the weeks that the bill was being negotiated “the Massachusetts senator took in $140,000 from banks and investment firms and their executives… That is 400 percent more than the $28,000 received on average by all Republican senators during the same three weeks.  As the money poured in, Brown and his Senate staff were working both publicly and behind the scenes to scuttle $19 billion in fees on the financial industry that would have paid for part of the regulatory overhaul, and to weaken a provision intended to curb certain types of investment activities by banks and insurance companies”.

The lesson here is that even during the efforts to enact the necessary reforms required to addressed the widely acknowledged primary cause of financial sector behavior that led to the wide-scale undermining of human rights across the globe, the financial sector lobbyists were able to successfully continue their efforts to skew the regulatory system in their favour.

States have a duty to protect human rights against violations by private actors.  At a minimum, this includes guaranteeing that people are not harmed by irresponsible trading practices of derivatives and other products and ensuring banks do not become so big that threats to their existence pose wider systemic threats to society and the world. Financial regulation reform is an important first step. Ensuring consumer protections against unfair lending practices is another area where States can play a central role is safeguarding the rights of people. Maintenance by states of social protections and services in times of economic downturn, especially for the most marginalized in society, is also of critical importance.   Similarly, when looking back at the example of environmental protection, the role of state agencies in safeguarding a clean environment, and the human rights to water and health that are dependent on it, are also critically important functions for agencies like the EPA.

However, in looking at the US and its influence on the wider world, what is becoming ever clearer is that the influence of corporate money in government decision making and oversight erodes the fundamental organizing principle of our society that ‘the will of the people shall be the basis of the authority of government’, as articulated in the Universal Declaration of Human Rights.  In working to safeguard and advance human rights, this is becoming an increasingly vital front of struggle.

Dominic Renfrey, June 11th, 2013. Renfrey is a Programme Officer at the International Network for Economic, Social and Cultural Rights -ESCR-Net.
Source: RightingFinance
http://www.rightingfinance.org/?p=444


SUSCRIBIRSE A NUESTRO BOLETÍN

Enviar