W21st NYC's List: 112th Congress

• The rules here differ in significant ways — for  starters, the European system is not greased by corporate campaign  contributions, which are banned or strictly limited in many member countries.  But the law firms have managed to win results for clients, which include  chemical and energy companies, drug makers, Silicon Valley firms, Wall Street  businesses and military contractors.

   

  The firms are taking advantage of weak ethics rules in  Brussels, including one that allows some former government officials to begin  exploiting their connections the day they leave office.
• including top officials at the European Commission, Parliament and Council, the  three bodies that make up the government — with fat paychecks.
• “They hide behind confidentiality,” said Robert  Mack, an American who is a top executive at the Brussels office of Burson-Marsteller, a global  lobbying and public relations firm. “It’s unfair; it’s anticompetitive,” he  added. “There are people who want to do things secretly, and what they do is go  to the law firms.”
• As attendees nibbled on foie gras lollipops, dipped in a chocolate fondant, they  discussed the potential business bonanza from trans-Atlantic trade negotiations  that recently began between Europe and the United States. The goal of the  negotiations is to “harmonize” the regulatory systems of the United States and  Europe, so that companies can meet a single standard — worth hundreds of  millions of dollars, if not billions, in savings for businesses, particularly if  they can persuade negotiators to accept less strict rules in the process.
• The results are tangible, the firms say, providing documents to back up some of  their claims. Last year, Hogan Lovells helped an American semiconductor company  secure  an exemption in European environmental law that allowed it to continue using  a potentially hazardous substance in the computer chips it makes.
• Covington helped get an amendment to data privacy legislation that would ease  restrictions on how companies are allowed to use certain personal data collected  from consumers; the proposal is pending. The firm also recently successfully  lobbied to weaken a proposed regulation intended to curb the ability of European  pension funds to invest some of their money with private  equity firms.
• Craig Burchell, the global head of trade and market access for Philips, said  Hogan Lovells’s mix of legal and policy advocacy is exactly what his company  demands. “Sure, we need lawyers who can handle antitrust work and trade  matters,” he said. “But what we really need is upstream influence on policy  here.”
• Some of the opponents of the mandatory registry included members of Parliament  who work at law firms, including Klaus-Heiner  Lehne, a Christian Democrat from Germany who is a partner at the  British-based law firm Taylor  Wessing and advises clients on European regulations, while serving as  chairman for Parliament’s committee on legal affairs.
• He estimated that the 6,000 companies, lobbying firms and nonprofit groups that  have joined the register — with about 30,000 lobbyists — represent 75 percent of  the universe of people trying to influence the European government. And the area  with the least compliance, he said, is the law firms.

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• So, was monetary policy excessively easy through this whole period? If so,  where’s the inflation? Maybe you can argue that loose money, for a while, shows  up in asset prices rather than goods prices (although I’ve never seen that  argument made well). But for a whole generation?

   

  So what was different? The answer seems obvious: financial deregulation,  including capital account liberalization. Banks were set free — and went wild,  again and again.

• BUT if universal access to health care is the goal, employer plans are not the  solution. Because global competition has increased pressure to cut costs, the  number of workers with such plans has been steadily declining for more than 40  years.

• Obamacare, in any event, is now the law of the land.  Even its most ardent supporters concede that the program will need to be amended  as experience accumulates. But evidence from the emerging insurance exchanges  vindicates the basic policy choices underlying the legislation.

   

  We must ask those who would repeal Obamacare how they  propose to solve the adverse-selection problem. That problem is not an  abstraction invented by economists to justify trampling individual liberties. As  experience in most countries around the world has confirmed, it is a profound  source of market failure that renders unregulated insurance markets a  catastrophically ineffective way of providing access to health care.

• This industrial dance has been choreographed by Goldman to exploit pricing  regulations set up by an overseas commodities exchange, an investigation by The  New York Times has found. The back–and-forth lengthens the storage time. And  that adds many millions a year to the coffers of Goldman, which owns the  warehouses and charges rent to store the metal. It also increases prices paid by  manufacturers and consumers across the country.
• The inflated aluminum pricing is just one way that Wall Street is flexing its  financial muscle and capitalizing on loosened federal regulations to sway a  variety of commodities markets, according to financial records, regulatory  documents and interviews with people involved in the activities.
• The maneuvering in markets for oil, wheat, cotton, coffee and more have brought  billions in profits to investment banks like Goldman, JPMorgan Chase and Morgan  Stanley, while forcing consumers to pay more every time they fill up a gas tank,  flick on a light switch, open a beer or buy a cellphone. In the last year,  federal authorities have accused three banks, including JPMorgan, of rigging  electricity prices, and last week JPMorgan was trying  to reach a settlement that could cost it $500 million.
• Before Goldman bought Metro International three years ago, warehouse customers  used to wait an average of six weeks for their purchases to be located,  retrieved by forklift and delivered to factories. But now that Goldman owns the  company, the wait has grown more than 20-fold — to more than 16 months,  according to industry records.
• Metro International holds nearly 1.5 million tons of aluminum in its Detroit  facilities, but industry rules require that all that metal cannot simply sit in  a warehouse forever. At least 3,000 tons of that metal must be moved out each  day. But nearly all of the metal that Metro moves is not delivered to customers,  according to the interviews. Instead, it is shuttled from one warehouse to  another.
• Because Metro International charges rent each day for the stored metal, the long  queues caused by shifting aluminum among its facilities means larger profits for  Goldman. And because storage cost is a major component of the “premium” added to  the price of all aluminum sold on the spot market, the delays mean higher prices  for nearly everyone, even though most of the metal never passes through one of  Goldman’s warehouses.
• All of this could come to an end if the Federal Reserve Board declines to extend  the exemptions that allowed Goldman and Morgan Stanley to make major investments  in nonfinancial businesses — although there are indications in Washington that  the Fed will let the arrangement stand. Wall Street banks, meanwhile, have  focused their attention on another commodity. After a sustained lobbying effort,  the Securities and Exchange Commission late last year approved a plan that will  allow JPMorgan Chase, Goldman and BlackRock to buy up to 80 percent of the  copper available on the market.

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