Daniel J. Ikenson
Protectionism masquerading as regulation in the public interest is the subject of an excellent new paper by my colleagues Bill Watson and Sallie James. As tariffs and other border barriers to trade have declined, rent-seeking domestic interests have turned increasingly to regulations with noble sounding purposes – protecting Flipper from the indiscriminating nets of tuna fishermen, fighting the tobacco industry’s efforts to entice children with grape-flavored cigarettes, keeping U.S. highways safe from recklessly-driven, dilapidated, smoke-emitting Mexican trucks, and so on – in order to reduce competition and secure artificial market advantages over you, the consumer.
The paper documents numerous examples of this “bootleggers and Baptists” phenomenon, where the causes of perhaps well-intentioned advocates of health and safety regulation were infiltrated or commandeered by domestic producer interests with more nefarious, protectionist motives, and advises policymakers to:
be skeptical of regulatory proposals backed by the target domestic industry and of proposals that lack a plausible theory of market failure. These are red flags that the proposal is the product of privilege-seeking special interests disguised as altruistic consumer advocates.
After reading this incisive paper, you might consider whether a new law restricting U.S. government purchases of Chinese-produced information technology systems in the name of cybersecurity fits the profile of regulatory protectionism. A two paragraph section of the 574-page “Consolidated and Further Continuing Appropriations Act of 2013,” signed into law last week, prohibits federal agency purchases of IT equipment “produced, manufactured or assembled” by entities “owned, directed, or subsidized by the People’s Republic of China” unless the head of the purchasing agency consults with the FBI and determines that the purchase is “in the national interest of the United States” and then conveys that determination in writing to the House and Senate Appropriations Committees.
Sec. 516. (a) None of the funds appropriated or otherwise made available under this Act may be
used by the Departments of Commerce and Justice, the National Aeronautics and Space
Administration, or the National Science Foundation to acquire an information technology system
unless the head of the entity involved, in consultation with the Federal Bureau of Investigation or
other appropriate Federal entity, has made an assessment of any associated risk of cyberespionage
or sabotage associated with the acquisition of such system, including any risk associated
with such system being produced, manufactured or assembled by one or more entities that are
owned, directed or subsidized by the People’s Republic of China.
(b) None of the funds appropriated or otherwise made available under this Act may be used to
acquire an information technology system described in an assessment required by subsection (a)
and produced, manufactured or assembled by one or more entities that are owned, directed or
subsidized by the People’s Republic of China unless the head of the assessing entity described in
subsection (a) determines, and reports that determination to the Committees on Appropriations
of the House of Representatives and the Senate, that the acquisition of such system is in the
national interest of the United States.
Congress and the administration have already effectively blacklisted Chinese telecom companies Huawei and ZTE by advising U.S. carriers not to purchase their wares and by blocking Huawei’s acquisitions of U.S.-based firms. And none of the evidence that these companies are bad actors posing U.S. national security threats has been made public. We are to trust that Huawei’s and ZTE’s U.S. competitors and their representatives in Washington have no ulterior motives in keeping the Chinese telecoms out of the market.
The new law would seem to ensnare many more Chinese companies, as “IT equipment” is a much broader category than just telecommunications equipment. Notwithstanding any legitimacy to the concern that IT equipment made by Chinese companies fitting the statutory description could pose higher-than-average cyber threats, the law will undoubtedly have the effect of reducing demand for all Chinese-made or assembled IT equipment because the costs in time and money of enduring an FBI approval process, as well as the costs – for U.S. agencies and U.S. companies selling in the federal IT market – of ascertaining every potential Chinese suppliers’ relationship with the Chinese government will prove too daunting. And, of course, among the significant beneficiaries of this diverted demand will be U.S.-based producers of IT equipment.
The fact that included among the restricted group of suppliers are companies “subsidized” by the Chinese government should raise eyebrows about the real motives of this law. Are companies that receive subsidies more likely to be a cyber threat? Or is this more score settling for Chinese industrial policies? If improved cybersecurity – and not protectionism – is the true aim of policy, there are better approaches that carry a much reduced risk of inspiring retaliatory measures from China and a proliferation of unilateral policies around the world.
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Statistics: Posted by yoda — Tue Apr 09, 2013 12:18 pm
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Morgan reportedly returns $600 million in MF Global customer funds
Submitted by cpowell on Sat, 2012-06-02 06:07. Section: Daily Dispatches
By Aaron Lucchetti
The Wall Street Journal
Friday, June 1, 2012
J.P. Morgan Chase & Co. has returned roughly $600 million that was ensnared at the bank when MF Global Holdings Ltd. collapsed in October, people familiar with the matter said.
Most of the payments haven’t been disclosed publicly, and a bankruptcy trustee representing customers of the failed securities firm might pursue J.P. Morgan for as much as several hundred million dollars in additional claims, according to a person familiar with the investigation.
Still, the New York bank’s payments are a sign of progress in efforts to fill the estimated $1.6 billion hole left in customer accounts at MF Global. Money recovered by the bankruptcy trustee, James Giddens, eventually will be passed along to customers, though the amount depends on the outcome of continuing legal squabbles and negotiations.
A spokesman for Mr. Giddens said in a statement that "substantive discussions" are under way with the nation’s largest bank in assets for "the resolution of other claims" made on behalf of the former customers. J.P. Morgan continues to cooperate with the investigation, the spokesman added.
J.P. Morgan was one of MF Global’s biggest creditors and handled many of its trades as the New York securities firm scrambled to save itself in late October. MF Global also transferred $175 million to fix an overdraft in one of the firm’s accounts at the bank, according to congressional testimony.
Bank officials have said J.P. Morgan never intentionally accepted or held on to money that belonged in segregated customer accounts at MF Global. In May, the trustee announced that J.P. Morgan agreed to hand over $168 million that came from collateral held at the bank when MF Global filed for bankruptcy.
Bank officials contend that J.P. Morgan isn’t holding more MF Global money, according to people familiar with the matter. Mr. Giddens hasn’t reached the same conclusion and could demand additional payments, claiming that money passed through J.P. Morgan on its way elsewhere, according to a person familiar with his thinking.
If that happens, J.P. Morgan might counter that its repayments to date have exceeded $600 million, not including the losses suffered by the bank as a creditor to MF Global. While that $600 million could help lower the $1.6 billion shortfall, much of that money already had come back to MF Global before the shortfall estimate was made.
Mr. Giddens is expected to disclose in a report Monday details about where the money in customer accounts went, including the portions that are believed to have gone to J.P. Morgan.
The trustee also is expected to disclose more information about how the money went missing. It isn’t clear how detailed the report will be, partly because other investigators have expressed concern that too much disclosure by Mr. Giddens could hurt their continuing probes.
MF Global moved money out of customer accounts to cover margin calls and meet other obligations. No one has been charged with wrongdoing.
Jon S. Corzine, the former MF Global chief executive, and other officials at the firm have told lawmakers that they didn’t realize customer money had been tapped until employees told them the day before its bankruptcy filing about an apparent shortfall.
J.P. Morgan and MF Global had close ties. The bank facilitated trades on behalf of MF Global and in the firm’s final weeks, J.P. Morgan officials spoke to Mr. Corzine and other senior MF Global executives about liquidating assets and dealing with ratings firms, according to people close to those discussions.
J.P. Morgan even considered buying MF Global, but then backed away amid questions about money transfers that came up three days before the securities firm filed for bankruptcy.
MF Global officials never provided written documentation that J.P. Morgan asked for on two transfers. The bank wanted to know if the money moves were in accordance with Commodity Futures Trading Commission rules. A J.P. Morgan lawyer later told lawmakers that the bank received verbal assurances from MF Global that the transfers were proper.
Many U.S. customers have recovered 72 cents of every $1 from their MF Global accounts. They are expected to get another eight cents per dollar soon.
The $1.6 billion shortfall also includes about $700 million stuck in the U.K. bankruptcy process and is affected by money being held back by the trustee for potential legal claims. On Friday, a U.K. court scheduled a trial for April 2013 on the trustee’s issues in that country.
Statistics: Posted by DIGGER DAN — Sun Jun 03, 2012 3:31 am
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By Tricia Phillips 1 Comment 30 May 2012 00:00
High rents forcing thousands into debt
A Rightmove report revealed the average amount spent on rent in the UK is 38% of net income
ONE in three tenants say they have to cough up more than half of their take-home pay on rent.
A Rightmove report revealed the average amount spent on rent in the UK is 38% of net income and six in 10 predict their rent will rise during the next 12 months.
This comes hot on the heels of a warning from debt charity the Consumer Credit Counselling Service that high rents are forcing thousands into hardship.
More than 10,000 people asked the charity for help with rent arrears in 2011 – a 27% increase on 2010.
Kay Boycott from housing charity Shelter said: “These figures paint a worrying picture of the rising numbers of families facing a monthly battle to keep a roof over their head.
"High unemployment and rising living costs continue to take their toll.”
Statistics: Posted by yoda — Wed May 30, 2012 9:45 am
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