UK bodies act to bolster consumer safety
Four British consumer and business bodies have taken legal steps that could compel the regulator to take swift action to end scams after years of financial product mis-selling.
In a bid to end the litany of mis-selling which stretches back to the 1980s with pensions and home loans, Britain's finance ministry said on Wednesday that four bodies have applied for "super complainant" status.
This means that if they collate enough documented evidence that consumers of financial services are being ripped off, the Financial Conduct Authority (FCA) regulator must say within 90 days what action, if any, it will take.
Banks have paid over £10bn ($15.26bn) in compensation so far for selling unsuitable loan insurance, a mounting bill that forced Barclays on Tuesday to announce plans to replenish its capital buffer.
One of the applicants for super complainant status, the Federation of Small Businesses, is representing companies who believe they were mis-sold interest rate protection by banks.
The FCA replaced the Financial Services Authority in April, which was scrapped partly because of mis-selling scandals. The FCA has a remit to protect consumers with its powers to ban products.
"By giving certain consumer and business groups the ability to make 'super-complaints' to the new regulator, the Financial Conduct Authority, we can all help to tackle bad practice more rapidly and robustly than before," UK financial services minister Greg Clark said in a statement.
The other three bodies are the Citizens Advice Bureau, consumers association and Consumer Council Northern Ireland. Others are expected and a decision on who will be granted super complainant status will be taken later this year.
Britain passed a law in 2012 making it possible for consumer bodies to become super complainants and called in March for applicants.
'Obamacare' delay to hit US workers hard
President Barack Obama's decision to delay implementation of part of his healthcare reform law will cost $12bn and leave a million fewer Americans with employer-sponsored health insurance in 2014, congressional researchers said Tuesday.
The report by the non-partisan Congressional Budget Office is the first authoritative estimate of the human and fiscal cost from the administration's unexpected one-year delay announced on July 2 of the employer mandate - a requirement for larger businesses to provide health coverage for their workers or pay a penalty.
The analysts said the delay will add to the cost of "Obamacare's" insurance-coverage provisions over the next 10 years. Penalties paid by employers would be lower and more individuals who otherwise might have had employer coverage will need federal insurance subsidies.
"Of those who would otherwise have obtained employment-based coverage, roughly half will be uninsured (in 2014)," CBO said in a July 30 letter to Representative Paul Ryan, Republican chairperson of the House of Representatives Budget Committee.
Under Obama's healthcare reform law, employers with 50 or more full-time workers were supposed to provide healthcare coverage or incur penalties beginning on January 1. But the requirement will now begin in 2015.
The delay intensified doubts about the administration's ability to implement Obama's signature domestic policy achievement, and stirred Republican calls for a similar delay in another Obamacare mandate that requires most individuals to have health insurance in 2014.
The Republican-controlled House followed up the administration's decision by voting on July 17 for its own measures to delay the employer and individual mandates. Neither piece of legislation is expected to succeed in the Democratic-controlled Senate.
State and federal officials are racing to set up new online health insurance exchanges, where lower-to-moderate income families that lack health insurance will be able to sign up for federally subsidised coverage beginning on October 1. The poor will also be able to sign up for Medicaid coverage in 23 states that have opted to expand the programme.
Most large employers already offer health insurance and CBO said few are expected to drop coverage because of the delay.
But the change will still result in a $10bn reduction in penalty payments that some employers would have made in 2015 for failing to provide coverage next year, CBO said.
The change also means another $3bn in added costs for exchange subsidies. That is because about half of the one million workers who would have gained employer-sponsored coverage next year will now obtain insurance through the exchanges or via public programmes including Medicaid, CBO said.
Other changes, including an increase in taxable compensation resulting from fewer people enrolling in employment-based coverage, will offset those factors by about $1bn.
CBO now puts the net cost of Obamacare's insurance coverage provisions at around $1.38trn over the next 10 years, versus its May baseline projection of $1.36trn.
Obama offers 'grand jobs bargain'
President Barack Obama proposed a "grand bargain for middle-class jobs" on Tuesday that would cut the US corporate tax rate and use billions of dollars in revenues generated by a business tax overhaul to fund projects aimed at creating jobs.
The goal, as outlined in his speech to an enthusiastic audience at an Amazon.com Inc facility in southeastern Tennessee, was to break through partisan gridlock in Congress with a formula that satisfies Republicans and Democrats alike.
But there was no sign that congressional Republicans who have fought nearly every facet of Obama's domestic agenda would look favourably upon the president's proposal.
The president's plan combined a proposed corporate tax rate cut desired by Republicans with new spending on infrastructure projects like roads and bridges as well as education investment desired by his fellow Democrats.
"I've come here to offer a framework that might help break through the political logjam in Washington and get some of these proven ideas moving," Obama said.
Despite the olive branch, Obama's proposal immediately drew fire from the top Republicans in Congress. Senate Republican Leader Mitch McConnell said: "It's just a further-left version of a widely panned plan he already proposed two years ago - this time, with extra goodies for tax-and-spend liberals."
Bickering broke out as the White House said it had tried to tell aides to John Boehner, the Republican speaker of the House of Representatives, about the plan on Monday but, according to Obama spokesperson Jay Carney, "never heard back" from them.
The president in his speech also jabbed at Republicans over their support for a proposed oil pipeline from Canada and their continual opposition to his ideas.
The contretemps reflected the hyperpartisan environment that has made negotiations nearly impossible in Washington. Efforts to reach a "grand bargain" between Democrats and Republicans on deficit reduction have been at an impasse for months.
New showdowns over spending are expected in the fall, as Congress confronts an October 1 deadline to pass a bill funding the government and then a White House request to raise the federal borrowing limit, known as the "debt ceiling".
Senior administration officials said Obama is not giving up on a big deficit-cutting package, but since no agreement appears imminent, he is offering a new idea to try to follow through on his 2012 re-election campaign promises to help the middle class.
But his narrow proposal on corporate taxes suggested that Obama had all but abandoned a big deal with Republicans on deficit reduction. He argued the deficit was rapidly declining anyway and no deal seemed near with his political opponents.
'The white flag'
The president cast his latest tax proposal as part of a menu of items he is offering to help the United States pick up its economic game in a competitive world economy.
"If we don't make these investments and reforms, we might as well throw up the white flag while the rest of the world forges ahead in a global economy," he said. "And that does nothing to help the middle class."
Obama wants to cut the corporate tax rate of 35% to 28% and give manufacturers a preferred rate of 25%. He also wants a minimum tax on foreign earnings as a tool against corporate tax evasion and the use of tax havens.
In exchange for his support for a corporate tax reduction, Obama wants the money generated by a tax overhaul to be used to fund such projects as repairing roads and bridges, improving education at community colleges and promoting manufacturing, senior administration officials said.
For his part Obama, who will need Republican backing for any budget deal, had scathing words for Republican proposals on economic growth.
He spoke dismissively of the proposed Keystone XL pipeline from Canada, which Republicans have urged him to approve because of its economic benefits. The president said it would create only 50 permanent jobs, adding: "That's not a jobs plan."
Obama's plan to cut corporate taxes while also curtail some existing tax benefits would result in a one-time source of revenue. The White House did not say how much money would be raised, but Obama called for $50bn for infrastructure spending in his State of the Union speech in February.
Republicans contended that by spending the revenue, it would violate Obama's previous commitment to a "revenue-neutral" overhaul of corporate taxes.
Administration officials said they recognise that the climate is difficult in Congress, with Republicans adamantly refusing anything that is seen as increasing spending and Democrats in no mood to cut taxes and get nothing for it.
The president, who has failed in several tries to reach a comprehensive fiscal accord with Republicans, accused them of holding a personal grudge against him and called for a good-faith exchange of ideas.
"If folks in Washington really want a grand bargain, how about a grand bargain for middle-class jobs?" Obama said.
"I don't want to go through the same old arguments where I propose an idea and the Republicans just say: 'No,' because it's my idea. So I'm going to try offering something that serious people in both parties should be able to support," he added.
Boehner's spokesperson, Michael Steel, criticised the proposal even before Obama's speech, saying: "Republicans want to help families and small businesses, too.
"This proposal allows President Obama to support President Obama's position on taxes and President Obama's position on spending, while leaving small businesses and American families behind."
Iran sanctions bill to slash oil exports
The House of Representatives easily passed a bill on Wednesday to tighten sanctions on Iran, showing a strong message to Tehran over its disputed nuclear program days before President-elect Hassan Rouhani is sworn in.
The vote also highlighted a growing divide between Congress and the Obama administration on Iran policy ahead of international talks on the nuclear program in coming months. Iran insists the nuclear program is purely for civilian purposes.
The bill, which passed 400 to 20, would cut Iran's oil exports by another 1 million barrels per day over a year to near zero, in an attempt to reduce the flow of funds to the nuclear program. It is the first sanctions bill to put a number on exactly how much Iran's oil exports would be cut.
The legislation provides for heavy penalties for buyers who do not find alternative supplies, limits Iran's access to funds in overseas accounts and penalizes countries trading with Iran in other industrial sectors.
Existing US and EU measures have already reduced Iran's oil exports by more than half from pre-sanction levels of about 2.2m barrels per day (bpd), costing Tehran billions of dollars in lost revenue a month.
Most of the OPEC member's exports head to Asia, where the United States has worked with Iran's top four customers China, India, Japan and South Korea to push them towards alternative suppliers. The four have cut purchases from Iran by more than a fifth in the first half of this year, over and above the reductions made last year.
China
The success of any toughening of the sanctions will depend on China, Iran's top customer, which has repeatedly said it opposes unilateral sanctions outside the purview of the United Nations, such as those imposed by the United States.
The country reduced oil purchases from the Middle Eastern nation by 21% last year, but that was partly on account of differences in the first quarter over the renewal terms of annual contracts and shipping delays.
Chinese officials have said refiners are likely to cut shipments 5% to 10% this year from last. They cut imports 2% in the first six months of the year.
"I don't think the Chinese government will give in to this kind of pressure," said an official with a Chinese refinery that processes Iranian crude. "There is no chance that Iranian supplies would come to a halt."
For now, relatively steady oil prices have allowed the efforts to continue, but analysts say further sanctions risk pushing up prices and damaging the economies of US allies.
"This is almost like an embargo on Iranian oil imports. It is like giving Iran an ultimatum," a Seoul-based refining source said, after the vote. "I think we can find alternatives but we prefer Iranian crude as the economics are better. If very little Iranian crude is available, overall oil prices would rise."
The bill still has to be passed in the Senate and signed by President Barack Obama before becoming law. The Senate Banking Committee is expected to introduce a similar measure in September, though it is uncertain whether the language to cut exports by 1 million barrels a day will survive.
Critics of the bill said it shows an aggressive signal to Iran that last month voted in Rouhani, a cleric many see as more moderate. He will be sworn in on Sunday.
No higher priority
Rep. Ed Royce, a California Republican and Chairman of the House Foreign Affairs Committee who introduced the bill with Rep. Eliot Engel, a New York Democrat, said the United States has no higher national security priority than preventing a nuclear-armed Iran.
Royce said the Supreme Leader Ayatollah Ali Khamenei's drive to develop a nuclear arsenal was evident. "New president or not, I am convinced that Iran's Supreme Leader intends to continue on this path," he said.
The vote showed a growing disagreement between the White House and Congress on Iran policy. A senior administration official said on Wednesday the White House is not opposed to new sanctions in principle, but wants to give Rouhani a chance.
The Treasury Department last week partially eased sanctions on Iran by expanding a list of medical devices that can be exported there without special permission.
One of the 20 lawmakers to vote against the bill, Jim McDermott, a Washington-state Democrat, said shortly before the vote that the rush to sanction Iran before Rouhani takes office could hurt efforts to deflate the nuclear issue.
"It's a dangerous sign to send and it limits our ability to find a diplomatic solution to nuclear arms in Iran," McDermott said.
A supporter of harsher sanctions disagreed.
Ayatollah Ali Khamenei "doesn't see our flexibility and good faith efforts as a sign of good intentions, he sees it as a sign of weakness," said Mark Dubowitz, the head of Foundation of Defense of Democracies, an advocate of sanctions.
"If anything, it's only going to be massively intensified sanctions that get him to blink."
But Trita Parsi, the president of the National Iranian American council, said the House action undermines the US strategy which has long been one of good cop - bad cop.
The White House has taken a softer stance toward Iran's nuclear program and Congress has taken a tougher one. But now there are signs that the good cop cannot control the bad cop, he said.
"The impression on the Iranian side is not that it's good cop bad cop, but complete chaos and mayhem," Parsi said.
'Too much'
The bill also further denies Iran's government access to foreign currency reserves, and targets Iranian efforts to circumvent international sanctions against its shipping business.
"I think it's too much. Asian countries don't have much oil resources and they need to import a lot from the Middle East," said a trader with a North Asian buyer of Iranian crude. "If the United States keeps pushing further, it would be a big burden for Asian refineries."
While the bill has more steps to clear before becoming law, other buyers, apart from China, have already begun voicing their inability to reduce dependence on Iranian oil much further.
"Cuts in our imports from Iran have been the maximum as compared to other Asian countries," an Indian industry executive said. "At this moment there is no scope for further reduction."
India cut its Iranian oil imports by 43% over the first half of the year. That's more than the 27% cut by South Korea and 22.5% by Japan.
Turkey would also struggle to cut its crude oil imports from Iran any further, a Turkish official said.
Snowden leaves Moscow airport
Fugitive former US spy agency contractor Edward
Snowden left Moscow's Sheremetyevo airport on Thursday after Russia granted him refugee
status, ending more than a month in limbo in the transit area.
A lawyer who has been assisting Snowden said the young American, who is wanted in the United States for leaking details of secret government intelligence programmes, had left the airport for a secure location which would remain secret.
"Edward Snowden has successfully acquired refugee status in Russia," the anti-secrecy organisation WikiLeaks, which is also assisting Snowden, confirmed on Twitter.
His lawyer, Anatoly Kucherena, told state television: "I have just seen him off. He has left for a secure location ... Security is a very serious matter for him."
Snowden, aged 30, arrived in Moscow from Hong Kong on 23 June. He had hoped to fly to Latin America, where three countries have offered to shelter him, but was concerned that the United States would prevent him reaching his destination.
Snowden's case has caused new strains in relations between Russia and the United States which wants him extradited to face espionage charges.
According to reports, Snowden, who has left the airport for an undisclosed location, will be allowed to live in Russia for a year.
A lawyer who has been assisting Snowden said the young American, who is wanted in the United States for leaking details of secret government intelligence programmes, had left the airport for a secure location which would remain secret.
"Edward Snowden has successfully acquired refugee status in Russia," the anti-secrecy organisation WikiLeaks, which is also assisting Snowden, confirmed on Twitter.
His lawyer, Anatoly Kucherena, told state television: "I have just seen him off. He has left for a secure location ... Security is a very serious matter for him."
Snowden, aged 30, arrived in Moscow from Hong Kong on 23 June. He had hoped to fly to Latin America, where three countries have offered to shelter him, but was concerned that the United States would prevent him reaching his destination.
Snowden's case has caused new strains in relations between Russia and the United States which wants him extradited to face espionage charges.
According to reports, Snowden, who has left the airport for an undisclosed location, will be allowed to live in Russia for a year.
US dept 'horrified' by WikiLeaks release
Prosecutors in the case of US soldier Bradley
Manning are focusing on the damage done by his release through WikiLeaks of
more than 250 000 US diplomatic cables.
The first witness on Thursday at Manning's sentencing hearing was former
deputy assistant secretary of state Elizabeth Dibble. She says agency officials reacted with "horror and disbelief" when WikiLeaks began publishing the leaked cables in the autumn of 2010.
The former army intelligence analyst faces up to 136 years in prison for sending the cables and more than 470 000 Iraq and Afghanistan battlefield reports to the anti-secrecy website.
The government opened its sentencing case on Wednesday with testimony that WikiLeaks' publication of the leaked battlefield reports fractured US military relationships with foreign governments and silenced some friendly Afghan villagers.
