CFA News Update- November 15, 2011
With abusive practices that affect military families continuing to mount, the Senate Banking Committee held a hearing earlier this month to highlight the problem. CFA released information in conjunction with the hearing on a number of financial practices that harm military families and that the Consumer Financial Protection Bureau will need its full authority to address. “The Consumer Financial Protection Bureau is fighting financial abuses with one arm tied behind its back without a confirmed director,” said CFA Legislative Director Travis Plunkett. “Military families, as well as all Americans, need an effective CFPB to curb abusive financial practices and products peddled by both banks and nonbanks.”
CFA identified a number of problematic practices that continue to occur despite passage in 2006 of the Military Lending Act (MLA). Among them: loans and credit practices that target the military, often with high fees or other features designed to evade MLA restrictions; unfair bank overdraft loans; bank and Internet payday lending; and use of military allotments to pay for commercial credit. “Military service members are vulnerable to abusive financial practices that put their bank accounts and military pay at risk,” said CFA Financial Services Director Jean Ann Fox. “Documentation of Military service member complaints by the CFPB will enable the Consumer Financial Protection Bureau to protect service members and to curb abusive practices, while helping the Department of Defense get the full impact of the Military Lending Act.”
The House Communications and Technology Subcommittee held a hearing earlier this month on legislation (H.R. 3035) that purports simply to update the Telephone Consumer Protection Act (TCPA) but would instead open up everyone’s cell phones, land lines, and business phone numbers, without their consent, to a flood of commercial, marketing and debt collection calls. CFA joined with a number of national consumer, civil rights, poverty and privacy organizations to write to members of the House Energy and Commerce Committee in advance of the hearing in opposition to the bill. “H.R. 3035 is not only unnecessary, it will effectively gut the Telephone Consumer Protection Act’s essential protections against invasion of privacy, nuisance and harassing calls,” the groups wrote. They urged that the bill be withdrawn.
A resolution of disapproval (S.J. Res. 6) designed to block implementation of the Federal Communications Commission’s net neutrality rules was defeated in the Senate last week when a motion to proceed to consideration of the measure garnered just 46 votes. The House had approved a similar measure on a largely party-line vote earlier this year. “Ensuring nondiscriminatory access to the means of communications is one of the cornerstones of democracy and commerce in our society,” said CFA Research Director Mark Cooper. “The FCC adopted a very light handed rule to ensure access to the Internet is unfettered. It is reassuring that the Senate rejected the effort of the House to let the telephone and cable companies control the public's access to the Internet, but the slim margin of victory reminds us the price of freedom is constant vigilance.”
The Commodity Futures Trading Commission (CFTC) is reportedly close to finalizing a key rulemaking implementing the Dodd-Frank Act’s swaps dealer business conduct rules, including enhanced protections for so-called special entities such as municipalities, school districts, endowments, and pension funds. CFA and Americans for Financial Reform wrote to CFTC Chairman Gary Gensler earlier this month urging him to ensure that “the important protections provided under the CFTC’s original proposed approach are not lost in an effort to accommodate sometimes legitimate, but often exaggerated concerns that have been raised with regard to the rules.”
The CFTC has come under enormous pressure to revise its rules in accord with the much weaker proposal from the Securities and Exchange Commission. To do so would eviscerate protections for these most vulnerable to swap market participants, many of whom suffered devastating losses as a result of predatory and abusive swap dealer practices, warned CFA Director of Investor Protection Barbara Roper. “In evaluating revisions to its proposed business conduct rules, Commissioners must weigh whether the revised rules are likely to be effective in combatting those abuses,” the groups wrote. “Many of the revisions that have been proposed fail that test. In most if not all such cases, alternatives exist that would address legitimate concerns without unduly compromising appropriate protections.” The letter, which follows a number of meetings with SEC and CFTC staff members working on the rule, seeks to identify such alternatives.
In a lawsuit challenging publication of a consumer report on the new product safety database, CFA, Public Citizen, and Consumers Union have asked the federal court hearing the case to deny the company’s motion to seal all papers. In a news release on their action, the groups argued that keeping the case hidden from the public would violate a right of public access to court records and that the case is of significant public interest because, if the company prevails, the existence of the CPSC database and other federal agency databases used to provide consumers with information about potentially hazardous products could be jeopardized. “This database was created because people were in the dark about potentially lethal product hazards that manufacturers and sometimes the government were aware of,” said CFA Senior Counsel Rachel Weintraub. “Consumers were unwittingly using and allowing their children to play with these dangerous products. We should not turn the clock back on this important consumer protection.”