CFA News Update- December 7, 2011

House Advances Bills that Would Undermine Federal Consumer Protections

The House passed two bills last week and has begun consideration of a third to impose new burdens of federal regulators that seek to protect consumers from unsafe food, predatory financial products and schemes, and dangerous consumer products.  In a letter to the House prior to the votes, CFA legislative staffers urged members of Congress “to oppose the ‘triple threat’ to consumer protection” embodied in these bills.  “If adopted, these proposals would waste federal resources, minimize the ability of federal agencies to do their jobs to protect the public and ultimately harm American consumers.”

The House passed H.R. 3010, the Regulatory Accountability Act, on a 253-167 vote.  It would amend the Administrative Procedures Act to require all agencies, regardless of their statutorily mandated missions, to adopt the least costly rule, without consideration of the impact on public health and safety or the impact on our financial marketplace. The House also passed H.R. 527, the Regulatory Flexibility Improvements Act, on a 263-159 vote.  It would require almost all agency proposals to go through a time-consuming and resource-intensive process to analyze their impact, including their indirect impact, on small businesses, increase the authority of the Chief Counsel for Advocacy of the Small Business Administration over proposed safeguards, and subject agencies to review by both the Office of Management and Budget and the Chief Counsel, delaying the promulgation of necessary protections.

Meanwhile, the House prepared to vote on the third of these bills, H.R. 10, the Regulations from the Executive in Need of Scrutiny or REINS Act.  That bill would require that any rule with an economic impact of $100 million or more obtain approval from both houses of Congress of the entire rule without changes within 70 legislative days of the rule being received by Congress before the rule could be implemented.  With a few exceptions, failure to receive that congressional approval in the allotted time would table the rule until the following session, effectively thwarting implementation of the rule.

The Obama Administration has indicated that senior White House advisors would recommend that the President veto each of the three bills.

A narrower bill, aimed at imposing similar procedural hurdles on the Securities and Exchange Commission, was approved in the Capital Markets Subcommittee on a party-line vote in November.  CFA Director of Investor Protection sent a letter in opposition to the bill prior to that vote.  “Far from making the SEC more efficient or cost-effective, this legislation would place insurmountable procedural barriers in the way of the agency as it seeks to adopt needed rules and to administer and enforce the securities laws. As such, it would be harmful to investors, to market participants, and to the health and stability of our nation’s capital markets,” she wrote.

FDA Urged To Label Genetically Engineered Food

The Center for Food Safety has petitioned the Food and Drug Administration to require labeling for genetically engineered food.  CFA wrote to the agency in support of the petition. “Consumers have a basic right to know what is in their food,” wrote Chris Waldrop, Director of CFA’s Food Policy Institute. “Without labeling, consumers are unable to make an informed choice when they are shopping for food for themselves and their family. We urge the FDA to act favorably on the CFS petition and require the labeling of genetically engineered food.”

More High-Quality Spectrum Needed for Shared and Innovative Use

As the House Subcommittee on Communications and Technology prepared to take up legislation regarding future spectrum policy last week, CFA wrote to members of the subcommittee urging them to ensure that any legislation to increase the spectrum for wireless communications maintains the availability of high quality spectrum for shared use and gives the Federal Communications Commission the authority to determine how much should be made available to promote the continued development of this vital sector.   “The most important and immediate goal of spectrum policy reform is to ensure that the mobile communications sector, which lies at the center of the digital economy, continues to develop in an innovative, user- and consumer-friendly manner, so that it can continue to spur economic growth, investment and job creation,” CFA Research Director Mark Cooper wrote.  Policy proposals to auction all the high-quality spectrum made available by clearing current users would have the opposite effect, he wrote, resulting in higher prices for lower value wireless broadband services, less economic activity, fewer jobs, and less federal revenue.  In conjunction with the letter, CFA released a new analysis of the consumer benefits of expanding shared use of the public airwaves, which the study found exceed $50 billion a year.

Consumers Continue to Feel Sting of Financial Crisis

As the holiday shopping season begins, a new survey from CFA and the Credit Union National Association (CUNA) finds that consumers continue to feel the string of the worst financial crisis since the Great Depression.  A significantly higher percentage (37 percent) of respondents to the 12th annual holiday spending survey reported that their financial condition was worse this year than a year ago, up from 30 percent who responded that way to the same question in last year’s survey.  Meanwhile, only 19 percent reported that their condition was better compared to a year ago, down from 23 percent who reported improving conditions last year.  These findings help explain why 41 percent said they were planning to spend less this year than last year and only 8 percent said they planned to spend more. The release includes tips for keeping holiday debt under control. “With just a little planning, consumers can substantially reduce their holiday spending debt load without sacrificing holiday quality,” said CFA Executive Director Stephen Brobeck.

Leading Policymakers Address CFA Financial Services Conference

A remarkable gathering of financial service policymakers presented their perspectives on a wide variety of financial issues facing both consumer and government officials at CFA’s 24th annual financial services conference in Washington, D.C. last week.  Keynote speakers included: Representatives Barney Frank (D-MA) and Judy Biggert (R-IL); Rajeev Date, Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau; SEC Director of Enforcement Robert Khuzami; David Wessel, Wall Street Journal Bureau Chief; David Stevens, President & CEO of the Mortgage Bankers Association; and Admiral Steve Abbot U.S. Navy (Retired).