CFA News Update- August 1, 2012
The U.S. House of Representatives adopted H.R. 4078, the so-called “Red Tape Reduction and Small Business Job Creation Act” on a largely partisan 245 to 172 vote last week. Two Republicans voted against the bill, while 13 Democrats voted for it. The legislation consists of seven separate bills that collectively make it all but impossible for consumer protections to be developed and implemented. One particularly egregious provision, for example, would prevent any significant regulations from being adopted until the unemployment rate falls to six percent, which the Congressional Budget Office projects is unlikely to occur before 2016.
“We are profoundly disappointed that the House of Representatives voted today to pass a bill that would entirely thwart the ability of federal agencies to protect consumers from unsafe food, predatory financial products, systemically risky financial practices, and dangerous consumer products,” stated CFA Senior Counsel Rachel Weintraub in a news release following the vote. “This bill has extreme and negative consequences that will result in harm to American consumers and harm to the U.S. economy. At a time when consumers need more protections, not less, the House of Representatives has tied the hands of government.”
Chris Waldrop, Director of CFA’s Food Policy Institute, noted that the bill would halt important food safety regulations “that are essential to protect consumers from contaminated food.” CFA Director of Investor Protection Barbara Roper noted that it would also simultaneously delay, and strengthen industry’s already considerable influence over, rules designed to respond to the financial crisis that caused the nation’s current economic woes.
The bill is not expected to advance in the Senate. President Obama has indicated that he would veto the bill if it were to pass.
By the end of the summer, the administration is expected to sign off on stronger fuel economy standards that raise the average fuel efficiency of the nation’s new passenger vehicle fleet to the equivalent of 54.5 miles per gallon by 2025. CFA released a new analysis in July demonstrating that the new standards align with consumer demands and needs.
Based on an examination of historical and current day mileage and pricing data as well as new polling data to determine what consumers want and need, whether or not the auto industry can deliver on those needs, and whether or not fuel economy improvements will be cost prohibitive, the report concludes that consumer demand and auto industry innovation is driving the creation of a more efficient, cost-effective automotive fleet.
“The 54.5 mpg by 2025 standard will be one of the most important consumer protection measures to be adopted in decades,” said CFA Director of Research Mark Cooper. “Record spending on gasoline for American families, combined with consumer demand for better mileage and a broad political consensus over higher national standards, are driving faster improvements in fuel economy than at any time since the oil price shocks of the 1970s.”
Consumer advocates, civil rights groups, and community organizations across the country filed comments with the Consumer Financial Protection Bureau (CFPB) last week urging the agency to ban overdraft fees and payday loans on prepaid cards. The CFPB has announced that it will write rules to govern prepaid cards, a rapidly growing and largely unregulated market targeted at unbanked consumers and people who have credit problems.
“Payday lenders are already using prepaid cards to circumvent state laws that protect people from loans with dangerous triple-digit interest rates,” said CFA Director of Financial Services Jean Ann Fox in a news release on the issue. “The CFPB needs to put a stop to prepaid card payday loans or interest rate caps across the country will be wiped out.”
In their comments, the groups include a number of additional suggestions to improve consumer protections associated with prepaid cards. For example, they urge the CFPB to extend fraud and loss protection to all cards, give consumers free access to balances and account information, require FDIC insurance, improve fee disclosures, and require a choice of direct deposit to the consumer’s own account for government payments and financial aid.
Citing the commitment President Obama has repeatedly made to strengthen food safety protections, consumer groups joined with victims of foodborne illness last month in calling on the White House to release long-delayed regulations to implement the Food Safety Modernization Act. In a recent letter to food industry representatives, the Food and Drug Administration said that until final rules are issued, the agency would not enforce the FSMA requirements that food processors adopt prevention-based protections, and that importers assure the safety of the food products they send to the United States.
“On behalf of those whose lives have been directly impacted by foodborne illness and others who may be unfortunately impacted in the future, as well as for all of the consumer, public health and victim organizations that worked tirelessly to get FSMA enacted, we are writing to tell you respectfully that we cannot wait any longer,” they wrote. “Please allow the promise of this landmark law to become a reality now, by releasing the long-delayed proposed rules.”
A broad coalition of consumer, civil rights, good government, and community groups, as well as members of Americans for Financial Reform, wrote to the Consumer Financial Protection Bureau (CFPB) last month calling on the agency to expand the information provided in its new consumer complaint database. While they praised the creation of the database as “a bold first step,” they argued that access to individual complaints, including narrative data, “is a key component to allowing consumers to make full and accurate use of the complaint information that is submitted.” They expressed confidence that the information could be provided in a way that protects individual privacy. “The CFPB should be a government leader, both in providing consumers with detailed information about the nature of complaints that they can use to make good choices about financial products, and in protecting their privacy,” said CFA Legislative Director Travis Plunkett.