CFA News Update - June 25, 2013
USDA Proposes to Label Mechanically Tenderized Meat
In an action long sought by food safety advocates, the U.S. Department of Agriculture Food Safety and Inspection Service has proposed to label mechanically tenderized meat. “This is good news for consumers,” said Chris Waldrop, Director of CFA’s Food Policy Institute. “Without labeling, consumers would never know that the steak they are purchasing has been mechanically tenderized and may present a greater risk for foodborne illness.”
Mechanical tenderization is a process by which small needles or blades are repeatedly inserted into the product. These needles or blades pierce the surface of the product increasing the risk that any pathogens, such as E. coli or Salmonella, located on the surface of the product will be transferred to the interior. The process is often used on less expensive cuts of meat to increase tenderness.
In order to kill pathogens which may be located on the interior of these products, consumers must cook these products differently than they would intact steaks and roasts. Without labeling to identify these products as mechanically tenderized, and information on how to properly cook these products, consumers may be unknowingly at risk for foodborne illness. Labeling of mechanically tenderized products would allow consumers to identify these products in the supermarket and handle them appropriately.
U.S. House Continues Its Assault on Financial Reform, Investor Protection
The House of Representatives voted 301-124 earlier this month to limit the ability of U.S. regulators to rein in the types of risky and abusive practices in derivatives markets that threatened to bring down the global economy during the 2008 financial crisis and have been directly implicated in more recent scandals, such as the J.P. Morgan “London whale.” The vote came on legislation (H.R. 1256) that would limit the ability of the Commodity Futures Trading Commission to enforce derivatives rules on conduct that occurs outside U.S. borders but has a direct impact on the U.S. economy.
In a letter to members of the House urging opposition to the bill, CFA Director of Investor Protection Barbara Roper wrote, “This bill threatens to reverse the considerable progress that has been made in recent years to bring transparency, reduce systemic risks, and provide reasonable regulatory oversight to the U.S. swaps markets. It would do so by further delaying implementation of a cross-border policy, creating a system of regulatory oversight easily gamed by large, multi-national swaps dealers, and inappropriately delegating significant responsibility for protecting U.S. markets, and the consumers and businesses who rely on those markets, to foreign regulators that may or may not provide equivalent regulatory protections.”
In a separate action, the House Financial Services Committee gave bipartisan approval to four more bills to weaken investor protections, all of which were opposed by CFA. Included among the bills was cynically misnamed “Retail Investor Protection Act” (H.R. 2374) designed to derail efforts at the Securities and Exchange Commission (SEC) and Department of Labor (DOL) to protect investors and retirement plan participants from predatory and self-interested financial services providers seeking to profit at their customers’ expense. The bill would throw new roadblocks in the way of SEC rulemaking, then prohibit DOL from moving forward with its own rulemaking efforts until the SEC completes a rule it has not even proposed and may never finalize.
“Each year, Americans pay millions of dollars in excess costs to self-interested financial services providers, take on unnecessary investment risks, and purchase investments that do not serve their best interests,” Roper said. “It is discouraging that, instead of spurring on regulators who have taken far too long to address this problem, a majority of members of the House Financial Services Committee would vote for legislation that would further delay and possibly derail those regulatory efforts. With the House all but certain to pass this legislation later this summer, it is essential that consumer champions in the Senate put a stop to this assault on investor protections,” she added.
CFPB Report on Overdraft Fees and Practices Prompts Calls for Reform
The Consumer Financial Protection Bureau (CFPB) issued a report earlier this month on overdraft programs which found that consumers who incurred one or more overdraft fees in 2011 paid an average of $225 in total fees. “The CFPB’s thorough and data-driven analysis of financial institution’s overdraft practices raise important questions about how this product impacts a consumers’ ability to maintain a checking account and conduct transactions in a safe and sustainable manner,” said CFA Director of Financial Services Tom Feltner in a press statement on the report.
The study included a detailed analysis of processing procedures in place at financial institutions, which found that posting orders differed widely from institution to institution. These variations make it difficult for consumers to fully understand the risks they face conducting important transactions like checking writing, debit purchases, and ATM withdrawals, Feltner said.
CFA has recommended expanding consumer protections for transaction accounts that include overdraft coverage, including:
- Limiting overdraft fees to one fee per month and six fees per year.
- Requiring that overdraft fees be reasonable and proportional to the amount of the overdraft.
- Prohibiting the ordering of transactions from largest to smallest, or requiring a neutral transaction ordering policy.
- Requiring the disclosure of the cost of overdraft as an annual percentage rate to provide consumers with the information needed to compare overdrafts to other forms of high-cost credit.
The CFPB report findings further emphasize the need for these reforms, Feltner said.
Outcome of E-Book Price-Fixing Case Will Impact Consumers
As arguments in the Apple E-Book price-fixing trial wrapped up last week, CFA Director of Research Mark Cooper issued a statement emphasizing the importance of the outcome for consumers. “This case is straightforward and important,” he said. “It is not about the ‘agency’ model, it is about price fixing, plain and simple. Apple and the publishers wanted to raise prices and to do so they had to limit competition. The case presented by the Department of Justice makes it clear that this was a conscious scheme orchestrated by Apple and joined by the publishers to raise prices and dampen competition at the expense of consumers.
“All across the digital economy we see companies trying to dampen competition with business practices that were clearly recognized as illegal in the physical economy,” Cooper added. “As the digital revolution affects more and more consumer products, a ruling against price fixing will ensure that content providers and digital distributors cannot concoct blatantly anticompetitive schemes to drive up consumer prices. If we let companies get away with this type of price fixing, consumers will be denied a substantial part of the benefits of the digital revolution. It is vitally important that we affirm our commitment to vigorous competition in the digital economy.”