Consumer Law & Policy Blog

No Warren Peace

by Jeff Sovern

The prospect of Elizabeth Warren heading the Consumer Financial Protection Bureau continues to elicit discussion. Two Bloomberg columnists have weighed in recently: Jonathan Alter wrote Why Obama Should Fight Hard for Elizabeth Warren, while William D. Cohan countered with Elizabeth Warren Should Bow Out for Change.  Cohan's argument is that Warren "has made herself so bloody disagreeable on Capitol Hill that she has obliterated her chance of winning the Senate votes she needs to be confirmed."  He cites the McHenry disgrace of last week as evidence.  In other words, it somehow became Professor Warren's fault that a Congressman apparently reneged on a deal with her and effectively called her a liar for objecting to his behavior. Of course, as Cohan noted, that Congressman wouldn't have been able to vote on her confirmation anyway, because he's in the House, not the Senate.  Meanwhile, 44 Republican Senators have said they won't vote to confirm aynone to head the Bureau unless the Bureau's power is reduced--meaning that the President has nothing to lose by nominating Elizabeth Warren because neither she nor anyone else can be confirmed. 

War is Peace

As I mentioned a little while back, even as the rhetoric about high taxes persists, the total tax burden on U.S. taxpayers has hit historic lows.  Now, Bruce Bartlitt, former Reagan and Bush(I) official, explains in this New York Times piece just how ridiculous the claims of high taxes are. He describes why "if taxes are low historically and in comparison with our global competitors, how ... Republicans [are] able to maintain that taxes are excessively high[.]" "They do so by ignoring the effective tax rate and concentrating solely on the statutory tax rate, which is often manipulated to make it appear that rates are much higher than they really are." And, to rebut "[t]he GOP [claim that] global competitiveness requires the United States to reduce its corporate tax rate," he's got a cute little chart showing that effective U.S. corporate tax rates are the lowest in the developed world. He then ends with this thought: "The truth of the matter is that federal taxes in the United States are very low. There is no reason to believe that reducing them further will do anything to raise growth or reduce unemployment."

Federal Court in Virginia Holds Ban on Direct Corporate Contributions Unconstitutional

A federal district judge in Virginia, James Cacheris, has held that the federal law banning direct corporate contributions to candidates violates the First Amendment, in light of the Supreme Court's controversial Citizens United decision, which struck down federal restrictions on so-called "indepedent" corporate expenditures. The relevant analysis starts at page 42 of the court's decision. Here's the key passage:

This Court recognizes that it must strive to avoid rendering constitutional rulings except where absolutelynecessary. Ashwander v. Tenn. Valley Auth., 297 U.S. 288, 347 (1936). But for better or worse, Citizens United held that there is no distinction between an individual and a corporation with respect to political speech. Thus, if an individual can make direct contributions within FECA’s limits, a corporation cannot be banned from doing the same thing. So because individuals can directly contribute to federal electioncampaigns within FECA’s limits, and because [the corporation contributions ban in 2 U.S.C.] § 441b(a) does not allow corporations to do the same, § 441b(a) is unconstitutional.

So, "for better or worse," this judge felt that he had no choice. The Supreme Court made him do it. Go read FEC v. Beaumont, 539 U.S. 146 (2003), and ask yourself whether you would have lacked discretion to come out the other way. The ban on direct corporate contributions struck down by Judge Cacheris has been in federal law since 1907.

States and Consumer Protection

by Jeff Sovern

In the continuing battle over the role of states in consumer protection, two developments this week merit attention here.  David Arkush called my attention to an article by 

Amy Widman

 of Northern Illinois and

Prentiss Cox

 of Minnesota, State Attorneys General Use of Concurrent Public Enforcement Authority In Federal Consumer Protection Laws, forthcoming in Cardozo Law Review.  Here's the abstract:

Recent scholarly and legislative interest in state enforcement of federal law has led to the need for an empirical understanding of how and when these enforcement powers are used. This article reports on an examination of the use by state attorneys general of sixteen federal consumer protection laws that expressly allow for state enforcement. The data are sorted and analyzed by both single state actions and multistate actions over time, and by the involvement of federal agencies in the state cases. The data reveal a measured use of such powers by state attorneys general and robust state and federal cooperation in the enforcement of the statutes. This study should be useful for future legislative and scholarly examinations of federalism, enforcement powers, and consumer protection.

 So maybe states should be given more authority to enforce consumer protection laws?  Not so, says the OCC, which wants to preempt as much state law as it can, and perhaps a bit more, as Ed Mierzwinski reports. 

Comphrehensive Single-Payer Health Care Bill Enacted in Vermont

Read about it here.

EPA and DOT Release Fuel Economy Labels for New Cars and Trucks

As explained in this LA Times article, the Environmental Protection Agency and the Department of Transporrtation has unveiled new fuel economy stickers labels that will accompany new cars and trucks beginning in model year 2013. The idea is that consumers will better be able to assess the comparative fuel economy and environmental impact of vehicles before they buy them:

In the most extensive overhaul of the decals in 30 years, the U.S. Environmental Protection Agency and the Department of Transportation said Wednesday that 2013 model year cars and trucks will have more comprehensive labels detailing projected fuel costs and emissions. In addition to the miles per gallon, the labels will show, on a scale of 1 to 10, how a vehicle stacks up against competitors for smog, tailpipe emissions and fuel economy. They will also display the amount of fuel needed to go 100 miles and the expected cost of fuel over the next five years compared with the average new vehicle.

 Here's an example of the new label:

Go to EPA's web page about the new label for more details.

 

Disgraceful Behavior in Congress

by Jeff Sovern

Here are two accounts of yesterday's testimony by Elizabeth Warren before a House oversight committee: one by the Times and the other in the Huffington Post.  Both describe the fireworks at the end of the hearing when Representative McHenry, Republican of South Carolina, essentially called Professor Warren a liar when she said she had to leave because of a prior commitment and that she had been promised she would be done by 2:15.  The HuffPo story reports how the Republican questioners repeatedly got their facts wrong and includes a video of the contretemps at the end, which is worth watching. 

My own opinion is that McHenry owes Professor Warren an apology, but it obviously will not be forthcoming.  Even if McHenry believed that his staff had not made an agreement with Professor Warren, which is what he purported to believe, the appropriate thing for him to do was to acknowledge a misunderstanding, rather than saying she was making things up.  Even if Professor Warren was a liar--something I do not believe--why would she lie about something so easily verified and so trivial?  Espcially since doing so would not get her out of answering questions at a later date.  Indeed, she offered to answer questions later.  It's notable that McHenry's later statement (at least the part which is quoted in the stories; I looked for the statement on McHenry's web site but couldn't find it) does not repeat the claim that no agreement was made.  Nor is it honest enough to acknowledge a mistake on his part or apologize; instead, it offers further criticism of Professor Warren.  Remember President Bush's campaign promise that he would restore civility to Washington?  McHenry seems not to.  Shame on him.

Deepak's Departure

by Jeff Sovern

I have been consumed by other matters recently (chiefly, grading), but I did want to thank Deepak Gupta for his work on the Blog. Deepak did the heavy lifting in creating and running the Blog, and so our readers--and I--owe him considerable gratitude.  I'm sorry you're leaving us, Deepak, and I'm sure Public Citizen is disappointed to lose you too, but i take comfort in my certainty that your work at the CFPB will be good for the country and consumers.  I look forward to watching your accomplishments in the coming years and wish you the best of luck.

Does the CFPB Have Adequate Oversight?

Republicans seeking to restructure the Consumer Financial Protection Bureau claim that the agency will be too indpedendent, allowing it to issue regulations and take enforcement actions without adequate congressional oversight, budget restraints, and controls on its regulatory powers. Adam Levitin says that's not so. In this post, he compares CFPB oversight with other prominent agencies, including major financial regulators such as the Federal Reserve Board, the Office of the Controllor of the Currency, and the Office and Thrift Supervision. He concludes:

that the CFPB is subject to an extensive battery of oversight mechanisms--more than any of the other financial regulators included in [his] comparison. At the very least, th[e] chart [included in his post] provides pretty good evidence that claims that the CFPB is the least accountable agency ever just don't hold water, and that it is at least as accountable as the existing bank regulators.

Check out Levitin's chart.

Does Purell Cause Cancer?

The title of this post is unfair. I have no reason to think that Purell causes cancer. My point is that after concerns were raised about an influenza epidemic, public buildings all over the country quickly installed machines that dispense shots of hand sanitizer. My work place installed them all around the campus. Why did this happen? Because we assumed that the only risk was illness from bacteria and that there was some significant anti-illness benefit from using hand sanitizer. Why did we make those assumptions?

Since then, I've asked my friends, half jokingly, "Does Purell Cause Cancer"? I wanted to drive home the point that it didn't seem like anyone had done a risk-benefit (or risk-risk) analysis. I've been told repeatedly that Purell is harmless. But that's not necessarily correct even if Purell doesn't cause cancer. If we are spending money for hand sanitizer dispensers and Purell (or its generic equivalents), but those expenditures don't benefit the public, then the decision to go ape over Purell is not exactly harmless.

Over the last couple years (that is, during the Purell craze), I have been asking my friends, including my doctor friends, whether repeatedly splashing one's hands with Purell makes a bit of difference. They have no idea. It's a relevant question, isn't it? After all, if Purell made a difference, you would expect work places that installed dispensers to have lowered the incidence of illness among their workforces. Just last week, I asked a doctor working in the public health field if he knew any studies on the topic. He had no idea.

So, check out this story in today's Washington Post. It reviews data that suggests that hand sanitizer may make little or no difference in preventing illness.