Consumer Law & Policy Blog

Op-Ed on Bank of America's $5 Debit Card Fee

We've blogged here and here about Bank of America's decision to charge five bucks a month for the privilege of using its debit card. Now, antitrust lawyer Lloyd Constantine has this New York Times op-ed, entitled "Charging for Debit Cards is Robbery." As we explained earlier, Bank of America said its $5 fee was necessary because a new Federal Reserve regulation would significantly reduce the "swipe fees" banks could charge retailers every time a consumer uses a debit card. Constantine responds that "the banks’ simplistic statements [relying on the forced reduction of "swipe fees"] are merely an attempt to rationalize and obfuscate one of the largest illegal transfers of wealth from consumers to banks in American history."

Government Expert Panel Says No to PSA Tests for Routine Prostate Cancer Screening

First, the U.S. Preventative Services Task Force questioned the value of routine mammaography to screen for breast cancer. And now, it says that the PSA screening test for prostate cancer may be useless or worse. Specifically, it "concludes that the current evidence is insufficient to assess the balance of benefits and harms of prostate cancer screening in men younger than age 75 years" and "recommends against screening for prostate cancer in men age 75 years or older." As the Washington Post explains, it's not just that the PSA test doesn't save lives on balance, but that it "leads to too much unnecessary anxiety, surgery and complications." And don't forget the large financial cost for a test that, on average, probably does more harm than good. Again, we are kidding ourselves, if we think we don't have to ration (and don't already ration) health care. 

Senate Banking Committee Votes to Confirm Cordray Nomination, 12-10

Here.  The action now moves to the floor where the 44 Republican Senators are expected to block confirmation unless something shifts.

Interesting Consumer Law Job

Hofstra University has announced an interesting clinical faculty position focused on consumer law that may be of interest to CL&P Blog readers.

Hofstra's announcement states:

Hofstra University School of Law, located in Hempstead, NY, is seeking to hire a Clinical Professor to teach and supervise a clinic that will focus on investor rights, consumer rights, or a related area. The Hofstra Law Clinic was established in 1973 and is a vibrant and integral part of the Law School. The Law School has 6 additional clinics, including Political Asylum, Community and Economic Development, Criminal Justice, Law Reform Advocacy, Child Advocacy, and Mediation.

The successful applicant will offer a vision for the future direction of an investor and/or consumer rights clinic that includes an integration of direct advocacy, law reform, community outreach, and public policy work in areas related to protecting the rights of low-income investors and/or consumers. The Clinical Professor will be responsible for all aspects of running the Clinic, including: course planning and teaching, client selection, supervision and mentoring of law students in representing clients, clinic administration, and community education and outreach. If so desired, the Clinical Professor can also teach non-clinical course offerings.

Hofstra’s Clinical Professors are subject to the following standards of review and promotion: an initial contract of two years, two additional two-year reappointments, followed by five-year long-term contracts, assuming all standards of review have been satisfied. Clinical Professors are
eligible to serve on all faculty governance committees, attend faculty meetings, and may vote on all matters except appointments, reappointments, and promotion. Our Clinical Faculty benefit from generous support for scholarship and pedagogical innovation, as well as being part of an active and engaged NYC-area clinical community. All Clinical Professors are warmly encouraged to participate in faculty workshops, conferences, and other aspects of academic life at the Law School, including the bi-monthly meetings of an energetic and supportive clinical faculty.

The Law School seeks an applicant with demonstrated experience in an area related to investor and/or consumer rights. Clinical teaching experience is highly desirable. New York bar membership or eligibility and willingness to seek admission on motion is required. Salary and title are commensurate with experience.

Hofstra University is an equal opportunity employer, committed to fostering diversity in its faculty, administrative staff and student body, and encourages applications from the entire spectrum of a diverse community.

Interested applicants may send via email only a cover letter, resume, writing sample, and references
to the attention of the secretary to the hiring committee, Ryan Duck, Ryan.Duck@Hofstra.edu. The deadline for submission is November 15, 2011.

(Hat tip to Norman Silber)

Banks Flout U.S. Rules for Foreclosure Prevention Program

Propublica has an excellent report today, based in part on audits obtained via freedom of information requests, detailing the failure of Treasury and Freddie Mac to enforce rules of its primary foreclosure prevention program, HAMP, against the major banks. 

Bank of America's Debit Card Fee

by Jeff Sovern

For those who haven't read enough about the Bank of America's monthly debit card fee (coverage here and here, for example), PBS broadcast a debate between the Los Angeles Times columnist David Lazarus and Consumer Bankers Association president Richard Hunt.  Here is some of what Hunt said:

[T]he banks would not have raised fees on any single customer if they didn't have to.

The fact of the matter is, Congress interjected itself through the Dick Durbin amendment that told us how much we could charge for a product. Now, I don't think McDonald's would appreciate if they were told how much they would charge for a hamburger or for a Coke. We don't want to do this. We have no choice to do this to stay in business.

* * *

The Durbin amendment only allowed us to recoup the cost for the actual transaction, not for development of the card, not for processing, not for marketing, not for the call center. That would be like McDonald's only being able to charge for disbursing the Coke, but not ordering the Coke or marketing the Coke.

It's hard to reconcile Hunt's claim that  banks "have no choice to do this to stay in business" with the fact that some banks have not imposed debit card fees.  But if BofA keeps its customers despite charging the fee, surely other banks will start charging such fees, because they can do so without losing customers (whether or not they have to).  And if BofA does lose enough customers that it rescinds the fees, it will be interesting to see if it is able to stay in business. 

Rick Perry and the Subprime Lending Industry

This AP story describes how Presidential candidate Rick Perry subsidized subprime mortgage lenders in his home state of Texas when he was governor to create jobs. As the introduction to the article explains, it did not work out too well:

As Texas governor, Rick Perry spent tens of millions in taxpayer money to lure some of the nation's leading mortgage companies to expand their business in his state, calling it a national model for creating jobs. But the plan backfired. Just as the largest banks began receiving public cash, they aggressively ramped up risky lending. Within four years, the banks were out of business and homeowners across Texas faced foreclosure. In the end, the state paid $35 million to subsidize it.