Consumer Law & Policy Blog

U.S. labor force is finally growing again

As Fivethirtyeight explains, February saw the biggest one-month increase in the size of the labor force in over a year and continues the longest streak of gains in eight years. If this is a trend and not a blip, it's a significant reversal:

Labor force participation has been a dark cloud hanging over the economy in recent years, even as other job-market indicators have shown steady improvement. The share of Americans working or looking for work plunged in the recession as people abandoned job searches in the face of overwhelming odds. The rate kept falling even as employers started hiring again. In September, the participation rate hit 62.4 percent, its lowest level since 1977.

Read more here.

Trump admission of malicious reasons for suing a reporter reminds us why we need anti-SLAPP statutes

An article by Paul Farhi in this morning’s Washington Post discusses a lawsuit filed by Donald Trump against the Timothy O'Brien, a financial author who wrote a book about Trump's business career.  Among other things, the book questioned whether Trump is quite as wealthy as he claims; the author’s opinion was that Trump had exaggerated his assets by a factor of 20, and that his net worth was ”only” $150 million to $250 million, not the claimed "five to six billion."  Trump alleged that this low estimate was defamatory and that the low estimate had hurt his business, seeking $5 billion in damages, even though he admitted in a deposition that his contentions about the actual value of his estimates was based on his “feelings . . . about my value to myself.” (The deposition transcript is here).

FDA and pharma company Amarin settle lawsuit on "off-label" promotion

The Food and Drug Administration and Amarin, the manufacturer of a prescription fish-oil drug, have settled Amarin's lawsuit challenging the FDA's authority to restrict the company from touting its product for an unapproved use.

The Washington Post reports that the FDA said the settlement is “specific to this particular case and situation,” and did not mark a new legal precedent." But the settlement leaves in place a district court decision that is skeptical of the FDA's authority to protect patients when drug companies want to promote drugs for uses that have not been approved as safe and effective.

The settlement is here. New York Times coverage of the settlement is here.

Our previous posts about Amarin's first amendment theory and the implications for public health are here, here, and here.

"CFPB Supervision of Banks and Nonbanks Recovers $14.3 Million for Consumers"

The Consumer Financial Protection Bureau yesterday released its latest supervision report where the exams of banks and nonbanks resulted in the remediation of $14.3 million to approximately 228,000 consumers. In its examinations covering the last months of 2015, the Bureau found violations in the student loan market, including illegal automatic defaults by student loan servicers and illegal garnishment threats by debt collectors performing services for the Department of Education. Examiners also found instances of international money transfer companies violating the CFPB’s new remittance rule, banks providing inaccurate information to credit reporting companies about customer checking accounts, and debt collectors illegally contacting consumers.

The CFPB's full press release is here.

LA Times David Lazarus: Lawmakers are fighting efforts to rein in predatory lending. Why?

Here.  It's mostly about Florida Representative and Democratic National Committee chair Debbie Wasserman Schultz's proposal to derail the CFPB's possible payday lending rule that Brian blogged about a few days ago. Excerpt:

[Wasserman's] spokesman, Sean Bartlett, said the legislation "is about preserving the shared goal of implementing strong consumer protections while also preserving access to affordable lending for low-income communities."

Perhaps.

Or maybe it's more about money.

Florida's representatives, from both parties, have been the primary backers of the Consumer Protection and Choice Act since its introduction last November, and most of them are up to their necks in donations from the payday-loan industry.

* * *

Wasserman Schultz climbed aboard in December. She's pocketed $63,000 in contributions from payday lenders, according to the database.

* * * Florida's law has relatively lax standards and no requirement that payday lenders check in advance to make sure borrowers can repay loans in full without becoming mired in perpetual indebtedness.

There are few limits on how many loans a Floridian can receive. People in the state who use payday loans take out an average of nine loans a year, according to the Center for Responsible Lending.

The average loan is $250 with an annual interest rate of 312%. Most borrowers take out a new loan as soon as the previous one is paid off, the center found.

"Class action suit filed by residents over Flint water crisis"

The Washington Post reports:

A lawsuit stemming from Flint’s lead-contaminated water was filed Monday on behalf of the city’s residents against Michigan Gov. Rick Snyder as well as other current and former government officials and corporations.

The federal lawsuit — which is seeking class-action status — alleges that tens of thousands of residents have suffered physical and economic injuries and damages. It argues officials failed to take action over “dangerous levels of lead” in drinking water and “downplayed the severity of the contamination” in the financially struggling city.

The full article is here.

Obama speaks on financial regulation

The Wall Street Journal reports today:

President Barack Obama on Monday defended his administration’s record on financial regulatory issues and said that shadow banking, cybersecurity, and rules governing executive compensation would be top priorities during his remaining months in office.

On shadow banking in particular, regulators faced a challenging task in overseeing a new sector of the financial-services industry, Mr. Obama said. He pointed to the work done by the Financial Stability Oversight Council to monitor and label nonbank financial institutions as positive progress toward regulating shadow banks, which include finance companies, hedge funds and other entities that fall outside bank regulations.

The full article is here. (Subscription may be required.)

CFPB now acccepting complaints about online lenders

The Consumer Financial Protection Bureau has announced that it is accepting complaints from consumers encountering problems with loans from online marketplace lenders. The CFPB is also releasing a consumer bulletin that provides an overview of marketplace lending and outlines tips for consumers who are considering taking out loans from these types of lenders.

Millions of consumers take out personal loans online. Marketplace lending—often referred to as “peer-to-peer” or “platform” lending—is a relatively new kind of online lending. A marketplace lender uses an online interface to connect consumers or businesses seeking to borrow money with investors willing to buy or invest in the loan. Generally, the marketplace lending platform handles all underwriting and customer service interactions with the borrower. Once a loan is originated, the company generally makes arrangements to transfer ownership to the investors while it continues to service the loan.

CFPB's full press release and consumer bulletin are here.

Wealth inequality and the tax system

Law professor Edward McCaffery has written Taxing Wealth Seriously, which argues that U.S. wealth inequality can be and should be reduced via tax policy. Here's the abstract:

The social and political problems of wealth inequality in America are severe and getting worse. A surprise is that the U.S. tax system, as is, is a significant cause of these problems, not a cure for them. The tax-law doctrines that allow those who already have financial wealth to live, luxuriously and tax-free, or to pass on their wealth tax-free to heirs, are simple. The applicable legal doctrines have been in place for nearly a century under the income tax, the primary social tool for addressing matters of economic inequality. The analytic pathways to reform are easy to see once the law is properly understood. Yet our political systems show no serious interest in taxing wealth seriously. We are letting capital off the hook, and ratcheting up taxes on labor, at precisely a time when deep-seated and long-running economic forces suggest that this is precisely the wrong thing to do. It is time -- past time -- for a change. This Article canvasses a century of tax policy in the United States to show that we have never been serious about taxing wealth seriously, and to lay out pathways towards reform.

American Banker: Lenders Still Struggling with TRID, Survey Finds

Here (behind paywall). Excerpt:

Bankers are still grappling with vendor software problems, longer processing times and delays in mortgage closings as a result of new disclosures that went into effect four months ago, according to a new survey by the American Bankers Association.

The survey, which was released Tuesday, found that banks are delaying closings by eight days on average, with some institutions reporting delays of up to 20 days.

Some or all of the delays seem likely to be caused by the transition from the old forms to the new forms. It remains to be seen whether the forms cause delays after the adjustment period runs its course.