Consumer Law & Policy Blog

Consumer Protection Bureau Director Jessica Rich leaving FTC

Federal Trade Commission announced today that Jessica Rich, Director of the Bureau of Consumer Protection, is leaving the agency on February 17, after 26 years of service. The press release is here.

CNBC: Despite critics' claims, Dodd-Frank hasn't slowed lending to business or consumers

Here.  Excerpt:

"We expect to be cutting a lot out of Dodd-Frank," [President Trump] told a group of bankers and other corporate executives [on Friday, when signing an Executive Order pertaining to Dodd-Frank], "because, frankly, I have so many people, friends of mine that have nice businesses that can't borrow money. They just can't get any money because the banks just won't let them borrow because of the rules and regulations in Dodd-Frank.

" * * *

But statistics on bank lending don't back up that claim. Since the law took effect in July 2010, bank lending to businesses and consumers has continued to hit new highs.

NCLC's Lauren Sanders in USA Today: Protect our troops, not Wall Street

Here.  Excerpt (but the whole piece is worth reading):

Young servicemembers are often easy targets for financial firms marketing loans with ultra-high interest rates. Tens of thousands of servicemembers have benefited from the CFPB’s actions. The agency worked with state attorneys general to secure debt relief for 17,000 servicemembers tricked into taking out high-cost loans for computers, video games and electronics purchased near military bases. It sanctioned U.S. Bank and a partner company, ordering the return of $6.5 million in hidden fees to military borrowers. It ordered Navy Federal Credit Union to pay $28.5 million in penalties and refunds for using a variety of illegal debt-collection tactics. And it is now suing Navient, the nation's largest student loan company, for illegal practices against millions of borrowers, including severely injured veterans.

Corporate interests would prefer a weaker, less independent commission structure — not a strong, single director who can be held accountable. The CFPB’s enemies have also proposed to reduce the consumer agency to second-class status by politicizing its funding and cutting staff salaries below those of other big bank regulators.

* * *

A rigged system is what led to the financial crisis. Giant financial institutions had the ear of financial regulators and ordinary people suffered tremendously. A strong consumer watchdog protects our troops and helps to unrig the system, making it work better for regular Americans. In the real world, the world outside the Washington Beltway, most Americans support having a strong financial regulator on their side.

Politico: Trump Admin Divided Over Firing Cordray, Has Spoken to Todd Zywicki About the Job

Here. Excerpts:

“There has been talk of getting rid of Cordray, but I think they're trying to figure out what they can do and what [Trump] will actually go along with,” said a person close to the administration.

Lawyers who say they’re providing guidance to the White House declined to comment for the record or be identified, citing confidences with people connected to the administration. They say they’re responding to questions from those people but won’t say who they are.

* * *

Trump advisers are divided. One told POLITICO that the agency was on a “short list” for an overhaul and the administration isn’t convinced that Cordray would play along. Another person close to the White House said there has been no explicit call for the director’s firing.

* * *

Many Republicans on Capitol Hill are keen to take on the CFPB. House Financial Services Chairman Jeb Hensarling has promised to rein in the bureau’s independence regardless of what Trump does. If Trump does want an excuse to fire Cordray, Hensarling and his business allies have spent years documenting what they say are the director’s missteps.

A bill introduced last month by Republican senators Deb Fischer of Nebraska, John Barrasso of Wyoming and Ron Johnson of Wisconsin would replace the bureau’s independent director with a five-person commission.

* * *

“Trump’s base, the reason he won, is because of working-class voters in Rust Belt states. They certainly benefited from the foreclosure avoidance programs at the CFPB,” said Laurence Platt, a partner at Mayer Brown * * *

The administration has spoken to Todd Zywicki, executive director of the Law & Economics Center at George Mason University, about succeeding Cordray. Zywicki, who has called the bureau a “tragic” failure, has not been offered a job.

 

Public Interest Groups Sue FTC Over Unrepaired Recalls in Certified Cars

The petition for review, filed in the DC Circuit, is here. Press release here. Excerpt from the press release:

“We’re optimistic that the Court will rein in the FTC’s dangerous and irresponsible abuse of its authority. Instead of protecting consumers, the FTC is protecting unscrupulous auto dealers who engage in false and deceptive advertising about the safety of the cars they offer for sale to the public. This is a serious threat to used car buyers, their families, and all who share the roads,” said Rosemary Shahan, President of Consumers for Auto Reliability and Safety.

“Even if there is a 100% certainty that an unrepaired safety recall defect will immediately kill anyone who buys a so-called ‘certified’ car and their family, the FTC would allow car dealers to advertise that car as ‘safe’ and ‘repaired for safety,’” said Michael Brooks, Acting Director of the Center for Auto Safety. “Clearly the Court should intervene and force the FTC to reverse itself.”

WSJ: Financial Choice Act 2.0 Could be Introduced This Week

Here (behind paywall). House Financial Services Committee Chair's Financial Choice Act, passed last fall by the committee,  is expected to be introduced again in a revised version as soon as this week. While Senate Democrats can usually block legislation by using the filibuster, as long as they hold together, the WSJ reports that some aspects of this bill could be passed through the reconciliation process, thereby evading filibusters.  According to the article, that would "include cutting off the CFPB’s independent source of funds and forcing it to seek congressional approval for its budget. . . ." The article explains:

Senate Banking Committee member Sen. Pat Toomey (R., Pa.) is pushing for use of the reconciliation process and has encouraged industry groups in private meetings to lobby for such an approach.

Other Senate Republicans, including Senate Banking Committee Chairman Mike Crapo (R., Idaho), are still figuring out how they might proceed. A senior Republican aide said Mr. Crapo is considering multiple options to change the law, including through reconciliation.

Times: FCC Led by Trump Pick Starts to Reverse Obama Policies

Here (behind paywall). Net neutrality is in danger.

Paul Krugman on the "fiduciary rule"

In the New York Times today, Paul Krugman discusses the "fiduciary rule" that the President last week ordered the Department of Labor to "reconsider."

Last week Mr. Trump released a memorandum calling on the Department of Labor to reconsider its new “fiduciary rule,” which requires financial advisers to act in their clients’ best interests — as opposed to, say, steering them into investments on which the advisers get big commissions. He also issued an executive order designed to weaken the Dodd-Frank financial reform, enacted in 2010 in the aftermath of the financial crisis.

....

Why, after all, was the fiduciary rule created? The main issue here is retirement savings — the 401(k)’s and other plans that are Americans’ main source of retirement income over and above Social Security. To invest these funds, people have turned to financial professionals — but most probably weren’t aware that these professionals were under no legal obligation to give advice that maximized clients’ returns rather than their own incomes.

This is a big deal. A 2015 Obama administration study concluded that “conflicted investment advice” has been reducing the return on retirement savings by around one percentage point, costing ordinary Americans around $17 billion each year. Where has that $17 billion been going? Largely into the pockets of various financial-industry players....

The full article is here.

What the FDA might look like under Donald Trump (and the new Congress)

This article by Melody Peterson explains that a Trump Administration, with the agreement of Congress, may expand a trend in which the Food and Drug Administration cares less about certain drugs' effectiveness than it used to. Here's an excerpt concerning the views of someone Trump is considering to lead the FDA:

One of Trump’s possible selections to head the FDA —  Jim O’Neill, a Silicon Valley venture capitalist with no education in medicine or science —  has raised the idea of approving drugs with no tests of their effectiveness. “Let’s prove efficacy after they’ve been legalized,” O’Neill said in an August 2014 speech at a biotech conference.

Key litigation docs in State of Washington v. Donald Trump

This blog is focused on consumer policy, but I figured that some of our readers may be interested in having ready access to the key litigation documents in Washington State's case against the president over the travel ban. So, here is the the State of Washington's complaint, the State of Washington's request for a temporary restraining order, former U.S. officers' declaration, the district court's temporary restraining order, the U.S. government's motion in the Ninth Circuit for a stay, and the State of Washington's response to the stay request. 

Go here to watch a video of the Ninth Circuit's oral argument. The Ninth Circuit's order denying the government's request for a stay is here.

Update: For other relevant documents, go to this Ninth Circuit webpage on the case