Consumer Law & Policy Blog

Dodd-Frank Authors, Including Dodd And Frank, on How Congress Didn't Want the Vacancies Act to Apply to the CFPB

The architects of the Dodd-Frank Act, including former Senator Dodd, former Representative Frank, and former Treasury official Michael Barr, held a press conference on Thursday to make the point that Congress did not want the Vacancies Act to apply to the CFPB.  The American Banker has a report here.  Excerpt:

They said a federal judge erred when he ruled this week that the 2010 financial reform law did not take precedence over the Federal Vacancies Reform Act, which broadly allows a president to appoint any Senate-confirmed appointee as interim head of an independent agency.

"This was a choice we made very deliberately and the notion that that was just a suggestion on our part and that the president can pick or choose [a CFPB successor] makes no sense," Frank said on a conference call with reporters.

Dodd said that under the law, "the president cannot just create a director."

"We had the choice of keeping the Vacancies Act, but rejected that choice and wrote the language that was in the bill. We did not just call the CFPB an independent agency, we created an independent agency," Dodd said.

And for more on Frank's view on this as well as related matters, see his score-settling essay in The Daily Beast, Here’s the Truth About That Vacancy at the Consumer Bureau. Here's the first paragraph:

I take some pride in the fact that I upset Wall Street Journal editorial board members so much that they lose whatever cool they generally have when I am their subject. My favorite example is still their November 6, 2007 attack on me for sponsoring the bill to restrict banks from issuing subprime mortgages to people unlikely to be able to pay them back—the root cause of the 2008 crash. Oddly celebrating the fact that 80 percent of the mortgages were paying on time so far—not generally considered a sign of good lending practices—they denounced me for barring low-income minority group members from homeownership. (They have impressively obliterated that from their memory so that they now regularly blame liberals for being the enablers of the lending practices we prohibited over their objection.)

Kar and Radin Article: Pseudo-Contract & Shared Meaning Analysis

Robin Bradley Kar of Illinois and Margaret Jane Radin of Toronto and Michigan have written Pseudo-Contract & Shared Meaning Analysis. Here is the abstract:

Over the last several decades, courts have struggled with when to enforce boilerplate text as contract. An example is the copious digital text that consumers receive links to before clicking “I agree” to a purchase. Everyone knows that recipients rarely read this boilerplate text and would not understand it if they did. Still, given recent revolutions in digital contracting, many courts and scholars see no choice now but to absorb all boilerplate text into contract with relaxed requirements of “assent.” In a series of moves reminiscent of the ancient theory of “epicycles,” which tried to square geocentric theories of planetary motion with recalcitrant observation, contract law has been shifting away from its traditional focus on enforcing parties’ actual agreements. This shift is sufficiently well underway, and has been transforming the meanings of enough central contract law terms and concepts, to diagnose an unconscious paradigm slip from contract (or a legal regime rooted in actual agreement) into what we call “pseudo-contract” (or a system of private obligations created unilaterally without actual shared agreement).

The recent paradigm slip into pseudo-contract raises a complex blend of linguistic, factual, conceptual, normative and doctrinal problems. The full scope and interwoven nature of these problems has not yet been sufficiently appreciated, and the problems are only building as the use of boilerplate text expands. A major intrusion into the traditional sphere of contract law and modern market activity has gone largely unrecognized; or, at least, its true nature has escaped notice. These doctrinal facts are inviting expanding forms of market deception, which are hard to discern when hidden under the false mantel of “contract.” 

To resolve these problems, we develop a more nuanced and coherent method of analysis—“shared meaning analysis”—which courts can use to determine when any particular piece of boilerplate text does, and does not, contribute meaning to a contract. Shared meaning analysis draws on the well-known linguistic distinction, first treated rigorously by the philosopher of language Paul Grice, between “speaker meaning” and “sentence meaning.” Parties and courts implicitly rely on this distinction in a broad range of contract settings, and the distinction is critical for a proper identification of the scope and content of parties’ actual agreements. Indeed, closer attention to this distinction is critical to understand what contract and freedom of contract are. We develop the resources needed to prevent contract from slipping into pseudo-contract—or, put differently, to rescue a realm of private ordering from deteriorating into something different and normatively problematic.

Book recommendation

We do consumer law and policy here. Most of what we discuss is about laws and policies that will help or hurt consumers in this or that fairly modest way.

But the tax bills passed by the House and Senate, or any compromise in between, if enacted and signed by our loathsome president, would harm middle- and low-income people in massive ways, particularly as time goes on. The tax cuts and giveaways (and the repeal of the ACA mandate that, by the way, will cause increases in health insurance premiums) deliberately balloon the deficit. No one who has studied the issue or history truly believes that the tax cuts would pay for themselves in job and business growth translating into massive tax revenues at lower rates. No one. It's never happened before on the scale that would be necessary to create revenue neutrality, and it won't happen now. Surprise, surprise, we will then be told that we must further cut education, social welfare, jobs, infrastructure repair/update. There's nothing new in this sickening, despicable tale. Read David Stockman's 1986 Triumph of Politics: Why the Reagan Revolution Failed, and you will see what I mean. Or get a taste by viewing the book's prologue on Amazon.

Recents announcements from DOJ's Consumer Protection Branch

November 22, 2017 - Tobacco Companies to Begin Issuing Court-Ordered Statements in Tobacco Racketeering Suit

November 22, 2017 - Former Pharmacy Compliance Director Pleads Guilty to Introducing Adulterated Drugs into Interstate Commerce and Conspiracy to Defraud the United States

November 8, 2017 - District Court Enters Order Against Los Angeles Area Telemarketing Companies and Their Executives

October 31, 2017 - District Court Enters Permanent Injunction Against Philips North America and Two Executives to Limit Distribution of Adulterated External Defibrillators

October 25, 2017 - Five Chinese Citizens and Four Chinese Companies Indicted in Scheme to Sell Mislabeled Dietary Supplements

October 23, 2017 - United States Files Enforcement Action Against Long Island Company and Its Owner to Prevent Distribution of Adulterated and Misbranded Dietary Supplements

October 13, 2017 - District Court Enters Permanent Injunction Against California Company and Chief Executive Officer to Stop the Distribution of Custom Nutritional Products

October 4, 2017 - Spectrum Brands Ordered to Pay Civil Penalty for Failure to Report and Post-Recall Sales of Defective SpaceMaker Coffee Carafes

October 3, 2017 - United States Files Enforcement Action Against California Company and Company’s Owner to Prevent Distribution of Adulterated Seafood Products

Payday lending group plans to sue CFPB

USA Today reports on plans to sue the Consumer Financial Protection Bureau over its rule on payday lending. As the article epxlians, "The new rule requires providers of payday loans, auto title loans, and other small-dollar advances to predetermine whether borrowers can afford to repay the debts. The rule also limits lender efforts to debit borrowers' checking accounts, a practice that racks up extra fees."

A 2014 study by the [CFPB] found that roughly 62% of all payday loans — often due within two weeks and including annual interest rates of roughly 390% — go to consumers who repeatedly extend repayments. Some end up owing more in fees than the amount they initially borrowed.

"This cycle of piling on new debt to pay back old debt can turn a single unaffordable loan into a long-term debt trap," Richard Cordray, [now former] consumer bureau's director, said in October.

The full article is here.

Sixth Circuit Implicitly Embraces Dendrite Balancing Standard for Protecting Anonymous Speech

by Paul Alan Levy

In a decision issued on Tuesday in Signature Management Team v. Doe, the Court of Appeals for the Sixth Circuit implicitly adopted the majority rule followed in the state courts that have addressed the issue, holding that a plaintiff seeking to identify an anonymous defendant in order to pursue litigation over claims that the defendant’s anonymous speech violated the plaintiff’s rights must not only make a prima facie showing that the claims have evidentiary and legal merit, but must satisfy the court that the plaintiff’s need for identifying information outweighs the defendant’s First Amendment interests in keeping her speech anonymous. That basic holding is the good news.

Pursuant to that analysis, the majority opinion vacated a decision upholding the Doe defendant’s anonymity and remanded for reconsideration in light of various factors spelled out in the court’s opinion. The context for the anonymity ruling was an unusual one, in that the judge had issued a judgment determining that the anonymous blogger in the case had infringed the plaintiff’s copyright. The court thus held that, in conducting the needed the equitable balance between the First Amendment right to speak anonymously and the interests favoring unmasking, the trial court needed to take into account the general presumption of public access to judicial records.