Consumer Law & Policy Blog

Fostering equality in borrowing

That's addressed by law prof Abbye Atkinson in her article Borrowing Equality. Here is the abstract:

For the last fifty years, Congress has valorized the act of borrowing money as a catalyst for equality, embracing the proposition that equality can be bought with a loan. In a series of bedrock statutes aimed at democratizing access to loans and purchase money for marginalized groups, Congress has evinced a “borrowing-as-equality” policy that has largely focused on the capacity of “credit,” while acoustically separating its treatment of “debt” as though one can meaningfully exist without the other. In taking this approach, Congress has proffered credit as a means of equality without expressly accounting for the countervailing force of debt relative to social subordination. Yet, debt has itself functioned as a mechanism of the very subordination that Congress’s invocation of “credit” aspires to address.

This Article argues that because in articulating a borrowing-as-equality policy Congress is implicitly encouraging debt among marginalized communities, Congress should develop policies that recognize both the potential upside value of borrowing and the particular vulnerabilities that debt creates for socioeconomically marginalized groups. More broadly, any policy that invokes borrowing as a social good must engage more deeply with how credit and debt work in a social context. In other words, credit cannot meaningfully function as a social good without due attention to and a solution for the work of debt as a social ill.

Dee Pridgen'sTribute to Andy Spanogle

Tribute to Andy Spanogle, 1934-2020.

By Dee Pridgen, Professor Emeritus, University of Wyoming College of Law

I was very saddened to learn the news that my dear friend, and coauthor, Andy (John A.) Spanogle, had passed away in December of last year.  He was a towering figure in the law, especially in the fields of consumer law and international business transactions. 

Our paths first crossed in the late 1980’s, when Andy and his coauthor Ralph Rohner (who just left us last summer) asked me to join them on the second edition of their pioneering casebook, Consumer Law:  Cases and Materials.  The casebook was the first of its kind in a then nascent field.  In the preface to that first edition in 1979, Andy and Ralph relayed their rather apt and prophetic assumptions behind the text:

• Consumer protection statutes and caselaw doctrines are pervasive within the legal structure.
• They are growing.
• They are not likely to disappear, but are more likely to increase.
• Even though they concern widely disparate subject-matter, there are likely to be common doctrinal and practical threads running through them, and it is our job to try to discover those threads.

Consumer law was a thread that ran through Andy’s own professional life.  He was an advocate for the core federal consumer credit laws passed by Congress in the 1970’s, including the $50 limit on consumer liability for unauthorized use of credit cards which we still benefit from today.  He remained involved in and was a valued contributor to the 2^nd, 3^rd and 4^th editions of the Consumer Law casebook.  He also generously supported the National Consumer Law Center, especially in the founding of the Spanogle Institute for Consumer Advocacy, which opened in Washington, D.C. in 2017.

In addition to his influential work in the field of consumer law, Andy coauthored groundbreaking casebooks, treatises and articles in International Business Transactions and International Sales Law.  While teaching law at several different law schools, most recently at George Washington University in Washington, D.C., he also traveled the world as a consultant and teacher.  I know he loved teaching because he continued to serve in the law school classroom as a part-time faculty member for years after he “retired.”  His many students appreciated him very much.

Andy was sharp, witty and had an unforgettable deep-voiced laugh which he employed to good effect on many occasions.  He also sang at his church and in community groups, a talent that I wish I had been able to witness myself. 

Although separated by our geographic locations, Andy remained a good mentor, colleague, and friend to me over the years.  He will not be forgotten.

Sad News: Consumer Law Professor John "Andy" Spanogle Dies

by Jeff Sovern

Obituary here. Andy was one of the original co-authors of our casebook and I met him when I worked on the third edition of the book. Andy was larger than life, so filled with bonhomie that you almost didn't realize how brilliant he was. One way Andy will live on is through his influence on consumer law. For example, for the third edition of the casebook, he came up with a single extended story for the introduction that raised questions about every consumer law topic explored in the book. The story makes the subject come more alive for students, helps them understand the variety of consumer law issues that can arise, and pulls them into the course. Law students will continue to learn consumer law using the clever problems he devised, as well as through the techniques for writing the casebook that he taught Dee Pridgen and me that we employed when producing more recent editions. It is not by happenstance that the Washington D.C. office of the National Consumer Law Center is named for him. Andy had been less involved with consumer law in recent years, and so younger consumer law scholars may know little of him, but he was a giant.

Please keep Katie Porter on the House Financial Services Committee

by Jeff Sovern

The Wall Street Journal is reporting that Representative Katie Porter may be dropped from the House Financial Services Committee.  As someone who has regularly listened to House Financial Services Committee hearings on consumer matters for years, I believe that would be a huge loss. I cannot think of anyone who has been a more effective questioner of witnesses. And Katie may know her stuff better than any other committee member. She has taught courses on subjects within the committee's jurisdiction, she wrote a consumer law casebook (as someone who co-authored a competing casebook, I can say that writing a casebook forces you to learn a great deal about the subject), she has written important articles on the topics within the committee's bailiwick, and she has practical experience, such as when she served as the independent monitor for compliance in California with the mortgage settlement. I could go on, but you get the point. The country needs Katie Porter on this committee. If you agree, please let your representative in the House know.

8 states sue to block the OCC's 'True Lender' Rule

From the States' press release:

Attorneys general from New York, California and several other states sued on Tuesday to block the Office of the Comptroller of the Currency's recently finalized "true lender" rule, a measure that the states argue is unlawful and stands to facilitate predatory lending.

In a complaint filed in New York federal court, the coalition of state attorneys general says the OCC had overreached by issuing the "unprecedented and ill-conceived" rule, which adopted a two-prong test for determining who the "true lender" of a loan is, a status that in turn controls what interest rate limits and other laws might apply to the transaction.

Under the OCC's test, which was finalized in May, a loan offered through a partnership between a federally chartered bank and nonbank would be considered to have been made by the bank, so long as the bank either is named as the lender in the loan's documentation or funds the loan at origination.

That's significant because the bank in such an arrangement may not be bound by the local interest rate caps that would otherwise apply to the nonbank, so the rule effectively gives legal cover to nonbanks that would use bank partners essentially as fronts to get around these caps and make high-cost loans, according to the state AGs.

The complaint is here. The full press release is here.

CFPB Taskforce on Federal Consumer Financial Law Issued its Report

by Jeff Sovern

The report is here. I played hooky from the AALS Financial Serices & Consumer Financial Services program to listen to the Bureau's simultaneous event to release the report (don't tell Rory Van Loo). I haven't read the voluminous report but some comments on the remarks at the event: I learned that when Director Kraninger convened the Taskforce, she identified as one of her principal goals that the Taskforce members reach consensus. That may explain why the members don't appear to be diverse, ideologically or otherwise. It also may explain why the Taskforce wrote in its Small Dollar Credit section that "[I]nterest rate caps should be eliminated entirely" and "States should reconsider, update, or eliminate usury laws as appropriate, recognizing the high costs they impose by denying valuable services to consumers who need them." Volume 2, Recommendations p. 94. Plenty of consumer advocates disagree. The Taskforce members emphasized during the event the importance of competition among financial services providers, which makes it even more ironic that there doesn't seem (at least from the outside) to have been competition from competing views within the Taskforce. Don't get me wrong: I agree that competition among financial service providers is valuable, and I agree with some of the other ideas expressed during the event, such as the call for faster check-clearing. But a Taskforce that better reflected America and its diverse viewpoints, and included consumer advocate members, would have been preferable. For one thing, a consensus reached among a more diverse Taskforce would have more support for consequent changes in the law. And I see nothing wrong with a Taskforce that expresses different perspectives, because the airing of differences helps people to understand different arguments and their relative strength. In any event, I look forward to reading the report; I hope to learn from it; I am curious to see what the Taskforce came up with; and I congratulate its members on the timely production of their report, during a pandemic, no less.

Take this quiz to see if you are a reasonable consumer

Here. (H/T: Matt Bruckner).