"Law School Student Debt the Betsy DeVos Way"

That's the name of this article by Steven Harper (subscription possibly required). Harper begins by telling us that his concerns over [Secretary of Education Betsy] DeVos's willingness to deal effectively with student-loan policy "goes far beyond the embarrassing ignorance on display at DeVos’ confirmation hearing. . . . She knows nothing about basic educational policy, the decades-old Individuals with Disabilities Education Act, fraud by for-profit colleges and graduate schools exploiting students, or any other subject about which an aspiring secretary of education should have [had] at least some rudimentary knowledge." Harper then goes on to explain that two of DeVos's advisors may not have student-loan borrowers' interests at heart. Before joining forces with DeVos, one advisor was a lobbyist for the country's largest trade group for for-profit colleges. That trade group -- the Association of Private Sector Colleges and Universities -- sought "to eliminate the government’s 'gainful employment' rule, which can cost a school federal funding if too many of its recent graduates fail to repay their student loans." The other advisor was a "top lawyer" for a for-profit college called Bridgepoint Education, which "faces multiple government investigations, including one that ended in a $30 million settlement with the federal Consumer Finance Protection Bureau over deceptive student lending."

 

Predictions Abound: Cordray Stays; House Takes Up Dodd-Frank in the Summer or Later; Will Changes to the CFPB Go the Way of Trumpcare?

by Jeff Sovern

First, Cordray.  Here's what Politico's Morning Money reported:

CORDRAY IS ... STILL THERE - Compass Point's Isaac Boltansky and Lukas Davaz: "With a decision in the PHH case review unlikely until next year, and the path for a legislative compromise on the Bureau's governance structure becoming hazier by the day, all indications are that Director Cordray is likely to retain his seat at least through the year and possibly until it comes to term in July 2018.

"President Trump could conceivably attempt to dismiss Director Cordray, but our sense is that the White House would prefer avoiding the associated political and procedural fallout"

Now the House.  WSJ has a story about an interview with Rep. Patrick McHenry (R., N.C.), vice chairman of the House Financial Services Committee and Republicans’ chief deputy whip.  McHenry predicts that the House won't get to Dodd-Frank until the summer at the earliest. Here's a quote:

When Republicans do move toward voting on a financial regulatory bill, there is “no question” the House can “pass a major change to financial services law,” Mr. McHenry said. “What the Senate can do from there is an open question,” he added, nodding to the fact major Dodd-Frank changes might face opposition from Senate Democrats. 

* * *

Other potential changes * * * include[] changes to the Consumer Financial Protection Bureau’s structure, which he described as a “moving target” because Republicans have different ideas for how they want to change the agency.

If democrats hang tough on the CFPB, I wonder if bills to change it will go the way of Trumpcare.

Feds aggressively using private law firms to collect student-loan debt

This article by Bobby Allyn discusses a program, begun by the Obama Administration in 2015, to step up use of private law firms to collect student-loan debt through federal-court lawsuits. The program apparently includes obtaining judgments and then placing liens on poor people's homes. Allyn's article focuses on law suits filed in federal court in Philadelphia, but the tactic is being used elsewhere as well. And Allyn stresses that "almost all" of the suits are against low-income people.

Click here for a chart illustrating the increase in student-loan collection suits instituted by just one private law firm in Philly.

Health insurance "reformers" run headlong into econ 101

This article by Jonathan Swan and David Nather about the republicans' continuing efforts to "repeal and replace" the Affordable Care Act starts with something that would be laughable if it weren't so serious:

House Republican leaders are worried that a concession in the developing Trumpcare talks could make already anxious moderates run away from the bill. The proposal is to allow states to get rid of the "community rating" provision that prevents insurers from charging higher rates to sick people. Why it's a problem: Most Republicans have been adamant that they're going to keep covering people with pre-existing conditions (as has President Trump). It's one of the most popular parts of Obamacare. But without the "community rating" provision, insurers could jack up the premiums for people with health problems — and make it so expensive that they lose coverage because they can't afford it anymore.

Gee, what a surprise: One of the ACA's key attributes -- that you can't be turned away for health insurance if you are sick -- has to be paid for somehow. One way is to charge astronomical premiums for sick people -- which is hardly insurance at all. Another is requiring everyone -- even currently healthy people -- to buy insurance (or if they don't buy insurance to pay a tax) to help keep premiums fairly reasonable for everyone.

Between the two, which do you prefer?

CFPB's Brief in PHH

Here.

Free or low-cost options for tax preparation

Tobie Stanger has posted this piece at Consumer Reports comparing no-cost and low-cost tax preparation options from the major commercial tax preparation companies and the IRS.

Rutgers Arbitration Symposium This Friday

by Jeff Sovern

More here.  One panel is on the CFPB proposed arbitration rule (I'm on that one) and consumer arbitration; another is on FAA preemption and nursing home arbitration; a third is on ADR in practice.

Emily Bazelon's and Eric Posner's Disturbing Op-Ed on What Gorsuch Could Mean for Consumer Protection, Among Other Things

It's titled The Government Gorsuch Wants to Undo.  All of it is worth reading, but here's an excerpt:

Judge Gorsuch embraces a judicial philosophy that would do nothing less than undermine the structure of modern government — including the rules that keep our water clean, regulate the financial markets and protect workers and consumers. In strongly opposing the administrative state, Judge Gorsuch is in the company of incendiary figures like the White House adviser Steve Bannon, who has called for its “deconstruction.” The Republican-dominated House, too, has passed a bill designed to severely curtail the power of federal agencies.

* * *

What would happen if agencies could not make rules for the financial industry and for consumer, environmental and workplace protection? Decades of experience in the United States and around the world teach that the administrative state is a necessary part of the modern market economy. With Judge Gorsuch on the Supreme Court, we will be one step closer to testing that premise.

Article on Agencies Seeking Admissions of Guilt in Settlements

Verity Winship and Jennifer K. Robbennolt of Illinois have written Admissions of Guilt in Civil Enforcement, Minnesota Law Review, Vol. 101 (Forthcoming). Here is the abstract:

Should agencies require admissions of guilt from the targets of civil enforcement? Administrative agencies rely heavily on settlement as a key enforcement tool. Admissions of guilt - or, more commonly, declarations that nothing is admitted - form part of these settlement agreements and the underlying negotiations. The Securities and Exchange Commission (SEC) has come under particular fire for allowing enforcement targets to settle while neither admitting nor denying allegations, and we use its policy changes as a case study. But our observations are aimed more broadly at civil enforcement across agencies and our examples come from a wide range of administrative agencies. We use the explicit debate over the SEC’s practices to draw attention to the high (and mostly unexamined) stakes of admissions for enforcement throughout the administrative system.

The article identifies possible enforcement models and provides a nuanced account of what it means to make and require admissions. Although the policy choice is often portrayed as binary - either an agency requires admissions or it does not - the reality is more varied. We break down the options, addressing how admissions of guilt interact with denials and identifying more precisely what may be admitted (facts? legal violation? intent?). Taking our lead from judges, regulators and commentators who have described agencies’ approaches to admissions with words like “truth,” “guilt,” “confession,” and “apology,” we link this discussion to empirical studies of the psychology of blame and responsibility-taking, acknowledgement, and apologies. We use these studies to shed light on the function and value of admissions and the implications for agency settlement negotiations.

Be wary of the accuracy of free online credit scores

Ya know how your credit card company now gives you your FICO credit score for free each month? And what about all those online companies peddling "free" credit scores? (They are sometimes free, sometimes not, and the companies are usually trying to sell you something else.) This article by Kenneth Harney explains that the credit score from these services is often inaccurate. By inaccurate, I mean not the score that potential lenders use in evaluating your credit worthiness for, for instance, a mortgage -- and that's only credit score that really matters. Harney explains the problem and what consumers can do about it.