"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.

Teen girls see big drop in chemical exposure with switch in cosmetics

A new study led by researchers at UC Berkeley and Clinica de Salud del Valle de Salinas demonstrates how even a short break from certain kinds of makeup, shampoos and lotions can lead to a significant drop in levels of hormone-disrupting chemicals in the body.

Analysis of urine samples before and after a three-day trial in which the participants used the lower- chemical products found significant drops in levels of these chemicals in the body. Metabolites of diethyl phthalate, commonly used in fragrances, decreased 27 percent by the end of the trial period. Methyl and propyl parabens, used as preservatives in cosmetics, dropped 44 and 45 percent respectively. Both triclosan, found in antibacterial soaps and some brands of toothpaste, and benzophenone-3 (BP-3), found in some sunscreens under the name oxybenzone, fell 36 percent.

Berkeley News has more details.

Former student's consumer deception suit against her law school about to start

The downturn in the legal market brought a raft of suits against law schools by former students asserting that the schools took the students' money (or caused the the students to run up educational debts) while exaggerating their graduates' job prospects. Most of these suits were thrown out on pre-trial motions. But one trial -- against Thomas Jefferson School of Law -- begins tomorrow morning (March 7, 2016) in San Diego. Read about it here,

Wilkinson-Ryan Paper: Contracts Without Terms

Tess Wilkinson‐Ryan of Penn has written Contracts Without Terms.  Here is the abstract:

In consumer contracting, the ritual of documentation and provision of terms is essentially vestigial, at least as a form of deal-making communication between the parties. This paper starts with a thought experiment: what would it look like to have contracts but no standard terms? Most scholarly and political approaches to the mismatch of contract law and consumer contracting have focused on the information problem in consumer contracting — the difficulty of the required cognitive processing — and thus the proposed solutions have focused on how to make terms more salient or easier to assimilate. I argue that the focus on salience is not only futile but misleading. Promulgating a policy by contract lends it social or moral legitimacy, as well as a presumption of legal legitimacy. I report the results of an experimental questionnaire study designed to assess how the form of a policy — i.e., provided in standard terms or available in a non-contractual document, affects consumer behavior when there is a plausible complaint against the drafter. Subjects reported that company policies embedded in contracts were more likely to be legally enforceable, judged those policies as more fair, and reported that they would be less likely to challenge such those policies in court. Furthermore, subjects appeared to grant all but the most clearly non-contractual documents the status of contract, with all of its legal, moral, and social baggage. In the final section of the paper I consider the doctrines of assent and unconscionability in light of these results.

The New Yorker on the Impact of Scalia's Death on Class Actions and Arbitration

Here. Excerpt:

[M]any of the Roberts Court’s most important business cases were decided by a 5–4 margin, with the five conservative Justices voting as a bloc. And, as [Vanderbilt law professor Brian] Fitzpatrick points out, “Scalia has done more than any other justice in making it difficult for consumers and employees to bring class-action suits. So his absence alone may make a difference.”

(HT: Eric Sanders)

 

Federal magistrate rules for Apple in run-up to showdown over San Bernardino iPhone

Earlier this week, in a decision that is likely to be influential to the federal court in California now considering whether Apple can be compelled to help the FBI break into the San Bernardino shooter's iPhone, U.S. Magistrate Judge James Orenstein rejected the government's request for a similar order in an unrelated New York case. Judge Orenstein ruled that Congress has not authorized such an order and even if it had, the factors governing the court's decision to issue it (Apple's relationship to the investigation, the burden on Apple, and the necessity of imposing that burden) weighed against it.

Read the decision here.