"Inside The Fast-Cash World Of Virginia Car-Title Lenders"

...is the first part of a four-part investigative report by WAMU (Washington D.C.'s NPR affiliate) about exploitative lending practices in the Commonwealth, including how a lender transforms a loan with a capped interest rate into one without.

Part I, which aired yesterday, is here.

Part II aired this morning and is available here. The remainder are coming later this week.

As we've discussed, this is a problem that Attorney General of Virginia has pledged to address.

Decline in soda consumption and its relationship to public policy

Read The Decline of Big Soda by Margot Sanger-Katz in the New York Times. Sanger-Katz explains:

Over the last 20 years, sales of full-calorie soda in the United States have plummeted by more than 25 percent. Soda consumption, which rocketed from the 1960s through 1990s, is now experiencing a serious and sustained decline. * * * Sales of bottled water have shot up, and bottled water is now on track to overtake soda as the largest beverage category in two years, according to at least one industry projection. The drop in soda consumption represents the single largest change in the American diet in the last decade and is responsible for a substantial reduction in the number of daily calories consumed by the average American child. From 2004 to 2012, children consumed 79 fewer sugar-sweetened beverage calories a day, according to a large government survey, representing a 4 percent cut in calories over all. As total calorie intake has declined, obesity rates among school-age children appear to have leveled off.

The article goes on to explain that the reduction in soda consumption in Philadelphia has been particularly pronounced.  Soda consumption by Philly teenagers dropped by 24% between 2007 and 2014.

Why? Perhaps it is the city's comprehensive regulatory and publicity campaign led by Philly mayor Michael Nutter. The city has one of the country's strictest menu-labeling and calorie-disclosure laws. Sugary sodas are banned in the public schools, and their availability is limited in vending machines more generally. The city also runs TV and radio ads encouraging parents to keep their kids away from sugary drinks and sends nutrition educators into the schools. And Philadelphia offers financial incentives for corner grocers to feature healthy foods.

WSJ: Dodd-Frank's Effect on Small Banks is Muted; Law has raised costs, but by some measures community banks are quite healthy; low interest rates pose bigger hit to profits, observers say

Despite complaints from some that Dodd-Frank has led to the closing of community banks, the Wall Street Journal reports something different here. Some excerpts:

It's a favorite lament of community banks: The 2010 Dodd-Frank law is squeezing small financial firms and crimping access to credit for Main Street, all in the name of protecting the country from another financial crisis.

A look at the data shows the reality is more complicated, and small banks are proving surprisingly resilient by some measures.

* * *

There's no doubt Dodd-Frank has disproportionately raised compliance costs for small banks, which don't have the size and scale to absorb new costs as easily as larger firms, though exact tabulations are hard to come by. But in some ways, community banks are the picture of health.

* * *

In the second quarter, the profitability of small banks--which earned a 0.95% return on assets--barely lagged behind the 1.08% return of the big banks, according to the FDIC. That's a big change from the margin when Dodd-Frank passed, when the gap was more than three times as wide.

* * *

The number of community banks has been falling for decades. Although the decline accelerated over the past 10 years, in part because of the wave of bank failures during the financial crisis and tighter regulatory restrictions on new bank formation, almost two-thirds of banks that closed were bought by other community banks, according to the FDIC.

Years after Dodd-Frank enacted, 20% of required rules remain unwritten

The 2010 Dodd-Frank law prescribed 390 rule-making requirements and 249 now have finalized rules, while another 58 have rule proposals, according to a study by the law firm Davis Polk. That means about one fifth of the required rules haven't even been proposed.

You can read about it in the WSJ (subscription required, unfortunately), here. The study is available without a subscription, here.

Lower-income Americans tend to fare worse in car crashes

The Washington Post reports on a new study in the American Journal of Epidemiology supporting the conclusion that "The most disadvantaged are more likely — and have grown even more likely over time — to die in car crashes than people who are well-off." Indeed, "the inequality of traffic fatalities is getting worse, even as it looks nationwide as if our roads are getting safer."

Why? The Post explains:

The underlying issue here is not that a college degree makes you a better driver. Rather, the least-educated tend to live with a lot of other conditions that can make getting around more dangerous. They own cars that are older and have lower crash-test ratings. Those with less education are also likely to earn less and to have the money for fancy safety features such as side airbags, automatic warnings and rear cameras.

The number of trauma centers, the researchers point out, has also declined in poor and rural communities, which could affect the health care people have access to after a collision. And poor places suffer from other conditions that can make the roads themselves less safe. In many cities, poor communities lack crosswalks over major roads. The residents who live there may have less political power to fight for design improvements like stop signs, sidewalks and speed bumps. As a result, pedestrian fatalities in particular are higher in poor communities.

An important conclusion embedded in this study of rich and poor is that "fancy safety features" work. More of them should be standard -- not just as a matter of auto safety, but to address a deadly collateral consequence of income inequality.

Read the Post story here and a link to the study it discusses here.

More on Ralph Nader's tort museum

Read Karen Heller's article in the Washington Post.

Braucher & Orbach Article on Scamming: The Misunderstood Confidence Man

The late great Jean Braucher and Barak Orbach, both of Arizona, have written Scamming:  The Misunderstood Confidence Man, 27 Yale Journal of Law and the Humanities, (2015, Forthcoming).  Here's the abstract:

Samuel Thompson, the swindler who gave name to confidence men (“con men”) was “a man of genteel appearance,” “ladies’ man,” and gifted with “persuasive powers.” He approached his victims — “perfect strangers” — on the street, engaged them in a short conversation, and then asked them express confidence in him by lending him money or a watch. A few men placed confidence in Thompson and gave him gold watches and money. Thompson became known as the “Confidence Man” for his method and primarily for his signature question:  “Have you the confidence in me to trust with me your watch until tomorrow?” His modus operandi was used to reframe swindling as exploitation of trust and define swindling as “confidence game.”

“Scamming,” also known as the “confidence game,” “diddling,” and “swindling,” is the exploitation of predictable imperfect decisions for profit facilitated by persuasion tricks. The practice is as old as the human race, yet still confuses lawmakers, courts, and scholars. We use the story of the Confidence Man to explain some of the core elements of scamming. Specifically, we explain why the abuse of trust in the pursuit of profit is conceptually confusing.

Our study consists of two parts. First, we examine the origins of the terms “confidence game” and “confidence man.” Numerous studies describe Thompson as a genius operator. We argue that this attribution of sophistication illustrates broad misunderstanding of scamming. The record shows that Thompson was a clumsy thief and unsophisticated scammer and that his limitations were useful for illustrative purposes. We identify the reporter who coined of the term and explain the historical context in which the term was introduced. Second, we utilize insights from the story of the Confidence Man and its conceptualization to explain some of the confusing elements of scamming. Specifically, we emphasize (1) the common abuse of trust for profit; (2) the folly of attributing rationality to consumers and scammers; (3) scammers’ use of time to trap people in situations where they are likely to make mistakes; (4) challenges created by institutional scammers; (5) the role of intent and knowledge in scams; and (6) the possibility of using industry standards for scams.

 

Despite soda companies' political victories, consumption of their product declines

... reports the Times:

[T]he soda industry is winning the policy battles over the future of its product. But the bigger picture is that soda companies are losing the war.

Even as anti-obesity campaigners like [Philadelphia Mayor Michael A.] Nutter have failed to pass taxes, they have accomplished something larger. In the course of the fight, they have reminded people that soda is not a very healthy product. They have echoed similar messages coming from public health researchers and others — and fundamentally changed the way Americans think about soda.

The Times piece explains that "The drop in soda consumption represents the single largest change in the American diet in the last decade and is responsible for a substantial reduction in the number of daily calories consumed by the average American child."

Read the whole report here.

CFPB orders auto finance company to provide $44.1 million in relief for illegal debt collection tactics

The Consumer Financial Protection Bureau yesterday announced an enforcement action against an indirect auto finance company and its auto title lending subsidiary for pressuring borrowers using illegal debt collection tactics. The CFPB found that Westlake Services, LLC and Wilshire Consumer Credit, LLC deceived consumers by calling under false pretenses and using phony caller ID information, falsely threatened to refer borrowers for investigation or criminal prosecution, and illegally disclosed information about debts to borrowers’ employers, friends, and family. The Bureau ordered the companies to overhaul their debt collection practices and to provide consumers $44.1 million in cash relief and balance reductions. The companies will also pay a civil penalty of $4.25 million.

The CFPB's full press release is here.

The consent order with the companies is here.

Experian data breach affects 15 million T-Mobile records

Over two years, a hack of Experian apparently acquired the records of 15 million T-Mobile customers and people who had applied for credit. Experian, the vendor that processes T-Mobile's credit applications.

T-Mobile's CEO posted a letter on the company's website to explain:

We have been notified by Experian, a vendor that processes our credit applications, that they have experienced a data breach. The investigation is ongoing, but what we know right now is that the hacker acquired the records of approximately 15 million people, including new applicants requiring a credit check for service or device financing from September 1, 2013 through September 16, 2015. These records include information such as name, address and birthdate as well as encrypted fields with Social Security number and ID number (such as driver’s license or passport number), and additional information used in T-Mobile’s own credit assessment. Experian has determined that this encryption may have been compromised. We are working with Experian to take protective steps for all of these consumers as quickly as possible.