Effort to bring back low student-loan rates fails in the Senate

We reported earlier that the interest rate for new federal student loans doubled from 3.4% to 6.8% on July 1 because Congress failed to agree on new legislation. The Senate tried again yesterday, but again failed. A bill sponsored by Senate Democrats would have brought the rate back down to 3.4% for one year, retroactive to July 1. The bill had more "yes" votes than "no" votes, by 51-49, but that was far short of the 60 votes needed for the bill to advance. Getting 60 votes on any bill that would fix the rate at 3.4% seems unlikely because three Senate Democrats now favor a bi-partisan proposal that would allow loan rates to float, along with rates on 10-year Treasury bonds. Read more in this article by Chris Good.

Dazzling Times Op-Ed: To Catch a Creditor

Here. 

Do graphic tobacco warnings affect consumers' perceptions of taste?

My colleagues Greg Beck and Brian Wolfman have blogged here several times about the fight over the FDA's graphic cigarette warnings, which were invalidated by the D.C. Circuit on First Amendment grounds.  Other countries, however, are continuing to require graphic warnings. And now from Australia comes the fascinating news that the new graphic warnings there may already be changing consumers' perceptions of the way cigarettes taste:

Almost six months have passed since Australia imposed one of the world’s toughest laws for cigarette warning labels, swapping iconic packaging for graphic images of mouth ulcers, cancerous lungs and gangrenous limbs.

And though experts say it is too soon to know what impact the law has had on tobacco use, one thing is certain: Smokers think the cigarettes taste off. Complaints started to roll in about the flavor of cigarette brands almost immediately after the law went into effect on Dec. 1. That could mean a lot for health advocates’ efforts to prevent smoking.

“Of course there was no reformulation of the product,” the Australian health minister, Tanya Plibersek, said in an interview. “It was just that people being confronted with the ugly packaging made the psychological leap to disgusting taste.”

Constitutional attacks on Dodd-Frank

The Dodd-Frank financial reform legislation remains under assault in the Republican controlled House of Representatives. At a hearing yesterday before the House Financial Services Committee's subcommittee on Oversight and Investigations, law professor Thomas Merrill and lawyer C. Boyden Gray testified that certain aspects of Dodd-Frank are likely unconstitutional. Merrill's testimony is here and Gray's testimony is here. Here is an excerpt from the subcommittee's press release:

A panel of constitutional scholars testified at the subcommittee hearing today, highlighting the constitutional deficiencies and legal uncertainties of Dodd-Frank. “It is no mere coincidence that Dodd-Frank both entrenches the Too Big to Fail problem and violates the Constitution’s system of checks and balances,” said C. Boyden Gray, a former White House Counsel and Ambassador to the European Union who is now a founding partner in a law firm.   “By giving regulators effectively unlimited power, and by removing the checks and balances that ordinarily prevent the abuse of power, Dodd-Frank fosters the very conditions that give rise to Too Big to Fail.” Thomas W. Merrill, a professor at Columbia Law School, said in his testimony that Dodd-Frank raises “serious constitutional questions” and may violate, among other provisions, the Due Process Clause, Article III, the First Amendment, and the Bankruptcy Clause.  “Dodd-Frank says you can be sent to jail for up to five years for disclosing the truth about a civil case brought against you by the government.”

 

Federal judge holds that Apple violated antitrust laws by conspiring with major publishers to raise the price of ebooks

The case was brought by our own U.S. Department of Justice. Read about it here.

Fisher Study of Stalled Foreclosures

Linda Fisher of Seton Hall has written Shadowed by the Shadow Inventory: A Newark, New Jersey Case Study of Stalled Foreclosures & Their Consequences, forthcoming in the UC Irvine Law Review.  Here's the abstract:

Foreclosure activity has declined recently in some areas, but a number of states, such as Florida, New Jersey, and Illinois, showed increases in 2012. The national inventory of homes in foreclosure or owned by banks climbed nine percent to 1.5 million homes. Although investors are now buying foreclosed properties in certain markets, driving down inventory and contributing to an upswing in housing prices, lower-income neighborhoods generally have not enjoyed these effects. These include many of the African-American and Latino neighborhoods that bore the brunt of predatory and subprime lending.  There, lenders have failed to complete foreclosures or maintain and market their REO (real-estate owned) properties, contributing to the shadow inventory that continues to depress local housing markets.

This empirical project tests the extent to which bank stalling has contributed to foreclosure delays and property vacancies in Newark, New Jersey. Previous studies conducted by the U.S. General Accounting Office, as well as by researchers at the Federal Reserve, and in Cleveland and Chicago, uncovered considerable evidence of stalled or abandoned foreclosures. Several of the studies found that abandoned foreclosures correlated positively with property vacancies. This is the first study to trace the disposition of each property in the sample through both public and private sources, allowing highly accurate conclusions to be drawn. I reach a similar conclusion to the previous studies with respect to stalling: without legal excuse or ongoing workout efforts, banks frequently cease prosecuting foreclosures. The stalled foreclosures in my study, however, do not strongly correlate with property vacancies, but a high percentage of REO properties are vacant. This study is small in scale, involving a random sample of 100 foreclosures filed between 2007 and the first half of 2009 in a single neighborhood, but the results can be extrapolated to the City of Newark, and, to some extent, similar lower-income urban neighborhoods in Northeastern states with judicial foreclosure regimes. The national banks that securitized mortgages during the housing boom followed standard practices of targeting communities of color for the worst subprime loans. They also followed national servicing and foreclosure practices adapted to each state’s laws.

More on Debt Collection: CFPB To Go After Banks' Collection Practices

Suddenly, there's a lot going on the in the world of debt collection regulation. On the heels of yesterday's announcement by the FTC of a huge debt-collection settlement (discussed in the post below), the CFPB is announcing today that it will use its UDAAP authority to regulate the collection practices of banks. “It doesn’t matter who is collecting the debt — unfair, deceptive or abusive practices are illegal,” says CFPB director Richard Cordray in a statement. And the OCC, too, is investigating how JP Morgan and other banks collect credit card debt. Jessica Silver-Greenberg and Ed Wyatt have a story in today's TImes that takes a broad look at the developments at all three agencies.

The CFPB published two bulletins on debt collection today. The first makes clear that any entity subject to the Bureau's jurisdiction under the Dodd-Frank Act, whether a third-party collector or a creditor collecting its own debts, can be held accountable for any unfair, deceptive, or abusive practices in collecting a consumer’s debts. The second warns companies to avoid deceptive statements concerning the impact of paying a debt on a consumer’s credit score, credit report, or creditworthiness.

FTC curbs abuses by major debt collector

The FTC announced yesterday that the "world’s largest debt collection operation, Expert Global Solutions and its subsidiaries, has agreed to stop harassing consumers with allegedly illegal debt collection calls and to pay a $3.2 million civil penalty – the largest ever obtained by the Federal Trade Commission against a third-party debt collector."

The FTC's press announcement explains that the company was violating the Fair Debt Collection Practices Act by "calling consumers multiple times per day, calling even after being asked to stop, calling early in the morning or late at night, calling consumers’ workplaces despite knowing that the employers prohibited such calls, and leaving phone messages that disclosed the debtor’s name, and the existence of the debt, to third parties."  According to the FTC, "the companies also continued collection efforts without verifying the debt, even after consumers said they did not owe it."

In a piece this morning in the Washington Post, columnist Michelle Singletary writes that hearing the FTC announcement "you want to pump your fist and cheer because justice is being served." She notes that the case "may significantly curb some unsavory practices by debt collectors."

Will the Democrats Reform the Filibuster to Permit Cordray Confirmation?

That's the topic of a Times article, Democrats Plan Challenge to G.O.P.’s Filibuster Use.  The plan seems to be to leave unchanged the filibuster rules for legislation and confirmation of judges, but limit use of the filibuster for votes on confirmation of agency appointees. Such a change would make it easier to vote on confirmation of Cordray to head the CFPB.

The BP Settlements: Class actions v. institutional claims processing

Law profs Sam Issacharoff and D. Theodore Rave "The BP Oil Spill Settlement and the Paradox of Public Litigation." Here is the abstract:

The streamlined administrative program that BP set up to pay claims arising out of the Deepwater Horizon Oil spill — the Gulf Coast Claims Facility (GCCF) — promised a significant transaction-cost savings over litigation in the public court system. At least in theory, that savings should have worked to the benefit of BP and claimants alike, freeing up money that would otherwise have gone to lawyers and other litigation costs to fund claimants’ recoveries. But a comparison of the GCCF to the class action settlement that replaced it reveals that the class settlement will result in greater payments to claimants. Paradoxically, the dispute resolution system with the higher built-in transaction costs appears superior. We offer some hypotheses for why this might be the case. Our central claim is that claimants did better under the higher-cost class action settlement because it allowed them to offer the defendant something it valued — a greater degree of finality than the GCCF could ever provide — in exchange for a “peace premium.” And we analyze some of the features of the public system of class action litigation that enable parties to obtain a greater degree of closure than a purely private dispute resolution system like the GCCF, while at the same time providing guarantees of transparency, consistency, and equitable treatment of absentees.