Online Payday Lenders In the Media

Today's Times has an editorial, Bleeding the Borrowers Dry.  Here is the final paragraph:

A bill pending in the Senate, known as the Safe Lending Act, would require all online lenders to comply with state laws that provide stronger consumer protections than the federal statutes. It would establish once and for all that payday loan borrowers have the right to stop lenders from raiding their bank accounts. State and federal regulators also need to prohibit banks from giving payday lenders access to the automatic payment system in states where predatory, high-interest loans are illegal.

Meanwhile, the American Banker ran Payday Lenders Assail Online Competitors. Brick-and-mortar payday lenders are arguing that states, like New York, which ban payday lending are not going to stop it--because consumers will just go online to get the loans--and are losing out on the jobs and taxes payday lending generates. Consumer advocates respond by citing a Pew Study finding that states with legalized payday lending have only slightly more online payday borrowing as states that bar it--but that states where it is legalized have much more storefront payday lending.

More Airline Fees

by Brian Wolfman

Despite the view among some consumers that the airlines are gouging consumers with fees, a recent study shows that fees are a very small part of the overall cost of flying. That may change. This article by Jim Martin explains that the airlines are introducing new fees. Here are some excerpts:

Among the fees airlines have announced in the last few weeks are a charge to zip through airport screening gates and board early, a fee to watch streaming movies and a fee to have your bags delivered in 36 cities around the country. It should be no surprise that airlines keep coming up with new fees: Combined, such charges generated an estimated $36 billion in 2012 for the world's largest airlines. ... United Airlines now allows economy passengers to board with the first group of passengers and to speed through "exclusive" security gates with shorter lines. The airline says the Premier Access fee starts at $9, but the charge for a typical flight is closer to $50 to $100. ... United has also expanded a service to deliver checked luggage to your home, office or hotel within 100 miles of the airport. The fee, starting at $29.95, has been expanded from six cities to 36, including San Francisco, San Diego and Palm Springs. Southwest Airlines now lets passengers with laptop computers or electronic tablets watch streaming movies on most of its planes for $5 per movie, per device. Southwest already charges $8 per day to connect to the onboard wireless Internet, but you don't need to pay for Wi-Fi access to watch the streaming movies.

None of these fees seems like a great imposition on consumers. They are for things that are distinct from the airlines' core job of getting you from point A to point B -- that is, different from misleading fees for the seats themselves and fees that make it difficult for consumers to comparison shop.

DOJ Responds to the D.C. Circuit's "Noel Canning" Recess-Appointment Decision

We've posted many times about the D.C. Circuit's Noel Canning decision, which held that three putative recess appointments made by President Obama to the National Labor Relations Board were not proper recess appointments. Therefore, the court ruled, the appointments were invalid because they did not go through the Constitution's normal appointments process -- presidential nomination and approval by the Senate.

The Department of Justice has now responded to the decision for the first time in a 20-page letter brief filed in the Third Circuit. Here's a pargraph from that letter summarizing the Administration's position:

The Noel Canning decision conflicts with nearly two centuries of Executive Branch practice and the decisions of three other Courts of Appeals, two of them sitting en banc. Evans v. Stephens, 387 F.3d 1220 (11th Cir. 2004) (en banc), cert. denied, 544 U.S. 942 (2005); United States v. Woodley, 751 F.2d 1008 (9th Cir. 1985) (en banc), cert. denied, 475 U.S. 1048 (1986); United States v. Allocco, 305 F.2d 704 (2d Cir. 1962), cert. denied, 371 U.S. 964 (1963). Noel Canning’s constitutional conclusions are inconsistent with the constitutional text; they conflict with historical practices and usages which the court did not address; they are at odds with the settled understandings shared by the Executive and Legislative Branches; and they threaten a serious disruption of the separation of powers.

The Blog of the Legal Times has this report.

Everything you want to know about sequestration (without having to ask)

The Center for Effective Government (formerly OMB Watch) has created Sequestration Central, a website devoted to providing comprehensive and up-to-date information on the federal government budget sequestration that went into effect today.

More on the "Big Spring" challenge to the Dodd-Frank law and the CFPB

by Brian Wolfman

The Big Spring suit filed in federal district court in D.C. challenges various provisions of the Dodd-Frank Wall St. reform law, including the legality of the Consumer Financial Protection Bureau, on separation-of-powers grounds. That suit includes a challenge to Richard Cordray's appointment as CFPB director as an impermissible (non-)recess appointment. We last posted about Big Spring when eight more states joined the case as plaintiffs.

Last Friday, the Justice Department moved to dismiss the case, arguing that the plaintiffs -- both the private plaintiffs (including Big Spring bank) and the states -- lack standing to sue. This past Wednesday, just five days later, both the private plaintiffs and the states filed their oppositions to the motion to dismiss. (I wonder whether the Supreme Court's brand-new standing ruling in the Clapper case will play a role here.)

The Blog of the Legal Times has posted this article on the standing motion and related developments in the Big Spring case. 

Federal banking regulators enter final $9.3 billion settlement with mortgage servicers; borrowers to receive cash and loan reductions

by Brian Wolfman

Last month, we posted about a likely settlement between federal regulators and 13 major mortgage servicers -- including some of the world's biggerst banks -- that would make direct cash distributions to homeowners who lost their homes or went underwater during the financial crisis, in whole or in part because of improper foreclosure and loan practices. At the time, some consumer advocates thought the deal -- then $8.5 billion -- was not big enough. For instance, Alys Cohen of the National Consumer Law Center called  the cash payments for consumers "wholly inadequate in light of the scale of the harm."

The deal -- now worth $9.3 billion -- was finalized yesterday, as explained in this article by Danielle Douglas. Douglas says that $3.6 billion will go directly to borrowers whose homes were wrongfully foreclosed in 2009 and 2010. The remaining $5.7 billion will be used to reduce mortgage payments or interest rates on existing loans. The amount and kind of relief that consumers will obtain under the settlment will depend on which of 11 types of harm a consumer suffered. Consumer advocates are concerned that, under the settlement, borrowers will have no input in deciding how their situations are categorized and no right of appeal. Douglas explains that homeowners should start recieving payments or loan reductions in the next month or so.

Go here to see each mortgage servicer's share of the settlement. (Bank of America tops the list at nearly $2.9 billion.)

Justices Sotomayor and Kagan in the spotlight

This has been a revealing week for President Obama's two appointees to the Supreme Court, who are becoming two of the strongest voices on the Court. On Monday, Justice Sotomayor made national headlines with her opinion regarding a denial of cert. (beginning at page 13 of this Order List) -- though agreeing on procedural grounds with the decision to deny review, she rightly excoriated a prosecutor who argued in a criminal case that the presence of African-Americans, Hispanics, and money in a room should give rise to an inference that a drug deal was taking place. On Tuesday, Justices Sotomayor and Kagan were the only votes for the FDCPA plaintiff's position in Marx v. GRC (which we discussed here); the dissent included this forceful criticism of the majority's self-serving legislative history analysis:

Some Members of the majority have expressed doubt about the relevance of legislative history, claiming that relying upon it is analogous to “entering a crowded cocktail party and looking . . .for one’s friends.” Conroy v. Aniskoff, 507 U. S. 511, 519 (1993) (SCALIA, J., concurring in judgment). But speculating whole cloth about congressional intent, as the majority does, is surely more problematic. The majority is saved the trouble of having to look for its friends at the party; it simply invites them.

And yesterday, both Justices were quite active -- and willing to challenge their more conservative colleagues directly -- in the oral argument over the Voting Rights Act; for a good description of some of the courtroom exchanges and a discussion of the two new Justices' evolving role on the Court, check out this Washington Post op-ed.

More on Payday Loans

On Sunday, Brian posted a link to the Times story, Major Banks Play Key Role in Payday Loans Banned by States.  Yesterday, the Times followed up with a report, Dimon Pledges to Change JPMorgan’s Practices on Payday Loans. The specific practice that has drawn Dimon's ire is of withdrawing money from depositors' accounts to repay payday loans even over the objection of the depositor.   But the original article also noted that the federal government also plays an important role in thwarting applcation of state usury laws by providing that the usury law (or lack thereof) of the state where the lender is located applies to consumer loans, not the law where the consumer lives.  While three years ago duiring consideration of what became the Dodd-Frank Act, the Senate reconsidered that law--called the exportation doctrine because states export their usury laws to other states-- some Democrats joined all nearly all the Republican senators to preseve the exportation doctrine.

Meanwhile, Pew has issued a new study, Payday Lending in America: How Borrowers Choose and Repay Payday Loans.  According to the accompanying press release:

Pew’s survey results reveal that people choose these loans to avoid outcomes like long-term debt, borrowing from family or friends, overdraft fees, and cutting back further on expenses. But the average loan requires a repayment of more than $400 in two weeks, the typical duration, when the average borrower can only afford $50. When borrowers have trouble paying off the loan, they return to the very same choices they initially tried to avoid.

 

Bloomberg: FTC Commissioner Edith Ramirez Named by Obama as Chairman

Here.  According to the report, Ramirez was an intellectual property lawyer before joining the FTC.  It's not clear how much expertise she had in consumer law before becoming a commissioner. 

More on movement between industry and congressional staffs

We posted recently on the revolving door between industry and congressional staffs. Now, we've been provided more detail with this joint review by Remapping Debate and the Center for Responsive Politics. The review looked at the chiefs of staff and legislative directors of the new members of the 113th Congress to detemine who previously worked as industry or non-profit lobbyists. The review includes of a chart listing each staffer, the staffer's congressional boss, and the staffer's prior lobbying connections. The chart can be sorted by a number of variables, including staffer, congressperson, and political party.

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpufv

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf