The CFPB's Consumer Advisory Board

As you may know, the Consumer Financial Protection Bureau has recently named its Consumer Advocacy Board. Go here to read its members' names and bios. The Board will have its first public meeting in St. Louis on September 27. CFPB head Richard Cordray will speak (and presumably introduce the advisory board). Here's how the CFPB describes how the Board was picked and what its functions will be:

Through a public process, the Bureau has invited external experts, industry representatives, consumers, community leaders and advocates to apply to be a member of this advisory group. As a result, the Consumer Advisory Board is a crowdsourced group of experts on consumer protection, consumer financial products or services, community development, fair lending, civil rights, underserved communities, and communities that have been significantly impacted by higher priced mortgage loans. They are a source of market intelligence and expertise for us, and also advise and consult us on our work. The board helps inform us about emerging practices or trends in the consumer finance industry, and shares analysis and recommendations.They are charged with identifying and assessing the impact of emerging products, practices, or services on consumers and other market participants.

Crowdsourced? Yes. The advisory board members come from a range of backgrounds: academia, consumer advocacy, and the financial services industry. The advisory board's charter is here.

CBO Issues Study on Effect of Federal Tax Credits on the Purchase of Electric Cars (and related topics)

The Congressional Budget Office has released a study on the effect of federal tax credits on the purchase of all-electric cars and plug-in hybrids. (A summary of the study is here, and the full study and underlying data can be accessed from here.) The tax credits can be as much as $7,500 per car. That is, if a car dealer charges you $40,000 for an electric car, you may be able to get a tax credit against your federal income tax that effectively reduces the car's price to as little as $32,500.

The study finds that (1) the credits will cost the taxpayers around $7.5 billion through 2019, but have yet to make electric cars cost-competitive with other cars; (2) in the short-term, the credits will have little or no effect on fuel consumption (ironically because the inclusion of electric vehicles in the calculation as to whether a manufacturer meets the federal fuel-economy standards allows that manufacturer to sell more gas-guzzlers); and (3) subsidizing the purchase of electric cars may reduce fuel consumption in the long term because greater sales of electric cars may push lawmakers to make fuel-economy standards more stringent.

The CBO's detailed summary of the report's findings appears after the jump.

Ninth Circuit OKs Facebook class settlement, holding that it’s fair for all the settlement funds to go to a defendant-created foundation

by Greg Beck

The Ninth Circuit today upheld a district court’s decision approving a class-action settlement against Facebook over the company’s long-defunct “Beacon” program—one of the first of what turned out to be a long string of privacy fiascos for the social media company. With Beacon, Facebook teamed up with Blockbuster to post users’ video rentals online—allegedly without permission—thus running afoul of the Video Privacy Protection Act, which provides $2,500 in statutory damages for revealing private rental information.

Rather than giving class members any of their statutory damages, the settlement approved by the district court would give all the settlement funds—$9.5 million—to a new foundation created by Facebook to “educate” users about privacy. The court held that such a foundation sufficiently advanced class members’ interests in privacy, though Beacon does not appear to have been a failure of user education. If anything, Facebook was the one in need of privacy education.

Even worse, the settlement provided that Facebook’s own chief lobbyist would occupy one of the three seats on the foundation’s board, where he would influence the foundation’s distributions. The court was not troubled by the defendant’s retention of control over the damages, holding that the settlement was the product of compromise and need not be “ideal.” The court noted that no precedent disallowed cy pres funds on the ground of a defendant’s retention of control. That, however, is presumably true only because nobody has dared try it before.

Finally, the court concluded that, given the risks of litigation, it was reasonable and fair for class members to settle their $2,500 statutory damages claims in exchange for nothing.

In dissent, Judge Kleinfeld writes: "This settlement perverts the class action into a device for depriving victims of remedies for wrongs, while enriching both the wrongdoers and the lawyers purporting to represent the class."

Quite a decision. If this kind of thing is OK, I don't see any reason defendants won't find it an attractive option in many cases.

David Reiss on Eminent Domain and Underwater Loans

David J. Reiss of Brooklyn has written Comment on the Use of Eminent Domain to Restructure Performing Loans.  Here is the abstract:

There has been a lot of fear-mongering by financial industry trade groups over the widespread use of eminent domain to restructure residential mortgages. While there may be legitimate business reasons to oppose its use, its inconsistency with Takings jurisprudence should not be one of them. To date, the federal government’s responses to the current crisis in the housing markets have been at cross purposes, half-hearted and self-defeating. So it is not surprising that local governments are attempting to fashion solutions to the problem with the tools at their disposal. Courts should, and likely will, give these democratically-implemented and constitutionally-sound solutions a wide berth as the ship of state tries to right itself after being swamped by a tidal wave of mortgage defaults.

New Consumer Reports Study on Arsenic in Foods Containing Rice

Arsenic is a potential human carcinogen. Federal regulation limits arsenic in drinking water to 10 parts per billion. (The strictest state-law limit is in New Jersey, where the limit is 5 ppb.) An in-depth study by Consumers Union has found surprisingly high levels of arsenic in foods containing rice. Arsenic gets into food in various ways, mainly because pesticides and fertilizers often contain arsenic. CU is so concerned that it recommends that consumers impose limits on intake of rice containing products. (For instance, CU says that kids under 5 should not regularly drink rice drinks such as rice milk.) Here are CU's recommendations:

Consumers Union believes a [federal] standard for arsenic should be set for rice, and industry should accelerate efforts to reduce arsenic levels in rice. They should also develop types of rice that take up less arsenic, and use rice with the lowest possible arsenic [amounts] in products for young children, such as infant rice cereal.

Our scientists are also asking regulators to prohibit agricultural practices that may lead to increases in arsenic in rice:

• The EPA should phase out use of pesticides containing arsenic.
• The USDA and the EPA should end the use of arsenic-laden manure as fertilizer.
• The FDA should ban the feeding of arsenic-containing drugs and animal byproducts to animals.

Go here for an LA Times story on the CU study.

Bloomberg News: Republican State AGs Resisting CFPB Cooperation

by Jeff Sovern

Here.  An excerpt:

A group of Republican state attorneys general has declined to sign cooperation agreements with the Consumer Financial Protection Bureau, part of an escalating Republican revolt against the agency that began in the U.S. Congress.

Richard Cordray, the agency’s director, asked all 50 states in March to sign a memorandum of understanding designed to protect confidential information shared among states and the bureau. To date, only 12 states -- all but one with Democratic attorneys general -- have signed, according to the bureau and documents obtained in a public records request.

* * *

South Carolina Attorney General Alan Wilson, who is leading the effort with Pruitt, told a campaign rally in Greenville, South Carolina, last week that a suit against the Dodd-Frank would be filed in the “next couple of days.”

“We’re going to challenge that law,” Wilson said on Sept. 14, in remarks reported by Fox News. “We’re going take the battle back to Washington, D.C. because community banks on Main Street shouldn’t be choked to death so that big banks on Wall Street can take our money.” * * *

 Alas. the OCC is not the only agency captured by banks.



The 47% as Seen by Stephen Colbert

From Stephen Colbert here and embedded below:

The Colbert Report
Get More: Colbert Report Full Episodes,Political Humor & Satire Blog,Video Archive

 

Is College Worth The Cost?

At this blog, we have covered the increasing size of the country's aggregate student loan debt and the question whether college is worth the cost for many people with student loan debt. Catherine Rampell, drawing on work done at the Hamilton Project, says here that college is generally a good investment even for those who take on debt to finance it.

 

Will Technology Make "Do Not Track" Laws Unnnecessary?

Sunday's Times reported that the next version of Microsoft's Internet Explorer will include a "Do Not Track" privacy setting as a default. Consumers installing the browser will be presented with the option of switching from the default to permit tracking.  Excerpts:

But the specter of people opting out of tracking en masse presents a serious risk for marketers.

Consumer data, marketers say, is the fuel that powers the Internet, driving ads that support free content and e-mail services, search engines and social networks. If millions of consumers opted out of behavior-based advertising, industry representatives argue, many ad-sponsored sites could shut down or put up pay walls for people who elect not to see the ads. * * *

But Jonathan Mayer, a graduate student in computer science at Stanford who has studied online tracking, says there is cause for deeper concern. For him, the issue is not behavior-based ads, but the data-mining necessary to produce them.

For instance, Mr. Mayer says, consumers may not be aware that when they visit a site, dozens of entities, like analytics companies and data aggregators, may be operating on that page, collecting online information about them, and amassing those details for advertising purposes. Moreover, he says, those entities could potentially have access to screen names or e-mail addresses that might be used to re-identify people.

Justice Scalia on Whether the Supreme Court is Politicized

In this short video (also embedded below), Justice Scalia says that he is "enraged" by claims that the Supreme Court is "politicized." None of his colleagues, he says, decide cases based on who the President is. He then goes on to explain why justices appointed by Democratic Presidents often vote one way (the non-originalist, non-textual way) on constitutional questions and justices appointed by Republican Presidents often vote the other way (the originalist way that pays attention to the constitution's text). He also has a little something to say on Roe v. Wade.