U.S. Income Tax Rates are VERY LOW

We have written about low income tax rates before (for instance, here and here). But it's worth noting again: Contrary to much of the political rhetoic: rates are at historical lows. This article in today's Washington Post explains that federal income tax rates are lower than they've been in 30 years.

Commonweal: Holding All the Cards

Here.  A comment on arbitration, among other consumer issues.

Media Reports on CFPB's Proposed Mortgage Rules

The Times article is here.  Some excerpts:

For the most part, both consumer advocacy and industry groups broadly supported the proposed rules.

“We do think that these forms are better, in part, because there is a more prominent disclosure on prepayment penalties,” said Kathleen Day, a spokeswoman for the Center for Responsible Lending, a nonprofit group that works to end abusive financial practices.

However, Diane Thompson, a lawyer with the National Consumer Law Center, said that while she welcomed greater transparency in pricing for homeowners, she thought that the forms should emphasize clearly on the first page what the total cost of the loan would be, including interest, closing costs and principal.

The Mortgage Bankers Association, an industry group, said that lenders understood that faulty disclosures might have led homeowners to shoulder loans that they could not afford.

But David Stevens, the group’s president and chief executive, said that he worried that the 120-day public comment period could limit consumer advocates and mortgage lenders from conducting a thorough review, especially because the proposal was more than 1,000 pages long.

And from the Wall Street Journal:

Banks and other lenders, while supportive of the bureau's overall goals, have some reservations. The changes the consumer bureau envisions are "going to be incredibly, extremely difficult to implement," said David Stevens, chief executive of the Mortgage Bankers Association, citing the length of the proposal. "It is likely to add a whole new set of layers of significant complexity in a very difficult environment for lenders and consumers."

The Invasion of the Advertisers

Michael Hiltzik has penned this interesting article about the increasing infiltration of advertisers into our on-line lives. Here's an excerpt:

Facebook's [has stepped] up the proportion of commercial content in the messages received by its users, while concealing its true nature. The company is rolling out a product it calls "sponsored stories," in which a user's decision to "like" a company's product will show up in his or her friends' news feeds as an item placed by that company. The idea, plainly, is to dress up an ad so it masquerades as a voluntary endorsement of a product between friends. If that sounds like an extreme encroachment of commercial interests into our personal lives, so be it: Facebook thinks it's the key to attention-grabbing ads.

CFPB Proposes New Mortgage Disclosure Rules

The Dodd-Frank Act requires the CFPB to propose new disclosure rules for mortgages that combine the current disclosures mandated by Truth in Lending and RESPA.  The Bureau's proposed new forms appear here.  The proposal amends Regulations X and Z.  The web page also links to the Federal Register notice, a report on the testing the proposal underwent, a proposed new rule for HOEPA loans, and other materials.  Comments on some of the proposed amendments are due September 7, and for others on November 6.

Credit Card Complaints Adjusted for Number of Cards Issued

by Jeff Sovern

We have previously blogged about the CFPB's Credit Card Database (here, here,  and here).  One of my problems with the data was that it was not adjusted for the number of credit card users each issuer had, so that you couldn't tell which issuer had the most complaints per user.  Well, banking analyst Ken Thomas has now adjusted for the number of issuers.  Time Magazine has the report here.  Turns out Citibank, which had the second most complaints, actually ranks only 12th worst when the number of credit cards they've issued is taken into account. The best is USAA, and the worst is SunTrust.

 

Times Pieces

by Jeff Sovern

Yesterday the Times ran a piece, New Agency Plans to Make Over Mortgage Market, about some things going on at the CFPB as it approaches its first anniversary.  Last Sunday, the Times printed a letter repeating the usual right-wing canard that government regulation, including the Community Reinvestment Act, contributed to the subprime crisis.  My reply in the Times appears here, but Alan White provided a more complete refutation here. 

The Politics and Reality of Medicaid Expansion

Earlier this week, we posted a Washington Post article by Ezra Klein concerning the practical ramifications of the Supreme Court’s medicaid ruling in the Affordable Care Act case. Despite the Court’s ruling allowing states to opt out of the Act’s medicaid expansion—as a consequence of the Spending Clause analysis—Klein thought that states would not do so. His view was that the medicaid expansion represented too many federal dollars flowing to the states and so they could not afford to turn down the new medicaid funds. Klein noted that it was “red” states that stood to gain the most from medicaid expansion. This article, however, in Tuesday’s Post has a very different slant, indicating that several states already are planning to opt out of the expansion and others may follow. That under the Affordable Care Act the Feds pay for 100% of the expansion for the first three years (and at least 90% after that) suggests that the opt-outs are more politics than anything else. Perhaps some states will opt out at first and quietly get back in down the road. In this regard, see this article by Szuy Khimm explaining how the medicaid expansion could actually save states money.

HuffPo: Wells Fargo Fee Disclosures: Bank Joins Chase, TD Bank With Shorter Forms

by Jeff Sovern

Here.  You can see the new Wells Fargo form here.  These forms are a positive step and should be helpful to consumers who use them. As HuffPo points out, they facilitate comparison shopping.  But will consumers use them for that purpose?  I'm not sure.  By my count, the Wells Fargo form, which runs three pages, contains 29 disclosures--and you could count them in a way that leads to a higher number.  Will consumers put forms for two or more banks next to each other and compare so many disclosures--especially since the forms are not standardized by law and so could provide different information, or calculate fees in different ways?  The cynic in me wonders if this is an attempt to forestall regulation. Banks can say they have created their own forms, and so the CFPB need not intervene to require such forms.  Of course, if the CFPB did so, the disclosure would be standardized, which would aid in comparison shopping for those consumers who bothered to do so.  In any event, these forms might be helpful to a web site or entity like Consumers Union, publisher of Consumer Reports, which could compile the information and make it available to consumers in one place.  And if banks do not use them to argue against regulation, the forms won't hurt and may help.

California tries -- and fails -- to pass bill to limit Concepcion

California's legal newspaper, The Recorder, reported on Tuesday on the defeat in the state legislature of a bill that would have banned contracts that bar class action claims. According to the article, the bill's sponsor will keep trying. Read "Legislation to Blunt 'Concepcion' Is Killed in State Assembly."