A troubling tale of bedside debt collection, from today's NYT

Here. More here.

What Should Be Done About Student Loan Debt?

We have blogged many times (go, for example, here, here, here, and here). "[N]oting how little scholarship there is on student loans compared with say mortgages or credit cards," Adam Levitin has posted a preliminary review of six issues that he thinks can get a discussion rolling. Among other things, he addresses the cost of education, the relatively low interest rates on student loan debt (compared to other consumer debt), and the possibility of using equity (rather than debt) financing of education.

CFPB seeks information on how arbitration affects consumers

The Consumer Financial Protection Bureau (CFPB) today issued a Request for Information on Arbitration to gather information on how arbitration clauses affect consumers and how effective arbitration is in resolving consumers’ issues. The Request is an early step in assessing whether rules are needed to protect consumers. The comment period is open until June 23, 2012. 

Arnold Relman on a Single-Payer Health Care Program

Arnold Relman, former editor of the New England Journal of Medicine, penned this essay a few months ago in favor of a government-sponsored single-payer health care system. 

State Insurance Regulators Obtain Settlement With Met Life

Working together, state regulators can reform unlawful or unfair business practices. A coalition of state insurance regulators charged that the insurance company Met Life failed promptly to pay death benefits when its insureds died. As explained here, Met Life has now settled with the states -- including California, Florida, Pennsylvania, and Illinois -- in an agreement involving cash for the states and victims and reformation of the company's practices. The states' investigation centered around the company's failure to find beneficiaries. The settlement comes on the heels of similar settlements with Prudential and John Hancock. The total value of these settlements exceeds $1 billion.

Efforts Afoot to Subject Securities Law Class Actions to Individual Arbitration

Despite efforts in other industries to ban class actions through arbitration agreements, the securities industry historically has taken a different path. It generally demands that individual cases be arbitrated under pre-dispute arbitration agreements, but allows class actions to go forward in court. See, for instance, FINRA Code of Arbitration Procedure, sec. 12204. That policy is more important than ever because, when defendants demand it, class action bans laundered through pre-dispute arbitration clauses are likely to be enforced under the Supreme Court's decision in AT&T v. Concepcion.

But check out this article by law professor Hal Scott and lawyer Leslie Silverman urging that securities class actions should be governed by Concepcion. They begin by explaining that 

Last month, the Securities and Exchange Commission rejected attempts by the Carlyle Group, and proposals by stockholders of Pfizer and Gannett, to mandate arbitration rather than litigation in disputes between investors and management. The SEC gave no explanation for its action on Carlyle (related to an upcoming public offering), and it said opaquely the Pfizer and Gannett proposals might violate the securities laws.

But this issue isn't going to go away. Scott and Silverman argue that

[s]ecurities class actions undercut the competitiveness of the U.S. capital markets. Plaintiffs attorneys have demonstrated a clear tendency to target the largest public companies, and because insurance firms will not provide settlement coverage over a few hundred million dollars, public companies face substantial risk. Further, foreign corporations are reluctant to list and trade here, while private U.S. corporations have grown wary of going public.

If these arguments are not met on their merits securities class actions could become a thing of the past.

Social Security's Critical Role

Brad Plumer explains at the Washington Post that today "the trustees for Social Security and Medicare will release their reports on the state of finances for these two retirement programs. And there will be plenty of discussion on whether the programs are in crisis or blowing up the deficit or whatnot. But it’s worth taking a step back and looking at what they actually do."

For more than one quarter of all retirement-age Americans, Social security benefits provide 90% or more of income. Fully half of retired Americans get more than 50% of their income from Social Security, as the chart below shows:

 

 

 

 

 

 

 

 

 

 

And the Social Security program provides much more than retirement benefits. Among other things, it provides a safety net for disabled workers and insurance to children and adults when their breadwinning parents and spouses become disabled or die. Read the Center on Budget and Policy Priorities' "Top Ten Facts About Social Security" to learn more.

Complaints about discrimination in marketing and maintenance of foreclosed properties

An article in yesterday's Washington Post by business columnist Michelle Singletary reported on a series of complaints filed with the U.S. Department of Housing and Urban Development in which fair-housing organizations allege discrimination in the marketing and maintenance of foreclosed properties in minority neighborhoods. Examining more than 1,000 properties in 9 states, the organizations found that foreclosed properties in predominantly white areas were much better maintained than properties in predominantly African American or Latino neighborhoods.

Article on AT&T Mobility LLC v. Concepcion

There have been several articles on the effects of Concepcion. A recent article by Ann Marie Tracey & Shelley McGill in the Loyola of Los Angeles Law Review is called "Seeking a rational lawyer for Consumer Claims After the Supreme Court Disconnnects in AT&T Mobility v.Concepcion." Here is the abstract:

Since Congress first enacted the Federal Arbitration Act (FAA) in 1925, arbitration agreements have become ubiquitous in consumer contracts. Although Congress intended for the FAA to promote arbitration, Congress preserved the applicability of common law and equitable defenses, such as unconscionability, to arbitration agreements through section 2 of the FAA. The California Supreme Court in Discover Bank v. Superior Court established parameters for finding unconscionability in arbitration agreements, specifically with respect to waivers of collective redress. In AT&T Mobility LLC v. Concepcion, the U.S. Supreme Court, in a 5–4 decision, turned its back on consumers and section 2 of the FAA, holding that Congress intended to promote arbitration through the FAA. Therefore, the Court preempted any application of the Discover Bank rule to class action arbitration waivers.

This Article explores how the Court used faulty or inadequate analysis to reach its conclusion, failed to account for the importance of collective consumer redress in the modern era, and likely invalidated unconscionability as a defense to any arbitration agreement. Achieving its desired result of enforcing class arbitration waivers, the Court essentially eliminated one of the few methods, if not the only method, that consumers have to adjudicate legitimate claims that likely could not or would not be brought on an individual basis. This decision insulates companies from any meaningful liability that may result from poor practices or even fraudulent schemes. After Concepcion, only congressional action can balance the scales between the enforceability of arbitration agreements and the protection of consumers through equitable contract defenses. Congress must act now to clarify the intent and scope of the FAA; this Article offers several recommendations for such legislation.

The Tax Gap

The U.S. is running large budget deficits. One reason is that many people don't pay their taxes on time. Often, they don't pay at all. According to a recent report on what the IRS calls the "tax gap," in 2006, only 83% of all tax owed was paid on time. This unpaid tax results from people who don't report their taxes at all, those who don't report all of what they owe, and those who report what they owe but just don't pay it. The tax gap for 2006 was a stunning $450 billion, only $65 billion of which was ultimately recovered by the government. The IRS has produced this overview and a handy tax gap map.