Senate Banking Committee Votes to Confirm Cordray Nomination, 12-10

Here.  The action now moves to the floor where the 44 Republican Senators are expected to block confirmation unless something shifts.

Interesting Consumer Law Job

Hofstra University has announced an interesting clinical faculty position focused on consumer law that may be of interest to CL&P Blog readers.

Hofstra's announcement states:

Hofstra University School of Law, located in Hempstead, NY, is seeking to hire a Clinical Professor to teach and supervise a clinic that will focus on investor rights, consumer rights, or a related area. The Hofstra Law Clinic was established in 1973 and is a vibrant and integral part of the Law School. The Law School has 6 additional clinics, including Political Asylum, Community and Economic Development, Criminal Justice, Law Reform Advocacy, Child Advocacy, and Mediation.

The successful applicant will offer a vision for the future direction of an investor and/or consumer rights clinic that includes an integration of direct advocacy, law reform, community outreach, and public policy work in areas related to protecting the rights of low-income investors and/or consumers. The Clinical Professor will be responsible for all aspects of running the Clinic, including: course planning and teaching, client selection, supervision and mentoring of law students in representing clients, clinic administration, and community education and outreach. If so desired, the Clinical Professor can also teach non-clinical course offerings.

Hofstra’s Clinical Professors are subject to the following standards of review and promotion: an initial contract of two years, two additional two-year reappointments, followed by five-year long-term contracts, assuming all standards of review have been satisfied. Clinical Professors are
eligible to serve on all faculty governance committees, attend faculty meetings, and may vote on all matters except appointments, reappointments, and promotion. Our Clinical Faculty benefit from generous support for scholarship and pedagogical innovation, as well as being part of an active and engaged NYC-area clinical community. All Clinical Professors are warmly encouraged to participate in faculty workshops, conferences, and other aspects of academic life at the Law School, including the bi-monthly meetings of an energetic and supportive clinical faculty.

The Law School seeks an applicant with demonstrated experience in an area related to investor and/or consumer rights. Clinical teaching experience is highly desirable. New York bar membership or eligibility and willingness to seek admission on motion is required. Salary and title are commensurate with experience.

Hofstra University is an equal opportunity employer, committed to fostering diversity in its faculty, administrative staff and student body, and encourages applications from the entire spectrum of a diverse community.

Interested applicants may send via email only a cover letter, resume, writing sample, and references
to the attention of the secretary to the hiring committee, Ryan Duck, Ryan.Duck@Hofstra.edu. The deadline for submission is November 15, 2011.

(Hat tip to Norman Silber)

Banks Flout U.S. Rules for Foreclosure Prevention Program

Propublica has an excellent report today, based in part on audits obtained via freedom of information requests, detailing the failure of Treasury and Freddie Mac to enforce rules of its primary foreclosure prevention program, HAMP, against the major banks. 

Bank of America's Debit Card Fee

by Jeff Sovern

For those who haven't read enough about the Bank of America's monthly debit card fee (coverage here and here, for example), PBS broadcast a debate between the Los Angeles Times columnist David Lazarus and Consumer Bankers Association president Richard Hunt.  Here is some of what Hunt said:

[T]he banks would not have raised fees on any single customer if they didn't have to.

The fact of the matter is, Congress interjected itself through the Dick Durbin amendment that told us how much we could charge for a product. Now, I don't think McDonald's would appreciate if they were told how much they would charge for a hamburger or for a Coke. We don't want to do this. We have no choice to do this to stay in business.

* * *

The Durbin amendment only allowed us to recoup the cost for the actual transaction, not for development of the card, not for processing, not for marketing, not for the call center. That would be like McDonald's only being able to charge for disbursing the Coke, but not ordering the Coke or marketing the Coke.

It's hard to reconcile Hunt's claim that  banks "have no choice to do this to stay in business" with the fact that some banks have not imposed debit card fees.  But if BofA keeps its customers despite charging the fee, surely other banks will start charging such fees, because they can do so without losing customers (whether or not they have to).  And if BofA does lose enough customers that it rescinds the fees, it will be interesting to see if it is able to stay in business. 

Rick Perry and the Subprime Lending Industry

This AP story describes how Presidential candidate Rick Perry subsidized subprime mortgage lenders in his home state of Texas when he was governor to create jobs. As the introduction to the article explains, it did not work out too well:

As Texas governor, Rick Perry spent tens of millions in taxpayer money to lure some of the nation's leading mortgage companies to expand their business in his state, calling it a national model for creating jobs. But the plan backfired. Just as the largest banks began receiving public cash, they aggressively ramped up risky lending. Within four years, the banks were out of business and homeowners across Texas faced foreclosure. In the end, the state paid $35 million to subsidize it.

Senate Banking Committee Expected to Vote on Cordray Nomination Next Thursday

Here.  Reuters says Democrats "have the votes to move Cordray's nomination out of the committee to the Senate floor, but that will likely be as far as it gets for the foreseeable future. . . ."

Surprise, Surprise: Consumers Being Hit With New Debit-Card Fees

Beginning on October 1, a new Federal Reserve rule that drastically limits debit-card swipe fees will go into effect. (Read about the controversial rule here.) A swipe fee is what banks charge merchants each time a merchant swipes a consumer's debit card. Swipe fees have generated billions of dollars in revenue for banks. But with those fees cut, guess what the banks are going to do? They will charge fees directly to consumers. As this article explains, industry giant Bank of America is going to charge debit-card users $5 a month for the privilege of using the bank's card.

Federal Court Issues Preliminary Injunction Against Rule Limiting Credit Card Fees

The 2009 Credit  Card Accountability Responsibility and Disclosure Act (known as the Credit CARD Act) authorized the Federal Reserve to limit credit card fees in various ways including "in the first year during which the account is opened." The Federal Reserve was authorized to issue rules under the Act and initially adopted a rule limiting fees assessed during the first year of the account to 25% of the account's overall credit limit. The Fed later amended the rule to include fees charged before the opening of the account. Under the Dodd-Frank Act,the Consumer Financial Protection Bureau (CFPB) is responsible for enforcing the challenged rule.

Two affiliated banks sued the CFPB to enjoin enforcement of the amended rule on the ground that the Credit CARD Act does not authorize regulation of fees before a credit card account is opened. On September 23, the court granted the banks' motion for a preliminary injunction. In a lengthy opinion,the court held that the banks were likely to succeed on the merits and rejected the CFPB's claim that the rule represented the Fed's reasonable interpretation of the statute and was thus entitled to deference:

The Board did not reasonably define an ambiguous term within the statute to reach [the bank's pre-account] fee, which would have been within its power. Instead it arbitrarily chose to extend a definitive period of time established by Congress to reach a type of fee that is not charged to the account balance and not the sort of deceptive practice Congress meant to extinguish.

This decision may be the first addressing the validity of a rule enforced by the CFPB. No doubt there will be many more, as the banks try to extricate themselves from as many CFPB regs as possible. I wonder whether the CFPB will appeal.

The Health Care Insurance Mandate, the Supreme Court, and Presidential Politics

As the consitutionality of the Affordable Care Act's insurance mandate goes to the Supreme Court, I've read a number of things suggesting that the Obama Administration put politics aside in deciding not to seek en banc review in the Eleventh Circuit. The idea here is that by going straight to the Supreme Court, and not trying to slow down the litigation, the President risked losing his greatest legislative achievement right in the middle of the 2012 reelection campaign.

I don't doubt that, politics aside, the Solicitor General thought it made sense to go right to the Supreme Court. After all, the Eleventh Circuit was unlikely to rehear the case en banc. And, with cases attacking the mandate's constitutionality pending all over the country, and the issues fully developed among litigators, commentators, and judges, it's not plausible to argue that further percolation is needed in the lower courts. So, it seems right to me that, in seeking Supreme Court review, the Solicitor General was acting on general principles, not politics.

But I don't get the assumption that having the issue before the Supreme Court during the campaign, with a decision coming in June 2012, would be a political liability for the President. If, as Reagan Administration Solicitor General Charles Fried believes [go here as well], the case for the mandate's constitutionality is a slam dunk, the President is taking no risk that he will suffer a major political loss in the middle of the campaign. On the other hand, if the Supreme Court were to rule against the mandate's constitutionality, the President might generate significant support for his views on health care reform (and for his campaign) by emphaszing that the Court's conservative, Republican-appointed wing had thwarted the will of the majority. (That's what the President attempted unsuccessfully with the Citizens United decision.)

To be sure, running against a Supreme Court decision throwing out the mandate would turn off some voters (although many of them would never vote for the President anyway). But it's not as if President Obama can run a reelection campaign without trumpeting his signature legislative achievement. On the contrary, he'll need to give his health care reform law a full-throated defense, stressing not only its importance to the public health but its relationship to the country's longterm economic well-being. Linking those themes to one that bashes an "activist" conservative Supreme Court majority might resonate with undecided voters while activitating the Democratic base. So, on balance, it strikes me that having the issue before the Supreme Court in 2012 is a political plus.

Petitions on Constitutionality of Health Care Mandate Arrive at the Supreme Court

The Solicitor General has filed this petition asking the U.S. Supreme Court to review the Eleventh Circuit's ruling that passage of the Affordable Care Act's insurance mandate exceeded Congress's power under the Commerce Clause. The SG's petition also suggests that the Court grant review on a second question not addressed in the Eleventh Circuit's ruling: whether the federal district court lacked jurisdiction over the case because it could not order relief under the Tax (anti-)Injunction Act, 26 U.S.C. 7421(a). The government originally raised that defense in the district court and lost on it, and the government did not raise the point on appeal. The SG now says that section 7421(a) does not bar the suit, but thinks the Court should grant review on that issue and appoint an amicus to make the argument that the government has now abandoned.

Also today, 26 states on the other side of the case filed this petition seeking review of portions of the Eleventh Circuit's ruling that are unfavorable to them, including the Eleventh Circuit's holding that the (assertedly unconstitutional) provision imposing the mandate is severable from the rest of the Affordable Care Act.