More on Proposals to Gut the CFPB

by Deepak Gupta

As discussed in my previous post, the House Financial Services Committee is holding hearings this morning on GOP proposals to turn the CFPB into a five-member commission and strengthen FSOC veto power, among other things. A staff memo describes the four GOP bills from the sponsors' perspective.

The committee's website now includes the written testimony, including pro-Bureau statements by Adam Levitin of Georgetown Law and Hilary Shelton of the NAACP. The Chamber of Chamber asserts, with a straight face, that it wants to avoid regulatory capture.  If you want an accurate overview of what's really going on here, read Levitin's testimony first.

Bloomberg News reports that Sen. Tim Johnson (D-SD), Chairman of the Senate Banking Committee, has come out strongly against the four GOP proposals under consideration, which suggests the proposals have little hope of making it through the Senate. “This issue was already considered during the thorough Wall Street reform debate we had last year," said Johnson in an email, "and agreement was reached that consumers would be protected best with a director in place at the CFPB.

House Committee Takes Up Legislation to Weaken the CFPB

by Deepak Gupta

The House Financial Services Committee is holding a hearing at 10am tomorrow, April 6, on "Legislative Proposals to Improve [Read: Weaken] the Structure of the CFPB."  The Committee will consider four GOP proposals to weaken the Consumer Financial Protection Bureau's effectiveness in both the short and long term -- even before the agency is officially launched.  Each of the four proposals seeks to relitigate issues that were resolved with the enactment of the Dodd-Frank Act last year:

H.R. 1121: "The Responsible Consumer Financial Protection Regulations Act of 2011." This bill, introduced by Chairman Spencer Bachus, would replace the Director of the CFPB with a five-member Commission.

H.R. 1315: "The Consumer Financial Protection Safety and Soundness Act." This bill, introduced by Rep. Duffy, would beef up the Financial Stability Oversight Council's already unprecedented power to veto regulations issued by the CFPB.  It would change the vote required for the FSOC to set aside CFPB regulations from two-thirds to a simple majority. It would make clear that the FSOC must set aside any regulation that puts the safety and soundness of the banking system at risk. And it would eliminate the time limits established for the FSOC's decision about whether to veto a regulation.

H.R. __ and H.R. ___: Legislation Affecting CFPB's Authorites Prior to the Appointment of a Director. These bills, introduced by Rep. Capito, would (1) remove the prudential regulators' ability to allow the CFPB to participate in examinations of large financial institutions before the designated transfer date and (2) make the date for transferring regulatory authority dependent on whether the CFPB's Director has been confirmed by the Senate.

Tomorrow's hearing will include testimony from representatives of five financial services trade groups -- the American Bankers Association, the Consumer Bankers Association, the Credit Union National Association, the Independent Community Bankers of America and the National Association of Federal Credit Unions - along with input from Jess Sharp, executive director of the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness. As far as I can tell, nobody from the CFPB is slated to appear.

For more, see this article in The Hill. You can watch a live webcast of the hearing here.

The Randy Rabbi Returns

by Paul Alan Levy

Nearly five years after he withdrew subpoenas to Google seeking to identify four anonymous bloggers who commented on his expulsion from a rabbinical council and his dismissal from his synagogue over allegations that he had abused his religious authority to have sexual relations with congregants, Orthodox rabbi Mordechai Tendler has issued a new subpoena to Google demanding identification of the same bloggers (plus one more).   Invoking the First Amendment’s protection for the right to speak anonymously and the many court decisions holding that compelled identification is impermissible without compelling reasons, the bloggers have moved to quash the subpoena. 

In the 2006 proceedings, Tendler contended that he needed to know who the bloggers were so that he could sue them for defamation over such posts as this and this.  After Public Citizen and EFF teamed up to seek to have his subpoena proceeding treated as a SLAPP suit, Tendler withdrew those subpoenas, but the California trial court still awarded attorney fees against Tendler for forcing the bloggers to defend themselves.  This award was overturned on appeal, because the court held that a subpoena proceeding in support of a lawsuit in a different state is not a "cause of action" subject to the anti-SLAPP statute.  Tendler then issued a press release proclaiming that he was free to reinstitute the subpoenas to pursue his defamation claims.   

Norm Silber on Whether Consumer Credit Agreements Should be Required to Have Force Majeure Provisions

Norman I. Silber of Hofstra has written Debts, Disasters, and Delinquencies: The Case for a Mandatory Force Majeure Provision in Consumer Credit Agreements. 34 N.Y.U. Rev.L. & Social Change 1 (2010). Here's the abstract:

This article addresses inequities in the apportionment of losses that arise when traditional rules of consumer finance are applied to enforce payment obligations that accrue during and after catastrophes. Disasters lead inevitably to job losses, property destruction, inhibited access to homes and workplaces, and problems with debt repayment. In the wake of such devastation, fees and interest charges mount, and payment defaults increase. The author argues that hardships and social distress can be mitigated, and losses more equitably allocated, by mandating the inclusion of a force majeure provision in consumer agreements.

Gail Hillebrand of Consumers Union Joins CFPB

Story here.  Another excellent hire.  (HT: Ted Mermin)

GOP Statement on Consumer Protection

by Jeff Sovern

The Republican National Committee released a white paper today that included this comment on consumer protection:

Republicans believe that markets make for efficient economies.  But we also acknowledge that in rare circumstances, as demonstrated by the 2008 economic crisis, some regulation is needed so that markets function appropriately.  In that light, we support appropriate consumer protection laws.  We are prepared to work with our colleagues across the aisle in a bipartisan way that does not seek to score political points at the expense of good law-making to insure that the nation’s consumer protection laws serve both consumers and industry.  Our goal must be to enable consumers to have the information they need to make wise decisions about their purchases.

April Fool!  But wouldn’t it be nice?

Consumer Protection Matters: Highway Traffic Deaths at Lowest Level in More Than 60 Years

A combination of safety factors -- safer vehicles (prompted by government rules), more seat belt use (prompted by government rules, increased enforcement, and public education), and less drunk driving (prompted by government rules, increased enforcement, and an all-out public awareness campaign) -- have come together to bring the number of highway traffic deaths, in absolute numbers, to their lowest level since 1949. That's astounding given the immense increases over the period in the number of drivers and miles driven and the increased speeds at which people drive. A triumph of government regulation that is hard to overstate. Here is the National Highway Traffic Safety Administration's press release, which links to various reports and data.

Texas considers exempting real estate brokers from its consumer protection statute

by Richard Alderman

For most consumers, their home is the most expensive purchase they will make. It is also is the transaction with the greatest potential for problems.  A consumer who is mislead or deceived with respect to the purchase of a home is likely to suffer substantial economic harm. It is a good thing that in Texas, real estate brokers, agents and salespersons are subject to the Texas Deceptive Trade Practices Act [DTPA]. The DTPA imposes liability for such wrongful conduct, allows recovery of economic damages, damages for mental anguish, and possible punitive damages, and mandates attorney’s fees to a prevailing consumer. At least this is the law today.

The Texas Legislature currently is giving serious consideration to a bill to exempt real estate brokers, agents and salespersons from liability under the DTPA. Why?  Because they are sued too much. Apparently, the fact that consumers successfully use the DTPA against false, deceptive and misleading conduct in connection with the single largest purchase they make requires we no longer apply that law.  What’s good for business is good for Texas. 

Will the Fourth Circuit Live Up to Its Own Standards on Access to Judicial Records?

by Paul Alan Levy

I have discussed in the past our efforts in the Fourth Circuit to force both Rosetta Stone and Google to open up the factual discussions in their briefs about whether Google’s keyword advertising practices run afoul of the trademark laws, as well as the supporting evidence they supplied in the Joint Appendix.  These efforts have borne fruit, as both parties agreed to unseal their entire appellate briefs; Rosetta Stone agreed to allow all of the Joint Appendix material that it had originally stamped “confidential” during the discovery process to be filed publicly.  Google, for its part, agreed to the unsealing of most of its previously confidential material.  The very process of having to justify sealing forced both sides to acknowledge that too much confidentiality had prevailed in the appeal to date.

Still, Google insisted on keeping roughly 800 pages under seal.  We argued to the Fourth Circuit that Google’s submissions in support of continued sealing were far too conclusory and that no admissible evidence of the need for secrecy had been provided.

Perhaps even more maddening than Google’s position on these motions was the Fourth Circuit’s ruling which said without any further explanation:

    "[T]he court grants the motion to unseal only with respect to those documents that appellee has agreed in its response to unseal, and denies the motion to unseal as to those documents that appellee seeks to have remain under seal."
 

More on Finding Out What Others Know About Us

Here's my letter in today's Times, following up on Saturday's post (I'm happy it mentions the blog):

Re “It’s Tracking Your Every Move, and You May Not Even Know” (front page, March 26): You report that cellphone companies seldom disclose what information they collect about consumers. In fact, cellphone companies are not unique in that respect.

Your credit card company, landline phone company, grocery store (where you may have a discount card that enables the store to collect information about your purchases), Internet service provider and many other businesses may all have information about you.

Are you aware, except in general ways, of what they know about you?

Because Congress forced credit bureaus to make such information available to consumers, we can learn what credit reporting agencies have in their records about us. Unless legislators take similar steps concerning other businesses, we are unlikely to discover the contents of their files on us.

JEFF SOVERN
Jamaica, Queens, March 26, 2011

The writer is a professor at St. John’s University School of Law and co-coordinator of the Consumer Law and Policy Blog.