Yet Another Mattel Lead-Paint Recall: This Time It's Barbie Accessories

According to this Washington Post story, Mattel is instituting a major recall for the third time this summer, again because its toys are tainted with lead-based paint.  The recall involves more than 770,000 toys, 675,000 of which are Barbie accessories, including Barbie Dream Puppy House, in which lead paint was found on the dog.  This BBC story discusses recall of the same products in the UK.

Study Finds More Mortgage Originations When A Bank is Located in a Low- to Moderate- Income Neighborhood

O. Emre Ergungor, an economist for the Fed, reports in his paper, "Bank Branch Presence and Access to Credit in Low-to-Moderate Income Neighborhoods" on some effects of locating bank branches in low-to-moderate income neighborhood.  Here's the abstract: 

Banks specialize in lending to informationally opaque borrowers by collecting soft information about them. Some researchers claim that this process requires a physical presence in the market to lower information collection costs. I provide evidence in support of this argument in the mortgage market for low-income borrowers. Mortgage originations increase and interest spreads decline when there is a bank branch located in a low-to-moderate income neighborhood.

The paper can be downloaded at http://ssrn.com/abstract=951197.

Frightening Times Story on Consumer Product Safety Commission

The Times ran a devastating story about the Consumer Product Safety Commission in yesterday's paper. It opens with an account of how John Gibson Mullan, a former lawyer for the All Terrain Vehicle industry who was serving as the CPSC's director of compliance, argued against banning sales of adult-sized ATV's to children under the age of sixteen.  An excerpt:

Robin L. Ingle, then the agency’s hazard statistician and A.T.V. injury expert, was dumbfounded. Her months of research did not support Mr. Mullan’s analysis. Yet she would not get to offer a rebuttal.

“He had hijacked the presentation,” Ms. Ingle said in an interview. “He was distorting the numbers in order to benefit industry and defeat the petition. It was almost like he still worked for them, not us.”

* * *

Top officials at the Consumer Product Safety Commission say they have enhanced protections for the American public in recent years. But they have also blocked enforcement actions, weakened industry oversight rules and promoted voluntary compliance over safety mandates, according to interviews with current and former senior agency officials and consumer groups and a review of commission documents.

The full article, which is definitely worth reading, can be found here.

More on Dangerous Toys

This interesting post over at U.S. PIRG's consumer blog regarding dangerous imported toys concerns actions (and inactions) of European regulators to deal with the problem and Mattel's continuing efforts to place blame on others.

CPSC Recalls for August 2007

Consumer Product Safety Commission recalls and product safety news for August are posted here.  Included here are some of lead-paint toy recalls.

Some U.S. Toy Manufacturers Send Dangerous Products Overseas

What do some U.S. companies do with their products that do not meet U.S. safety standards issued by the Consumer Product Safety Commission?  According to this Washington Post article, they simply send those products -- including toys and pacifiers -- overseas.  And, apparently, the CPSC is powerless to stop them.

Avoiding Foreclosure

Check out this article for publication in tomorrow's Washington Post on avoiding foreclosure.  The on-line version's teaser says: "There are plenty of ways to avoid foreclosure: Refinancing, persuading the lender to modify the terms of the loan, selling the house or filing for bankruptcy protection, to name some. But there are also plenty of pitfalls."  CL&P blogger Ira Rheingold, Executive Director of the National Association of Consumer Advocates, is quoted extensively in the article.

Is Enforcement of Credit Card Late Fees Unconstitutional?

Seana Shiffrin of UCLA discusses the constitutionality of the enforcement of credit card late fees in her article "Are Credit Card Late Fees Unconstitutional? 15 William & Mary Bill of Rights Journal 1 (2006).  Here's the abstract:

State Farm Mutual Automobile Insurance Co. v. Campbell articulated serious and specific constitutional constraints upon the imposition of punitive damages. Justice Kennedy's majority opinion announced that, apart from exceptional cases, punitive damages should not exceed nine times the amount of the actual losses sustained by the plaintiff and should usually be far lower. Indeed, the opinion observed, they typically should be much lower, citing double, treble, and quadruple multipliers as instructive examples. Some commentators have worried that the decision could adversely affect consumer interests by offering insulation for tortuous behavior that is difficult to detect or litigate. This Article will explore, however, the decision's unheralded ramifications for contract law, ones that may serve consumer interests.

The constitutional standards articulated in State Farm call into question the constitutionality of those statutes and regulations that authorize credit card issuers to charge legally enforceable late penalties but place no significant limitations on their size. Analyzed through the lens of traditional contract law, these penalties are punitive damages for breach that, as such, would typically be invalidated but for positive legislative efforts to override this traditional treatment. Through federal and state statutes and regulations, credit card companies have gained government authorization to levy enforceable penalties that far exceed what the guidelines identified in State Farm permit. To be precise, disproportionately high credit card late fees themselves are not unconstitutional, but State Farm calls into constitutional question their legal enforcement. It also calls into constitutional question the federal and state statutes that authorize and facilitate the imposition of these high late fees, which override both consumer protection statutes to the contrary and traditional contract doctrines that entirely disallow punitive damages.

You can find the article at http://ssrn.com/abstract=961030.

Mortgage Meltdown Web Page

The National State Attorneys General Program at Columbia Law School has assembled a web page of links pertaining to the subprime mortgage meltdown. Given the focus of the Program, the page focuses particularly on actions taken by state attorneys general. 

Research into the Payoff Disclosures for Open End Credit Under the 2005 Amendments to TILA

Thomas A. Durkin of the Fed has a Working Paper available here titled "Requirements and Prospects for a New Time to Payoff Disclosure for Open End Credit Under Truth in Lending." Here's the abstract:

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (Public Law 109-8, April 2005) made significant changes to procedures for managing consumer bankruptcy petitions, but it also included amendments to the Truth in Lending Act. Notable among the Truth in Lending changes is a section providing for new disclosures on the length of time it will take consumers to repay open end credit accounts in full if they make only the minimum required payments. This paper explores the range of assumptions necessary for the calculations underlying the new required disclosures, examines the sensitivity of the disclosures to variations in the assumptions, and explores the potential for inaccuracy in the required disclosures based upon consumers' use of their open end credit accounts. For the latter exploration, the paper examines consumer survey evidence and employs a large longitudinal sample of credit card accounts to measure how often consumers' actual patterns of use of their credit card accounts match the assumptions of the new disclosure.