Consumer Law & Policy Blog

Jeff Gelles Column on the Elizabeth Warren Appointment

Here.  An excerpt:

Warren can help for two big reasons, starting with the fact that, unlike most politicians who claim to be outsiders, she really is one. She's not wedded to Washington ways, or a prisoner of expectations that lobbyists rule and nothing can change.

In a conference call Friday, Warren stressed that she'd had Obama's full support in establishing the new agency - an idea she first proposed when he was a senator. And she said Obama's support didn't waver even as other presumed allies - such as Barney Frank, chair of the House Financial Services Committee - voiced doubts.

"Everyone told me a year and a half ago that this idea of getting a consumer agency was a pipe dream," Warren says. "I would like to underline that. Those were exactly Barney Frank's words."

The other big reason that Warren is a breath of fresh air - and I know this will disappoint my libertarian friends - is that she's the anti-Ayn Rand. Warren is a public intellectual of great talent and insight who understands that the real world doesn't operate like some libertarian fantasyland divided between virtuous "producers" and the rest of us ne'er-do-wells.

HuffPo: Dodd Says Congress Could "De-Fund" CFPB if President Appoints Warren

Here.  It seems improbable that Congress would enact a new law to take away the CFPB's funding if Elizabeth Warren ends up heading the CFPB, especially since such a law would require either presidential approval or a veto override, but that's what Senator Dodd said.

Is Elizabeth Warren About to be Nominated to Head the CFPB?

We apologize for our recent failure to exhibit our obsession -- see our 9 earlier posts on the topic! -- with whether Elizabeth Warren will head the new Consumer Financial Protection Bureau. But we are back in business! An article in today's Washington Post explains that Warren has just pulled out from teaching contracts this coming semester at Harvard Law School:

When fall classes began Wednesday at Harvard Law School, Elizabeth Warren was scheduled to be teaching contract law to first-year students. But something happened on the way to the chalkboard. "I'm writing to let you know that Professor Jerry Frug will be teaching your Contracts class this term instead of Professor Elizabeth Warren," law school dean Martha Minow wrote to students on Tuesday, according to an e-mail obtained by The Washington Post. "Professor Warren regrets that she will not be able to teach you this fall and we regret the last minute change."

To read the whole article go here.

Implications of the Dodd-Frank Wall Street Reform Act for Consumer Law Practice

The National Consumer Law Center has released an eight-page summary of the Dodd-Frank Act's implications for consumer law practice, covering changes to TILA and RESPA, foreclosure-prevention measures, and preemption, among other things.  Read it here.  NCLC is also presenting a webinar on the subject on September 15 at 2pm EST.

Is Mandatory Consumer Arbitration Dying?

U.S. PIRG's Consumer Blog reports on this story from Money Talk News suggesting that mandatory consumer arbitration is on its way out. It notes, for instance, that the recently-enacted federal financial reform legislation empowers the new Consumer Financial Protection Bureau to limit or ban mandatory arbitration in contracts for consumer financial products and services. The Money Talk News story caught my eye because of the example it used to illustrate why mandatory consumer arbitration is unfair:

Just last week Wells Fargo was ordered to pay $200 million in connection with this class action suit that accused it of deliberately rearranging customer checks and account debits to maximize overdraft charges. What Wells Fargo was doing – and many banks still are doing – is clearing big checks first, which may reduce a checking account to zero, then clearing the smaller checks and debit charges made on the same day. Here’s how that would maximize their  overdraft charges: Say you have $2,000 in your checking account. You use your debit card to make ten $10 purchases. Then you write a check to buy something that costs $2000. What should happen is the ten $10 purchases would clear, but the $2,000 check would bounce, resulting in a $30 bounced check fee. Common industry practice, however, is to re-order the debits: clear the $2,000 check first, leaving the account with a zero balance. Then bounce the ten $10 purchases, resulting in $300 of bounced check fees. Think that’s fair? It’s been going on for years. Would going to arbitration with Wells Fargo over $300 in fees have changed anything? No. Would hundreds of people banding together and costing Wells Fargo $200 million dollars change their behavior? Quite possibly. (In this specific case, however, not yet – Wells is appealing the judge’s ruling.)

by Deepak Gupta

Consumer credit agreements, tax forms, regulations: They're all crammed with gobbledygook, says Alan Siegel, and incomprehensibly long. He calls for a simple, sensible redesign -- and plain English -- to make legal paperwork intelligible to the rest of us. Siegel says the Consumer Financial Protection Bureau should "make clarity, transparency and simplicity a national priority."

Among other things, he's designed a model one-page credit card agreement and simplified letters for the IRS.

Washington Post Profiles Elizabeth Warren

by Deepak Gupta

In today's Washington Post, Brady Dennis has a mini-bio of Elizabeth Warren, from her childhood in Oklahoma, where she was raised by parents whose lives were still scarred by the Great Depression, to her earliest research on bankruptcy filings, through today. Warren declined to be interviewed for the piece, but her brother and daughter are both quoted; Dennis also dug up some interesting quotes from previous publications.

Yesterday, Warren had a meeting at the White House with David Axelrod and Valerie Jarrett to discuss with CFPB position, but as far as we know no decision has been made.

When Will the President Nominate the CFPB Director?

by Jeff Sovern

At the risk of being a nag, I'm wondering when the President will nominate the new director of the CFPB.  I have two fears.  First, if the nominee cannot be confirmed before the new Congress takes over, and, as some predict, Republicans make significant gains in the election, a filibuster will be more likely to block the nominee, which could both prevent the President's first choice from serving in this key position and lead to additional delays as a second nominee is selected.  Second, the longer it takes before the CFPB's head takes office, the longer it will be before the CFPB can get rolling.  Confirmation proceedings can take an extended period even in non-election years. The CFPB will have a lot of things to look at in its early days, including arbitration clauses and revised disclosures under the Truth in Lending Act, and the sooner it can do that, the better.   I have no idea how long vetting processes take, and it is a time when lots of people go on vacation, but I hope this is getting the attention it deserves. It's not as if there aren't good candidates.

Colbert Report Takes on CFPB, Elizabeth Warren, Mandatory Arbitration, and Barney Frank

Among other things, listen to Stephen read from the mandatory arbitration clause in his credit card agreement. Enjoy:

The Colbert Report	Mon - Thurs 11:30pm / 10:30c
Consumer Protection Agency - Barney Frank
www.colbertnation.com
Colbert Report Full Episodes 2010 Election Fox News

WSJ: Credit Card Companies Have "New Credit-Card Tricks"

 The Wall Street Journal explains here that after the new Credit Card Act became effective last February, credit card companies were barred from making profits in certain ways. For instance, the Act generally bans "universal default" -- that is, credit card companies cannot raise rates on one credit card account (or all of a consumer's other accounts) just because the consumer was late or missed a payment on another, separate account. 

So, the companies are turning to other ways to make money, some of which are perfectly legal, such as raising annual fees, and some that may "skirt[] the new rules." This raises the question whether the new Consumer Financial Protection Bureau established by the Dodd-Frank legislation will go beyond the Credit Card Act and seek to bar some credit card company practices as unfair and/or deceptive.