Consumer Law & Policy Blog

President Bush Signs Landmark Student Loan Legislation

The Washington Post reports here that President Bush just signed into law major student loan legislation - - the College Cost Reduction and Access Act.  As indicated in our earlier post, the major focus of public attention has been Congress's efforts to slash subsidies to lenders and police improper relationships between lenders and educational institutions.  But the thrust of the legislation is the substantial reduction of interest rates for low- and moderate-income borrowers and other features that will ease student borrowing.  As the Post puts it:  The legislation "will gradually reduce interest rates on federally subsidized loans for low-income students to 3.4 percent over five years. The law will also offer loan forgiveness for those who have held public service jobs for 10 years and will cap payments on federal loans at a certain percentage of a college graduate's income."  The legislation also expands the Pell Grant program aimed at poor students.  An earlier Post story provides more detail.  The text of the legislation is available here. 

DOT Inspector General Issues Report on On-Board Flight Delays

Remember last winter when thousands of air travelers were stranded for hours and hours on runways without adequate food and water and any idea when they would be allowed off the plane? An article in today's New York Times discusses a long-awaited Department of Transportation Inspector General report on the issue.  The report itself appears to be comprehensive and detailed on the facts and the problem, but short on specific solutions.  (For instance, the report urges the agency to set a time period after which airlines must allow passengers to get off a plane, but it does not state what the limit should be.)  We blogged earlier here and here about airline passenger "bill of rights" legislation pending in Congress.

House Hearing On Toy Import Safety

U.S. PIRG's Consumer Blog has this informative post on today's hearing before the Commerce, Trade, and Consumer Protection Subcommittee of the Energy and Commerce Committee of the U.S. House of Representatives.  It is apparently a multi-day hearing.  Here is the witness list for today (day 1).  Here is full committee Chair John Dingell's introductory statement.

District of Columbia Passes Payday Lending Bill

As you may have heard, a close vote on a procedural motion in the U.S. Senate today means that the residents of the nation's capitol may not get the right to vote any time soon. But not all of today's news about democracy in the District of Columbia today was bad. D.C.'s City Council has the power to enact local legislation and today it voted to pass the Payday Loan Consumer Protection Act, which will make payday lenders subject to the District's 24% interest rate cap. Although the bill had been the subject of some intense and questionable industry lobbying efforts that continued up until the last minute, the members of the Council voted overwhelmingly in favor of it. The only dissenting vote was cast by D.C.'s unpredictable former mayor, Marion Barry, who originally cosponsored the bill but then made a bizarre about-face for which he still hasn't provided a satisfactory explanation.

August Vehicle Recalls from NHTSA

The National Highway Traffic Safety Administration's August 2007 vehicle recalls are available here.

Times Reports on Mortgages, Regulation of the Toy Industry, Junk Mail, and More

Another weekend, another collection of articles on consumer law issues from the Times.  Today's issue contains the "About New York" column by Jim Dwyer, headlined "Fighting an Outbreak of Mortgages Too Good to Be True," about the Foreclosure Prevention Project at South Brooklyn Legal Services.  The column reports on an offer one client, Tilton Jack, received for a one percent mortgage.  An excerpt:

In fact, the rate was 1 percent — but for one day. On the second day, it increased to 8.13 percent. Now, it is 8.77 percent. But those jumps are not what is sending his mortgage into a financial death spiral.

Under the terms, Mr. Jack’s monthly payment is set as if the mortgage cost just 1 percent, even though it is much more. So the seemingly low rate is a trap: every month, the unpaid interest is being piled onto his principal. When it reaches 110 percent of the original loan, the payments will be adjusted to the full 8.77 percent — on the principal that has been swollen by the unpaid interest.

“The principal has been increasing ever since he got the loan, and his payments will go from $1,100 a month to over $3,000,” said Navid Vazire, a lawyer with the Foreclosure Prevention Project who is representing Mr. Jack.

If only lenders used their imaginations for something more constructive than end-runs around the TILA disclosure rules.

Yesterday's issue contained an article titled "Toy Makers Seek Standards for U.S. Safety" about calls by toy manufacturers for federal regulation.  The stated goal is to reassure consumers about safety.  This contrasts with an editorial in Thursday's paper titled "Consumers Left in the Cold" which criticized Mattel for thinking "that the nation’s threadbare consumer protections are still too stringent and should best be ignored."  The editorial noted that Mattel has been fined by the Consumer Product Safety Commission for failing to report hazards timely.  The editorial also castigated the Bush administration's treatment of the CPSC. 

Thursday's paper contained several interesting articles on consumer issues, including one titled, ""Democrats Prepare Bills to Tighten Loan Rules."  Among the proposals:  barring mortgage brokers from steering borrowers who could qualify for prime loans to more expensive subprime loan and bans on hidden brokerage fees (a.k.a. yield-spread premiums) and prepayment penalties.  Another article, headlined, "Panel Questions Financial Advisers for the Elderly,"  reported on a congressional hearing.  Finally, "For-Profit Crusade Against Junk Mail" describes organizations trying to cut down on junk mail, including efforts to create a "do not mail" list similar to the "do not call" list. 

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.

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.