President Trump Issues Anti-Consumer Executive Orders
Among his first actions in office, President Trump issued an executive order in early February that seeks to curtail the promulgation of regulations by requiring that, for every new regulation promulgated, two must be eliminated, and by requiring that the cost of all new regulations finalized this year must be zero. CFA issued a press statement condemning the order as “irrational and arbitrary.”
“Creating an arbitrary one-in-two-out rule utterly disregards the substance and purpose for existing regulatory protections and the benefits they can provide to consumers,” said CFA Legislative Director Rachel Weintraub. “Moreover, requiring costs for new regulations to be zero means that, no matter how significant the benefits to consumers and society, costs to industry will always carry the day. Our nation deserves a rigorous and deliberative rulemaking process, not one that is based on arbitrary gimmicks that refuse to acknowledge why these rules exist at all.”
The order was also criticized by the Safe Food Coalition, which said it would “increase the risk that Americans will get sick from eating contaminated food.” CFA Director of Food Policy Thomas Gremillion warned, “For FDA, the executive order means that the agency will have to choose between regulations that ensure our drugs are effective against disease, medical devices aren’t quack instruments, and food is safe for our children to eat any time it wants to issue a new regulation. This is mindless ideology trumping public health, and it will only enrich the worst companies in the food industry at the expense of American families who will find themselves at increased risk of exposure to contaminated food.”
A separate executive order seeks to put new protections for retirement savers on hold while the Department of Labor (DOL) conducts a new review of the conflict of interest rule. The DOL rule requires all financial professionals to act in their customers’ best interests when they are paid to provide retirement investment advice. CFA joined with Americans for Financial Reform, AFL-CIO, AFSCME, Better Markets and Pension Rights Center to issue a press statement opposing the order.
“Rolling back conflict of interest protections for retirement savings will take tens of billions of dollars a year out of the pockets of hard-working Americans in order to enrich powerful Wall Street interests,” said CFA Director of Investor Protection Barbara Roper. “If the Department of Labor follows through on this threat and delays and repeals the rule, brokers and insurance agents will be free to go back to putting their own financial interests ahead of the interests of their clients, recommending investments that are profitable for the firm but not the customer. And they will be permitted to do all this while claiming to act as trusted advisers.”
On the same day, the President issued a separate executive order directing the Secretary of Treasury to review existing financial regulations in light of the Administration’s core principles and identify any that conflict with those principles. CFA Senior Fellow Rohit Chopra said in a press statement that this review is designed to “start the process of weakening new protections that protect consumers from fraud and abuse.” He warned, “Less than a decade ago, Wall Street and our economy were in freefall. Toxic mortgages peddled illegally helped to cause the most severe financial crisis since the Great Depression. Today’s actions by the White House are an ominous sign that amnesia has set in.”
Politicians Propose Elimination of Financial Watchdog Lauded by Military Leaders
Even as military leaders testified earlier this month about the important work of the Consumer Financial Protection Bureau (CFPB) to protect and educate military families and consumers, members of the Senate Armed Services Committee proposed cutting off funding and eliminating the agency altogether.
A proposal from Sen. Ted Cruz (R-TX) would shut down the new consumer agency and the military protection office. A separate proposal from Sen. Mike Rounds (R-SD) would cut off the agency’s funding and divert the agency’s Civil Penalty Fund which funds restitution for victims and financial coaching for veterans.
They have proposed these actions despite the agency’s record of success of the CFPB and its dedicated military protection office. Under the direction of the office’s first director Holly Petraeus, the agency secured $120 million in refunds, handled 70,000 complaints, and provided financial education at 145 military facilities to servicemembers, veterans, and their families.
CFA Senior Fellow Rohit Chopra submitted testimony to the Senate panel on behalf of CFA, the National Military Family Association, and other public interest groups to support the vigorous enforcement of laws combatting financial fraud that specifically target the military community. The statement detailed recent law enforcement actions to address misconduct by financial institutions that harmed military families.
“Losing a security clearance due to financial distress is a leading cause of involuntary military separations,” Chopra stated. “Military leaders agree that the consumer agency’s work on military financial readiness is playing a key role in overall force readiness. Proposals to shut down the consumer agency and its military office should have only one home: the dumpster,” he added.
Studies Find that Auto Insurance Rates Rise After Not-At-Fault Accidents and that Premiums are Unaffordable for Millions
Safe drivers who are in accidents caused by others often see auto insurance rate hikes, according to research released earlier this month by CFA. The research analyzed premium quotes in 10 cities from five of the nation’s largest auto insurers. Among the cities tested, drivers in New York City and Baltimore pay out the most for an accident where the driver did doing nothing wrong, and customers in Chicago and Kansas City also face average increases of 10 percent or more when another driver crashes into them.
“Innocent drivers who don’t cause accidents should not be charged more because someone else hit them,” said CFA Director of Insurance J. Robert Hunter. “Most people know that if they cause an accident or get a ticket they could face a premium increase, but they don’t expect to be punished if a reckless driver careens into them.”
CFA called on lawmakers around the country to prohibit such penalties on innocent drivers. “Penalizing safe drivers hit by another car is not only very unfair; it also discourages them from filing legitimate claims,” Hunter said. “Lawmakers and regulators need to protect consumers from being punished when they’ve done nothing more than use the policy they have already paid for.”
Meanwhile, a report released last month by the U.S. Treasury Department’s Federal Insurance Office (FIO), “Study on the Affordability of Personal Automobile Insurance,” finds that low- and moderate-income Americans face severe problems affording auto insurance coverage required to be purchased by all states except New Hampshire. FIO found that car insurance is generally unaffordable in 845 traditionally underserved ZIP codes across the United States.
“In every state but New Hampshire, American drivers are required to buy auto insurance, but there had never been a comprehensive study as to whether or not insurance prices are even affordable for lower- and moderate-income Americans until now,” Hunter said in a press statement praising the FIO study. “The government can’t force people to buy products in the private marketplace but pay no attention to whether the prices are sufficiently affordable that people can comply with these laws. That’s why this report is so important and needs to be updated annually.”
“Now that the Federal Insurance Office has taken the lead, state insurance regulators need to follow suit,” said Hunter. “They have a duty to do so because the states require all drivers to purchase the liability coverage as a condition of driving a car and then punish people with fines, registration suspension and even jail time for not maintaining coverage.”
Auto Makers Seek to Reduce Fuel Efficiency
Auto makers wrote to President Trump in February seeking to overturn a decision by the previous Administration to stay the course on fuel-efficiency standards for new cars and trucks. In their letter, auto makers misrepresent the “highly vetted decision,” said CFA Public Affairs Director Jack Gillis in a press statement.
“These standards protect struggling Americans who would benefit most by spending less at the pump,” Gillis said, noting that it is inevitable that gas prices will go up again. “It’s in everyone’s best interest to stay the course on vehicle fuel efficiency. In fact, all car buyers want more fuel efficient vehicles, as evidenced last year by consumers buying record numbers of the most fuel-efficient new cars ever offered.”
“Staying the course with achievable fuel-economy standards not only puts money back into consumer pocketbooks but it will ensure that U.S. car companies stay competitive,” he added. “We’ve already bailed out the car companies once, when they were saddled with millions of unsold, inefficient vehicles. We don’t want to have to do that again. These consumer protections against volatile gas prices are fair, effective and respect both consumer choice and the vastly different types of vehicles automakers offer.”
ATV Child Deaths, Injuries Rose in 2015
Estimated child deaths and serious injuries caused by all-terrain vehicles (ATV) increased slightly in 2015, according to data released in January by the Consumer Product Safety Commission (CPSC). At least 58 children lost their lives, though this data collection is not considered complete, and 26,700 were injured seriously enough to require treatment in a hospital emergency department.
“Thousands of families every year suffer as a result of ATV deaths and serious injuries. ATVs are one of the most dangerous products CPSC regulates, causing more deaths and injuries than almost any other product under CPSC’s jurisdiction,” stated CFA Legislative Director Rachel Weintraub. “Data indicates that injuries and deaths from ATVs have increased and much more must be done to prevent these serious and sometimes life altering incidents.”
In 2002, consumer groups filed a petition with the CPSC calling for the CPSC to ban the sale of adult-size ATVs for use by children. While the agency under the leadership of Chairman Hal Stratton denied the petition, the CPSC began a rulemaking process to create new ATV safety standards. On August 12, 2011, Congress passed H.R. 2715 which amended the CPSIA and which directed the CPSC to complete the ATV rulemaking within a year of enactment. The rule has not yet been completed.
In March 2014, CFA released a report, “ATVs on Roadways: A Safety Crisis” documenting the growing trend of states permitting ATV use on roads, a practice that contradicts recommendations from the CPSC, public health, consumer and ATV industry groups. CFA updated this report in 2015 and found that ROVs are permitted wherever ATVs are permitted. “CPSC’s data in the Annual Report of ATV-Related Deaths and Injuries is a critical source of information for those working to decrease ATV deaths and injuries,” stated Weintraub. “We urge CPSC to include information about ATV deaths and injuries taking place on and off road.”