CFA News Update - August 5, 2010
With only a week remaining before Congress adjourns for its August recess, advocates continue to push for a Senate vote on S. 510, the FDA Modernization Act. The bipartisan bill has been stalled in the Senate for months. In July, President Obama joined those calling on the Senate to act quickly. In a press statement praising the President for his leadership, Christopher Waldrop, Director of CFA’s Food Policy Institute, noted that the bill has strong support on both sides of the aisle. “The President has urged action. The House has already acted. The American people overwhelmingly support a strong new food safety law that will reduce foodborne illness,” he said. “There is no excuse for further delay. Senate leaders should get on board and schedule a vote on the bill this week.”
Food Safety Groups Seek Funding Increase for FDA
Food safety advocates wrote to Health and Human Services Secretary Kathleen Sebelius in July urging her to make funding for the FDA a priority as she develops the administration’s proposed budget for fiscal year 2012 and to provide the agency with a 20 percent increase over 2011 funding levels. “Our groups are particularly concerned about ensuring that the FDA is provided sufficient resources to address longstanding deficiencies in the agency's food safety programs and to bolster its capacities to prevent and rapidly respond to deadly foodborne illness outbreaks,” the groups wrote.
“The need is critical, especially as Congress considers new food safety legislation that would provide the FDA with important new authorities and responsibilities,” they added. “Today’s FDA faces severe resource constraints due to years of chronic underfunding and an exponential increase in the agency’s public health responsibilities. Without significant resource infusions, the FDA will be unable to effectively carry out the new food safety responsibilities envisioned in the legislation and adequately protect the public health.”
A copy of the letter from CFA, the Center for Foodborne Illness Research & Prevention, the Center for Science in the Public Interest, Consumers Union, Food & Water Watch, National Consumers League, the Pew Charitable Trusts, and Safe Tables Our Priority is available here.
Comment Letters Filed on Food Safety, Nutrition Issues
Meanwhile, CFA filed comments on several food safety and nutrition issues in July. CFA filed comments with the U.S. Department of Agriculture’s Food Safety and Inspection Service regarding new performance standards for Salmonella and Campylobacter in young chicken and turkey slaughter establishments. CFA praised the standards as “a welcome step towards reducing the impact of these pathogens on human health” but suggested changes both to improve the standard and to strengthen the agency’s hand in enforcing such standards.
In addition, CFA filed a comment letter with USDA’s Center for Nutrition Policy and Promotion on the section of the Dietary Guidelines related to foodborne illness. CFA criticized the guidelines for focusing exclusively on “the role of consumers in preventing foodborne illness without the appropriate emphasis on the role of the food industry and government in preventing contamination from occurring.” CFA also joined with National Consumers League to file a comment letter with the same department urging modifications to the guideline on alcohol, in particular to promote better understanding of the meaning of the term, “standard drink.”
The Federal Trade Commission issued new rules last week to curb abuses by debt relief services. The new rules require debt relief services to provide improved disclosures and prohibit them from misrepresenting the savings that consumers can expect or other aspects of the services. Most importantly, however, they prohibit debt relief services from charging a fee before they have actually settled or reduced a consumer’s debt. “This is a crucial element of the rules,” stated CFA Director of Consumer Protection Susan Grant in a press statement issued last Thursday applauding the agency’s action. “Desperate consumers scrape up their last dimes to pay the fees for these services, but too often they never get the debt relief they were promised.” The new rules “will change the business model of the debt relief industry from one that has been based on taking consumers’ money regardless of whether they ever get the promised results to one in which companies will earn money based on actually achieving successful results for consumers.”
Economy Squeezing Consumers and Complaint Agencies, Survey Shows
Credit and debt were among the leading sources of consumer complaints in 2009, and the fastest growing complaints were related to bogus offers to help consumers save their homes from foreclosure, according to a survey of state and local consumer complaint agencies conducted by CFA, the National Association of Consumer Agency Administrators, and the North American Consumer Protection Investigators. The survey, released last week, found that the nation’s economic woes have hit both consumers and consumer agencies hard. While the number of complaints received was up at a majority of the agencies, many saw their resources shrink.
“Consumers who are desperately trying to fend off collection agencies or save their homes from foreclosure are prey to scammers who offer to help them and then take their money and run,” stated Grant in a press release on the new complaint survey. “Despite layoffs, hiring freezes, and furloughs, state and local consumer agencies are making herculean efforts to keep up with these and other complaints.” In addition to the report, the groups also released consumer tips on how to avoid scams and rip-offs.
Free Consumer Complaint Websites Serve Useful Purpose
A report released by CFA in June found that, while the most popular free consumer complaint websites do not help consumers resolve their grievances, they can give complainants the satisfaction of communicating their unsatisfactory experiences to many other consumers, to the companies themselves, and to various third parties, including consumer protection agencies and the press. Moreover, these websites provide useful information to shoppers about potential problems they might experience purchasing products and services, especially those offered by nationwide companies. “The complaint websites provide a unique opportunity for consumers both to make their complaints heard and to learn about frequent problems experienced by other consumers,” stated CFA Executive Director Stephen Brobeck, the report’s author, in a press release on the study. “We commend those who have created and maintain these websites.”
With the financial regulatory reform bill finally signed into law, the administration is devoting increased attention to determining the future federal role in supporting the housing finance system. The Department of Housing and Urban Development and the Treasury Department have solicited public input on pending housing finance issues with an eye toward developing options for the housing finance system by early 2011.
“The housing GSEs have provided critical liquidity, stability and access to safe and affordable credit in the mortgage markets since the New Deal,” said Barry Zigas, CFA Director of Housing Policy. “Preserving long-term, fixed-rate and affordable mortgages is a critical goal of any new system, and assuring that community banks, credit unions, and other smaller institutions can benefit from federal support of the system also is a major objective.”
Zigas filed a comment letter with the agencies in July in which he outlined several main objectives of any national housing finance system:
- The constant availability of affordable, fixed-rate loans or of liquidity in the market for such mortgages;
- Access to financing by consumers and by lenders of all sizes and locations; and
- Stability through uniform underwriting and mortgage lending processes that lower costs to consumers.
Continued access to long-term, fixed-rate financing without prepayment penalties remains an important part of fulfilling Congress’s commitment in the 1949 Housing Act to ensuring all Americans have access to a decent home in a suitable living environment, the letter noted. It stressed that federal support in some form will be necessary to sustain such mortgages, but called on any new structure to rely on explicit guarantees that are fully paid for, rather than the former system of so-called “implicit” guarantees.
It urged that any new system regulate all issuers of securities backed by mortgages in order to prevent another race to the bottom in underwriting standards like the one that sparked the current mortgage crisis. And it stressed that any beneficiary of federal support should also be required to provide funding access to lenders of all sizes, including those not affiliated with that entity.
FHFA Proposes to Define GSE ‘Duty to Serve’
Implementing provisions in 2008 legislation that imposes a duty on Fannie Mae and Freddie Mac to serve certain under-served populations and communities, the Federal Housing Finance Agency (FHFA) issued a notice of proposed rulemaking defining that duty. The proposal specifies three areas covered by the duty: rural areas, manufactured housing, and multi-family rental housing.
CFA joined with Center for Responsible Lending, the Center for American Progress Action Fund, the CDFI Coalition, the National Association of Consumer Advocates, the National Council of La Raza, the National Fair Housing Alliance, and the Opportunity Finance Network to file a comment letter in general support of the proposal. In particular, the groups supported FHFA’s decision to allow credit toward meeting the duty to serve for real estate financing of manufactured homes and not where the home is personal property. However, the groups called on FHFA to expand the scope of proposed work plans to be submitted by the GSEs outlining their expected strategies and outcomes under the duty to serve requirement.
“FHFA’s proposal would establish an effective set of requirements for this new obligation of the GSEs,” Zigas said. “There are myriad ways the companies can provide services that are needed in underserved communities even while under conservatorship following the mortgage meltdown. These are perhaps even more important today for the communities most damaged by reckless mortgage lending.”
Federal Banking Regulators Seek Views on CRA Modernization
On a related issue, federal banking regulators – the FDIC, Comptroller of the Currency, Office of Thrift Supervision, and the Federal Reserve – are collaborating on a series of field hearings to gather views on modernization of the Community Reinvestment Act (CRA). The FDIC hosted the first of these hearings in July at which Zigas testified on behalf of CFA.
“CRA has been a critical contributor to neighborhood revitalization and equal access to mortgage credit since its adoption in 1977,” Zigas said. “The industry has changed dramatically since the law’s adoption, and since the last major overhaul of the regulations. This is an opportunity to modernize CRA to refresh and maintain its impact.”
In his testimony, Zigas called on policymakers to:
- Expand the assessment areas in which bank performance against CRA is measured to more accurately include the much larger areas in which banks operate today;
- Include the activities of affiliates in CRA reviews to more clearly gauge the impact of lenders’ credit policies in communities;
- Provide more weight to the quality and type of consumer credit and banking services offered to consumers and balance affirmative programs, such as mortgage lending, against other practices, such as support of high-cost services like payday lending and check cashing, in assessing performance;
- Experiment with greater reliance on strategic plans to generate a more integrated view of lenders’ plans and results; and
- Adopt more differentiated assessment grades to better distinguish among and between lenders.
The remaining hearings are scheduled throughout the month of August in locations around the nation.
The Treasury Department has proposed rules to facilitate direct deposit of Social Security and SSI benefits checks that, unless significantly changed, could expose elderly and disabled benefits recipients to abusive practices by payday lenders and other fringe bankers, CFA, Consumers Union, and the National Consumer Law Center warned in a comment letter filed with the Treasury Department in July. The rules are designed to expand the types of accounts into which benefits checks can be directly deposited.
In their comment letter, the groups urged the department to:
- tighten its rules to prevent deposits to inappropriate master-subaccount arrangements that do not give benefit recipients full ownership of, control over and access to the funds;
- prohibit direct deposit onto prepaid cards that are tied to payday-like loans secured by the deposit of federal benefits in evasion of Electronic Funds Transfer Act rules and rules protecting such funds from garnishment;
- prohibit prepaid accounts from being eligible for direct deposit if they charge unreasonable or inappropriate fees for the recipient’s access to the funds;
- ensure that funds deposited on prepaid cards have full protection under the Electronic Funds Transfer Act;
- give funds deposited on prepaid cards the same protections against garnishment and account freezing as bank accounts soon will have; and
- build in an enforcement mechanism to ensure compliance with the protections in Treasury’s rules in practice and not merely on paper.
“If Treasury is going to require seniors, veterans, and the disabled to receive federal funds via direct deposit, it is imperative that Treasury make sure these consumers receive first class consumer protections instead of being relegated to second class financial products,” said CFA Financial Services Director Jean Ann Fox.
CFA is pleased to announce its participation in the 2010 Combined Federal Campaign. The campaign, which kicks off in September and will conclude on December 15, is the workplace charitable giving drive for all civilian, postal and military employees of the federal government. Because CFA has been approved as a national organization, federal employees located anywhere can choose to support the organization. Employees should use #52521 to designate their contribution to CFA.