CFA News Update- November 23, 2010
In an important step forward on a top consumer priority, the Senate agreed to take up the FDA Food Safety Modernization Act (S. 510) when Congress returns from Thanksgiving Recess. The bill, which has already passed the House in similar form, has been pending in the Senate for a year.
A major obstacle to passage was cleared when a compromise was reached on an amendment by Sen. Jon Tester (D-MT) and Sen. Kay Hagan (D-NC) to exempt smaller producers and processors from federal oversight. The compromise would allow the Food and Drug Administration to revoke the exemption if a small farm or processor was associated with a foodborne illness outbreak or if the FDA determined that, based on conditions associated with the farm or facility, it was necessary to protect the public health. In a letter last week to bill sponsor Sen. Tom Harkin (D-IA), CFA had raised concerns that an earlier version of the proposed amendment would have put consumer health at risk.
Chris Waldrop, Director of CFA’s Food Policy Institute, issued a statement applauding the 74-25 cloture vote and expressing satisfaction that agreement had been reached on the Tester/Hagan amendment. “Now, it is critical to move as soon as possible to a final vote to pass this important legislation and send a final bill to the President for his signature,” he said.
Because there are differences between the Senate and House bills, the version passed by the Senate will still need final approval in the House before it can be signed into law by the president.
Congress returned for a post-election “lame duck” session last week, facing a crowded agenda and questions about whether it was capable of reaching the bipartisan agreement necessary to act on key priorities. CFA sent a letter to all members of Congress urging “immediate passage of critical consumer protection legislation that is still pending.” Priorities include passage of legislation to:
• improve food safety (see above);
• provide the Securities and Exchange Commission and Commodity Futures Trading Commission with the funding needed to carry out their dramatically expanded responsibilities under the Dodd-Frank Wall Street Reform and Consumer Protection Act;
• establish an Office of Homeowner Advocate with the Treasury Department;
• improve appliance efficiency based on energy- and water-saving standards negotiated between industry and public interest groups;
• prohibit paid-off or settled medical debt from appearing on a consumer’s credit report; and
• protect debt-strapped consumers from harmful practices by debt settlement companies.
In a separate alert, CFA also urged passage of the Motor Vehicle Safety Act (H.R. 5381, S. 3302), which would help protect consumers from dangerous safety defects, such as Toyota runaway vehicles.
“While much has been accomplished in this session of Congress, there are a number of consumer concerns that still need to be addressed during the lame duck session,” said CFA Legislative Director Travis Plunkett. “These bills would provide important, needed protections and benefits during these difficult economic times.”
The Supreme Court heard oral arguments this month in the case of AT&T v. Concepcion, in which the right to hold corporations responsible for wrong-doing through consumer class action lawsuits is at stake. In a statement on the case issued earlier this month, CFA Senior Counsel Rachel Weintraub said: “A ruling by the Supreme Court in AT&T’s favor would have dire consequences for the rights of consumers to obtain redress. Without access to class actions, consumers will be boxed into mandatory arbitration proceedings, which are held by arbiters often handpicked by the corporation and most often side with corporation.” CFA is among numerous consumer groups, civil rights organizations, state attorneys general, and law professors who have joined in an amicus brief “requesting that the Supreme Court preserve this important legal right to organize in class actions.”
CFA filed comments with the Securities and Exchange Commission last week urging the agency to strengthen its proposed rule requiring issues to conduct due diligence reviews of assets underlying asset-backed securities. “While there are aspects of the Commission proposal that CFA supports, the proposal stops well short of the steps needed to bring about the reforms Congress sought to achieve when it included the asset review requirement in the Dodd-Frank Wall Street Reform and Consumer Protection Act,” wrote CFA Investor Protection Director Barbara Roper. In particular, CFA called on the agency to set minimum standards for the reviews and to extend the requirement to private as well as public offerings.
Earlier this month, CFA joined with Fund Democracy to file comments in strong support of a Securities and Exchange Commission proposal to limit the payments that can be made to brokers through mutual fund 12b-1 fees and to introduce fee competition with regard to brokerage payments for fund sales. “If adopted, the proposed rules will promote competition, enhance price transparency and reduce conflicts of interests in ways that will strengthen the regulatory structure in which mutual funds have flourished during the three decades since Rule 12b-1 was adopted,” the groups wrote.