CFA News Update- June 8, 2011
The House Appropriations Committee approved a 2012 agriculture funding bill (H.R. 2112) last week that makes dramatic and dangerous cuts to food safety funding. The House bill would cut the Food and Drug Administration’s food safety program by $87 million below FY 2011 funding levels and would cut the U.S. Department of Agriculture’s Food Safety and Inspection Service by $35 million. Members of both the Make Our Food Safe Coalition and the Safe Food Coalition wrote to members of the committee in advance of the vote urging them to protect funding for the critical food safety functions of the FDA, the Department for Health and Human Services, and the FSIS. “FDA and FSIS are essential public health agencies working to protect consumers from foodborne illness. Cutting resources for these important agencies puts consumers at risk,” said Christopher Waldrop, Director of CFA's Food Policy Institute.
Federal regulators have announced that they will extend the comment deadline on controversial rules implementing so-called “risk retention” provisions in the Dodd-Frank Act that require lenders to retain five percent of mortgages they securitize. Housing advocates – including CFA, the National Community Reinvestment Coalition, the Center for Responsible Lending, and the National Housing Conference – have joined forces with the Mortgage Bankers Association, the National Association of Realtors and other industry groups to urge regulators to reconsider their proposed approach to defining a new class of safe loan, known as “qualified residential mortgages,” which would be exempt from the risk retention requirement.
The proposed criteria for the QRM exemption include a 20 percent down-payment, low limits on front- and back-end debt to income ratios, and strict credit repayment history. The groups expressed concern that the down payment requirement is not based on experience with low down payment, fully documented, fixed rate standard loans to people of low wealth. If adopted, the groups fear that they would unjustifiably raise costs to creditworthy borrowers and arbitrarily consign families with low wealth to either government credit through FHA, or to loans with higher pricing and possibly less availability or choice in the non-QRM market. “Congress didn’t direct the regulators to come up with a small exemption, but one based on the credit quality of the loans in the security” said CFA’s Director of Housing Policy Barry Zigas. Moreover, he said, the definition should be “based on criteria that matter and have relevance to the challenge of meeting the test of creditworthiness,” a standard the current proposal does not meet.
A white paper analyzing concerns with the QRM definition is available here.
With new fuel economy ratings due to begin appearing on 2012 models, a CFA analysis of current vehicles shows a great need for improvement. CFA applied the simple 1-10 greenhouse gas/fuel economy ratings developed by the Department of Transportation and the Environmental Protection Agency to 2011 models and found that the majority get a rating of 6 or less. “If (like school) you consider anything below a 60 to be a failing grade, then 70 percent of the 2011 models would fail under the new fuel economy labeling requirement,” said CFA Public Affairs Director and The Car Book author Jack Gillis.
Right now, nearly 20 percent of the 2011 models are at the bottom of the list, getting 1’s, 2’s, and 3’s. Historically, manufacturers do not like being at the bottom of any list, so this alone should be a strong motivator to improve. “One of the issues that has surfaced in our surveys is that consumers want better performing vehicles, but they just are not available,” said CFA Research Director Mark Cooper. “Giving consumers good information addresses part of the problem, but raising fuel economy standards, which is the next item on the agenda of the DOT and EPA, is critical to lowering gasoline consumption and reducing oil imports.”
The Federal Trade Commission should act to protect consumers from harmful debt collection practices as newer technologies evolve, CFA and Consumers Union wrote in a recent comment letter to the agency. “The FTC has an important role to play in shaping industry practices and strengthening consumer protections, both by enforcing existing laws and advising policymakers to enact reforms at the federal and state level,” the groups wrote. The goal, they said, should be to ensure “that newer technologies are used to promote a fairer and more efficient debt collection process that does not overburden consumers and the courts” while also ensuring “that the use of newer technologies to contact consumers and attempt to collect from them does not result in abusing their privacy.”
“Newer technologies can increase both efficiency and accuracy in the debt collection process by improving information flow between original creditors, debt buyers and consumers and facilitating dialogue between debt collectors and consumers,” said CFA Consumer Protection Director Susan Grant. “However, reasonable safeguards must be put in place to ensure that the use of newer technologies prevent consumer abuses throughout the debt collection process.”