House Votes to Repeal COOL, Senate Urged to Wait

The House of Representatives passed legislation that would repeal country-of-origin labeling (COOL) for beef, pork, and chicken. The Country of Origin Labeling Amendments Act of 2015 was adopted on a vote of 300-131.

“The House voted to deny American consumers basic information about where their food comes from,” said Chris Waldrop Director of CFA’s Food Policy Institute in a press statement. “In supporting a repeal of country of origin labeling for meat, pork and chicken, Congress bowed to overblown threats of retaliation from Canada and Mexico and took action prematurely before the case at the World Trade Organization (WTO) was fully settled.”

A coalition of 283 farm, rural, consumer, manufacturer, labor, faith and environmental groups from across the United States sent a letter to the House of Representatives urging Congress to reject the effort to repeal COOL. “The proposed COOL repeal legislation is particularly extreme in that it would roll back commonsense labels that the WTO actually supported or that never even were raised in the WTO dispute,” the groups wrote.

“U.S. consumers want more information about their food, not less,” Waldrop said. “CFA urges the Senate to wait until the WTO process is finalized before determining a course of action.”

House Bill Aims to Enhance Vehicle Safety

CFA joined with Representatives Schakowsky (D-IL), Frank Pallone (D-NJ) and Diana DeGette (D-CO), a victim of an exploding Takata airbag, and a broad coalition of safety advocates at a Capitol Hill press conference calling for swift passage of the Vehicle Safety Improvement Act of 2015 (H.R. 1181). Prompted by failings in the GM ignition switch and Takata airbag defects investigations and subsequent recalls, the legislation would give NHTSA the authority and resources it needs to carry out its lifesaving mission.

“Passing this bill will save lives and significantly improve America’s public health and safety,” said CFA Public Affairs Director Jack Gillis and author of The Car Book in a press statement. “Setting it aside will lead to unnecessary deaths and injuries and leave families without the lifesaving protections they need and deserve. Consumers should not be left in the dark about life-or-death defects.”

The bill would: give NHSTA the power to act quickly when a vehicle defect or non-compliance poses an imminent hazard; improve the transparency and quality of the information submitted to NHTSA; increase NHTSA’s enforcement power by increasing civil penalties; eliminate dangerous regional recalls; and authorize funding for the agency to accomplish its statutory mission.

The bill has been referred to the House Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade.

Efficiency Standards will Reduce Californians’ Electricity Bills

First-in-the-nation energy efficiency standards for computers and monitors recently proposed by the California Energy Commission (CEC) could save consumers up to $430 million each year on electric bills and also generate significant energy savings, according to comments on the proposed standards filed last month by CFA, Consumers Union, Consumer Action, and Consumer Federation of California.

“We applaud the action being taken by the CEC—it will spur manufacturers to address the shortcomings of their products. Passing up hundreds of millions of dollars in consumer savings in California and potentially billions of dollars nationwide is simply unacceptable,” said CFA Director of Research Mark Cooper in a press statement.

It has been estimated that a typical American home has forty products that constantly draw power, and people often do not even know they are paying for this hidden energy consumption. In California and across the nation, these devices have come to represent a significant electricity load and drag on consumer budgets, in the range of 3 to 4 percent of electricity bills.

The CEC found that computers and monitors, when grouped together, are among the leading users of energy in California. And though many manufacturers build efficient models, the CEC says it has determined significant efficiency improvements can be made — equivalent to the energy consumption of all homes in the cities of San Francisco and Santa Clara combined.

“We believe that the need for such standards is clear and the benefits to consumers, the economy and the environment will be substantial,” the groups stated in their comments.

Industry Seeks to Derail DOL Conflict Rule

Two financial industry trade associations, SIFMA and the Financial Services Roundtable, issued alternative regulatory proposals whose primary purpose appears to be to derail the Department of Labor (DOL) initiative to strengthen protections for retirement savers.

The DOL rule proposal currently out for public comment would define more financial professionals as fiduciaries when providing advice to retirement plans, plan participants, and Individual Retirement Account investors, hold them legally accountable for acting in the best interests of their customers, and prohibit common industry practices that encourage advisers to act against their customers’ interests.

SIFMA released an alternative proposal that would impose a best interest standard on recommendations by broker-dealers, require them to manage conflicts and fees and to disclose certain costs and conflicts.  CFA issued a press statement criticizing the SIFMA proposal on two main grounds:

• It would not cover either non-securities recommendations in retirement accounts or advice to retirement plans, both of which are covered under the DOL rule proposal; and
• It relies too heavily on disclosure to manage conflicts rather than attacking head-on the industry practices that exaggerate the conflicts embedded in the broker-dealer business model.

“If SIFMA’s intent was to offer an alternative to the DOL proposal, it has failed,” said CFA Director of Investor Protection Barbara Roper. “Even on its own terms, as a proposal to strengthen securities law protections, it falls well short of what is needed.”

The Financial Services Roundtable (FSR) also issued a proposal to replace the DOL’s rule proposal with an exemption that it characterizes as being based on the exemption already allowed under the 2006 Pension Protection Act (PPA).  In reality, however, FSR is proposing to eviscerate the central provision of the PPA, which prohibits any differential compensation based on the investments recommended.

“What these proposals have in common is their intent to obstruct, obfuscate, delay, and ultimately kill the DOL rulemaking,” said CFA Financial Services Counsel Micah Hauptman. “We think a better approach would be to work constructively within the context of the DOL rulemaking.”

Consumer Knowledge of Credit Scores Improves

The past year saw a small, across-the-board improvement in consumer knowledge about credit scores, according to the fifth annual credit score survey released this month by CFA and VantageScore Solutions. For example, more Americans correctly think that age, marital status, and ethnicity are not used to calculate credit scores, and a higher percentage understand that making all loan payments on time, using a credit card but keeping low balances, and avoiding opening several credit card accounts at the same time will raise a low credit score or maintain a high one.

However, serious consumer knowledge gaps remain. For example, only 20 percent of Americans know that low credit scores are likely to increase the finance charges on a $20,000, 60-month car loan by more than $5,000. Moreover, more than two-fifths (41%) incorrectly think that the additional charges would be less than $3,000.

“Low credit scores can deny one access to credit or increase the costs of this credit by thousands of dollars,” said CFA Executive Director Stephen Brobeck. “These higher costs can often be avoided simply by making loan payments on time or by deferring purchases until loan payments are manageable.”

In conjunction with the release of the survey findings, CFA and VantageScore also released an upgraded version of the the Credit Score Quiz website (www.CreditScoreQuiz.org), which has been upgraded for better performance on mobile devices and streamlined to enable quicker completion of its multiple-choice questions. The update also adds a new question about alternative lending sources, and enhanced options for sharing results on social media. Like the original Quiz website, it allows users to download and print the all questions and answers, and it includes a set of links to web resources about consumer credit and credit scoring.