President Obama signed the sweeping financial regulatory reform legislation into law Wednesday, marking the close of a nearly two-year legislative effort to bring safety, stability, and a new focus on consumer protection to our financial system. “We commend Congress for passing and President Obama for signing meaningful financial reform legislation that the American people want and need,” said CFA Legislative Director Travis Plunkett. “This legislation is the most sweeping overhaul of federal financial regulations since the Great Depression and should help protect consumers, Main Street investors, and the economy for decades to come.”
The President signed the bill just under a week after the U.S. Senate approved it on a 60-39 vote. The vote count was uncertain right up until the final days before the vote, but in the end Republican senators Susan Collins, Olympia Snowe, and Scott Brown joined all but one Democratic senator in voting to pass the reform bill.
Now the focus turns to implementation. “With dozens of studies, hundreds of rulemakings, and an entirely new consumer protection agency to create, our work is far from over,” said CFA Investor Protection Director Barbara Roper. “Whether this bill delivers robust reforms will depend on the regulators who undertake that crucial implementation task. If consumers and taxpayers are to realize the bill’s full promise, those regulators must not allow their commitment to meaningful reform to waiver now that the spotlight of public attention turns elsewhere.”
The pace of rulemaking at the Consumer Product Safety Commission (CPSC) has quickened in recent months as the agency has continued to roll out new rules required by the Consumer Product Safety Improvement Act (CPSIA). Among those to recently take effect is a rule requiring registration cards to be included with certain durable infant products.
By allowing consumers to easily register their product with the manufacturer, this new rule will give manufacturers crucial information necessary to directly contact consumers in the event of a recall or other product safety issue. Affected products include cribs, playyards, strollers and high chairs. “While it will take time for the product registration cards to be present in every new product as required by the law, parents can start now to register their products online with manufacturers,” said CFA Senior Counsel Rachel Weintraub. A consumer group release on the new rule is available here.
Weintraub participated in an event Thursday with CPSC Chairman Inez Tenenbaum, Illinois Attorney General Lisa Madigan, and others to raise public awareness of new product registration tools for children’s products and discuss other efforts being made to keep children safe. At the event, Weintraub unveiled a new brochure from CFA and Kids In Danger explaining the product registration program and its importance along with a list containing links to most manufacturers’ registration sites. “Product registration will only be effective if consumers fill out the new product registration cards. Filling out these cards can save a child’s life,” Weintraub said. A release on the event is available here, the brochure is available here, and the list of manufacturers’ registration sites is available here.
In addition to implementing the product registration rule, the Commission has proposed standards on toddler beds and on bassinets and cradles. In a comment letter filed jointly with Consumers Union and Kids In Danger, CFA expressed support for the agency’s approach of adopting a somewhat strengthened version of the voluntary standard for toddler beds. The three groups also filed a comment letter on the bassinet rule which, while supportive of the agency’s general approach, recommends additional changes to make the standard more stringent in order to further reduce incidents associated with these juvenile products.
Tri-Lateral Action Announced to Eliminate Window Blind Hazards
Meanwhile, safety agencies in the United States, Canada, and Europe announced a tri-lateral effort in June to eliminate hazards posed by corded window coverings. In a letter to standard development organizations, the U.S. Consumer Product Safety Commission, Health Canada, and DG SANCO called for “stronger standards that eliminate the risk factors causing child death and injuries” from window blinds and also stated their support for “a swift and comprehensive process that concurrently eliminates the risk factors causing deaths and injuries from all types of corded window covering products.”
“This process must begin immediately, must be transparent, and must include consumers as well as other stakeholders from the earliest stages of this standards process,” Weintraub said. “Consumer advocates are ready to work on an international voluntary standard which truly eliminates window coverings with long accessible cords that will save the lives of young children who might otherwise perish or be severely injured while playing or sleeping near corded window coverings.” A consumer group news release applauding the action is available here.
The House of Representatives voted 329-90 last week to pass legislation (H.R. 5114) to modify and extend the National Flood Insurance Program. “While this legislation includes necessary revisions to the NFIP, it does not propose the sweeping overhaul needed to fix long-term, structural flaws that are harming consumers and taxpayers,” said CFA Insurance Director J. Robert Hunter, who ran the NFIP in the 1970s.
CFA wrote to members of the House in advance of the vote urging them to oppose the bill and instead extend the troubled program for a shorter period and use that period to evaluate far-reaching changes to the program. ‘The review should include ending the program altogether or spurring private insurers to underwrite flood risk,” Hunter said.
Click here to read CFA’s news release on the issue, here to read CFA’s letter to House members in opposition to H.R. 5114, and here to read CFA’s letter to congressional leaders detailing serious problems with the NFIP and explaining why termination of federal flood insurance should be considered.
As this summer’s deadlines neared for new Federal Reserve overdraft rules, and with $23 billion a year in overdraft revenue on the line, many banks began rolling out changes to overdraft programs as they vigorously marketed debit overdraft opt-in. The Fed rules require banks to get consumers’ permission to charge overdraft fees for single debit card purchases and ATM withdrawals. Banks can continue to charge overdraft fees for checks, preauthorized electronic payments, and recurring debit card transactions without customer consent.
In late June, just before the rules took effect for new accounts, CFA issued information designed to help consumers decide whether to opt in to bank overdraft fees for the debit card purchases and ATM withdrawals covered by the rules. CFA updated its survey of bank overdraft fees and terms and released a brochure providing advice to consumers on debit card overdraft programs. The results of the bank survey are available here and here. The brochure is available here. “Bankers are asking their customers to sign up for their most expensive form of overdraft coverage. Consumers should just say no to these astronomical fees,” said CFA Director of Financial Services Jean Ann Fox.
At the same time, CFA joined with the Center for Responsible Lending, the National Consumer Law Center, Consumer Action, and Consumers Union to file comments with the Office of Thrift Supervision (OTS) on its proposed supplemental guidance on overdraft loan programs. The groups praised the agency for updating its guidance and, in particular, for recognizing that, “in some circumstances, failure to impose a reasonable limit on aggregate overdraft fees is an unfair trade practice under the FTC Act.” They urged the OTS to impose a reasonableness standard with respect to both the amount and frequency of overdraft fees. “A meaningful reasonableness standard would represent significant reform, and we hope the other federal banking regulators will follow the OTS’s lead in this regard,” they wrote.
With unemployment high and many families struggling with their finances, debt settlement firms are aggressively advertising on the radio, television, and the Internet that they can help by “eliminating your debts.” However, using debt settlement services often leaves people deeper in debt rather than debt-free. “Desperate consumers are paying these debt settlement services thousands of dollars with no guarantee that even one penny of their debts will ever be settled,” said CFA Director of Consumer Protection Susan Grant. “These people are the least able to afford being ripped off by paying for help and getting nothing in return.”
In response, CFA, Consumers Union (CU), Consumer Action (CA), National Consumer Law Center (NCLC), National Consumers League (NCL), and Maryland Consumer Rights Coalition (MCRC) have called on Congress to act quickly to enact S. 3264, the Debt Settlement Consumer Protection Act of 2010 sponsored by Senators Charles Schumer (D-NY) and Claire McCaskill (D-MO), and H.R. 5387, the companion bill sponsored by Representatives Louis Gutierrez (D-IL), Keith Ellison (D-MN) and Gwen Moore (D-WI). “This legislation will protect consumers who are deeply in debt and desperately looking for solutions from deceptive practices and misconduct in the debt-settlement industry,” Grant said. A release detailing the group statement is available here.
In addition, CFA joined with twelve other national and local consumer and community service groups to file supplementary comments with the Federal Trade Commission (FTC) in July expressing strong opposition to a proposal from The Association of Settlement Companies (TASC) that would undermine the FTC’s proposed advance fee ban by creating a safe harbor that would allow the use of advance fees as long as another option is also offered to the consumer. The groups urged the FTC to adopt the advance fee ban as proposed in the notice of proposed rulemaking and to reject false alternatives which would permit advance fees, such as a safe harbor.
CFA held its 40th annual Awards Dinner June 23rd. Sen. Christopher Dodd (D-CT) and Rep. Barney Frank (D-MA) were honored with the Philip Hart Public Service Award. The Esther Peterson Consumer Service Award was presented to Beth Givens, founder of the Privacy Rights Clearinghouse. Liz Pulliam Weston received the Betty Furness Consumer Media Service Award. A copy of the CFA news release, which includes brief bios of all the award recipients, is available here.