Child Deaths Highlight Need for Window Covering Cord Rulemaking

After four children died in a three-week period, CFA joined with Parents for Window Blind Safety and Independent Safety Consulting last week in issuing a public call for the U.S. Consumer Product Safety Commission (CPSC) to take effective action to protect children from the preventable strangulation hazard posed by cords on window coverings.

Due to the consistent death rate, the failure of the voluntary standards to address the hazard, and the existence of products and technology in the marketplace that can prevent this hazard, CFA, Parents for Window Blind Safety, Kids In Danger, Consumers Union, Independent Safety Consulting and other organizations filed a petition with CPSC on May 23, 2013, requesting that the CPSC promulgate a mandatory standard that prohibits hazardous accessible operating cords on window coverings.

The petition documented the failure of industry to rein in this hazard despite their knowledge since 1983 that infants and young children were strangling on accessible window covering cords at a rate of one or more per month.  Furthermore, the voluntary standards process, starting from the first standard in 1996 and including the most recent standard in 2012, has failed to eliminate or even significantly reduce the risk of strangulation and asphyxiation by window covering cords to children.  As a result, future generations of children are at risk of strangling on household window cords.

“A strong mandatory standard by the CPSC is necessary to protect children,” said CFA Legislative Director Rachel Weintraub.  “For almost 20 years, the voluntary standard has failed to address the strangulation posed to children.  In light of the history of the voluntary standard, the documented and persistent hazard that cords on window coverings pose to children, and these recent deaths, it is time for CPSC to act.”

SEC Urged to Revise Credit Rating Agency Rule Proposals

In a letter submitted to the Securities and Exchange Commission last week, CFA called on the SEC to re-propose and extensively revise rules designed to reform credit rating agency practices that helped trigger the 2008 financial crisis.  The letter focuses on three crucial aspects of the rule proposal – those designed to ensure that conflicts of interest do not influence ratings, that ratings agencies adopt procedures to ensure that they follow their methodologies when assigning ratings, and that ratings are applied consistently across asset classes – that do not match the scope and extent of the abuses they are intended to address.

“The fundamental breakdowns by credit rating agencies and the completely inadequate proposed rule to deal with those breakdowns warrant a more vigorous response from the SEC,” said CFA Financial Services Counsel Micah Hauptman.

CFA had urged re-proposal of the rules when they were first proposed in 2011.  The letter cites new information that has emerged in the intervening years that further highlights the inadequacies of the original rule proposal.  That information comes from the SEC’s own inspection reports, the Department of Justice’s lawsuit against Standard & Poor’s rating agency, and research into the historical performance of ratings across asset classes.  The letter found extensive evidence of basic failures in rating agency internal control systems, shocking examples of how conflicts of interest can influence ratings decisions, and widely divergent default and downgrade rates for the same ratings when applied to different asset classes.

“We’re more than three and a half years after the passage of the Dodd-Frank Act and credit rating agencies are still engaging in a multitude of failures that directly impact the accuracy and reliability of ratings. The SEC’s hands-off approach clearly has not worked,” Hauptman said.

“Efforts to wean the financial system off its dependency on credit ratings have been half-hearted at best,” said CFA Director of Investor Protection Barbara Roper.  “As a result, a major ratings failure of the type that helped to trigger the financial crisis would still pose a significant risk to the stability of the financial system.  The SEC has a responsibility to use the tools it was given by Congress to bring about meaningful reforms.  To do that it must withdraw and extensively revise its rule proposals in these all-important areas.”

CFA Applauds FDA Proposal to Update Nutrition Facts Panel

The Food and Drug Administration has issued a long-awaited proposal to update the Nutrition Facts Panel found on most packaged food products to more prominently identify calories.  “This is good news for consumers,” said Chris Waldrop, Director of CFA’s Food Policy Institute, in a press statement applauding the FDA action. “Updating the Nutrition Facts Panel will provide consumers with more relevant and useful information about the foods they consume.”

“In the two decades since the panel was first required under the Nutrition Education and Labeling Act, consumer diets and food consumption patterns have changed as have food products and packaging. Meanwhile, the obesity epidemic has become a major public health problem. A revision of the Nutrition Facts Panel to provide consumers with updated and relevant information about the nutritional content of their food is long overdue,” Waldrop said.

FDA’s proposal to more prominently identify calories on the label will make it easier for consumers to monitor the number of calories they consume. In addition, Waldrop called on the agency: to develop more accurate serving sizes that better reflect the fact that some packages of foods are typically consumed as a single serving; to identify added sugars on the label in order to help consumers better follow the Dietary Guidelines recommendations to reduce the intake of calories from added sugars; and to ensure that the revised label is easily understood by consumers and provides the right information to allow consumers to make healthy choices in the supermarket.

Digital Devices Are Hurting Americans’ Wallets

Digital devices drive electricity demand for U.S. households and sap consumers’ pocketbooks, according to a new analysis released by CFA in February. The analysis, Electricity Consumption and Energy Savings Potential of Digital Devices: The Role of California Appliance Standards Leadership, finds that demand for electricity from computers, monitors, notebooks, game consoles, routers and similar devices is growing at a faster pace than any other category of U.S. household appliances.

“Digital devices are energy guzzlers sapping consumer pocketbooks,” said CFA Research Director and report author Mark Cooper.  “Improving the energy efficiency of household digital devices by a third or more would save consumers a lot of money because the reduction in electricity bills would be much larger than the increase in the upfront cost of putting more energy efficient technologies in the devices.”

The report found that:

• Between the years 2000 and 2013, the amount of electricity gobbled up by digital devices increased more than five-fold in the United States.
• Nationally, these devices now consume about half as much energy as air-conditioners and two-thirds as much as refrigerators.
• The impact of digital devices on household energy use is particularly strong in California, where computer and Internet use is higher than the U.S. average and air conditioning use is below the national average.
• Substantial, cost-effective improvements in the energy efficiency of consumer digital devices can be achieved through strong performance standards.

The CFA report points out that California is uniquely positioned to drive the nation forward because of the large size of its consumer market for digital devices and because the state has experience in setting and executing energy efficiency standards that are consumer-friendly but also responsive to industry needs.  “In fact, it would be great if California took a leadership role in setting a highest common denominator standard that the rest of the nation and the world could follow. The only way to do that is to launch a full proceeding that forces the industry to put the facts, not their propaganda, on the table,” Cooper said. “The sooner the California Energy Commission starts the proceeding, the sooner consumers will start saving money.”

Most Americans Continue to Face Financial Challenges

Despite the economic recovery, most Americans continue to face significant personal savings challenges, according to the seventh annual national survey assessing household saving released by the America Saves campaign in February as part of America Saves Week.  When asked if they were making progress in meeting their savings needs, only about one-third (35 percent) of survey respondents said they were making “good” or “excellent” progress while nearly two-thirds (63 percent) said they were making only “fair” or “no” progress.

“Only about one-third of Americans are living within their means and think they are prepared for the long-term financial future,” said Stephen Brobeck, CFA Executive Director and founder of America Saves. “One-third are living within their means but are often not prepared for this long-term future.  And one-third are struggling to live within their mean.”

While only about one-third of Americans feel prepared for their long-term financial future, a much larger percentage say that they are at least paying their bills and saving a little. About two-thirds (68 percent) reported that they are spending less than their income and saving the difference. This figure was up from 65 percent in 2013 though much lower than the 73 percent in 2010.  Moreover, nearly two-thirds of respondents (64 percent) said that they “have sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit”, and about three-quarters (76 percent) said that they are reducing their consumer debt, or are consumer debt-free.  These two numbers are about where they were last year, though they are lower than in 2010 when 71 percent said they had sufficient emergency savings and 79 percent said they were reducing consumer debt or were consumer debt-free.

These and other survey numbers reveal the continuing struggles of the American middle class.  While unemployment rates have come down, unemployment and underemployment rates are still relatively high.  More importantly, real wages have been stagnant, and fewer middle class families are building wealth successfully through homeownership “The group hit the hardest by the Great Recession and its aftereffects have been moderate income households,” noted CFA’s Brobeck. “The rest of the middle class was not damaged as severely, and lower income households were protected somewhat by the social safety net,” he added.

The survey was released the first day of America Saves Week (February 24 – March 1), an annual event where government, business, and non-profit organizations at the local, state, and national levels work together to promote good savings behavior.  “To help individuals and families keep track of their saving progress, we have launched a new interactive Assess Your Savings Plan tool that motivates people to review their current savings strategies and find new ways to save,” said Nancy Register, America Saves Director and CFA Associate Director. “America Saves Week is the perfect opportunity for individuals to use our new tool to quickly review their savings situation by answering a simple series of yes/no questions and receive information to help them create a successful savings plan.”

America Saves, which is managed by CFA, and the American Savings Education Council, which is managed by the Employee Benefits Research Institute, coordinate this effort and commissioned the survey.  The Assess Your Savings tool is available here.