CFA News

CFAnews Update – February 28, 2022

Long-Serving CFA Director of Insurance Retires

After serving 27-years with the Federation, J. Robert “Bob” Hunter, CFA’s Director of Insurance, retired earlier this month.

Prior to joining CFA, Hunter created and ran the National Insurance Consumer Organization (NICO) for 13-years, had leading roles in both state and federal government, first as the U.S. Federal Insurance Administrator and later as the Texas Insurance Commissioner. Considered the “father of insurance consumer advocacy,” Hunter will continue to serve in an advisory role as CFA’s Insurance Director Emeritus.

“Bob built the consumer advocacy presence in the American insurance industry from scratch, and anyone who has purchased insurance owes him tremendous gratitude,” said Jack Gillis, CFA’s Executive Director. “By virtue of the problems he exposed, the reforms he spurred, and the changes to industry practices that came from his work, we calculate that his research and advocacy have saved American consumers hundreds of billions of dollars.”

During his 40-year career in insurance consumer advocacy, Hunter won several significant legislative and regulatory reforms of the insurance industry leading to key changes in the way the industry operates. Named one of National Underwriter’s “25 Living Legends of Insurance,” Hunter has been at the forefront of efforts to eliminate unfair and discriminatory pricing in insurance markets.

As Hunter transitions into his role as CFA’s Insurance Director Emeritus, Doug Heller, CFA’s Insurance Advocate, will take on the role of Director of Insurance.

“Bob has been an unrelenting advocate for four decades, whose work has dramatically changed the way insurance in America is priced and how claims are paid,” said Heller. “For the past forty years, the insurance industry has always had to ask themselves ‘what’s Bob going to say?’ whenever a consumer issue was on the table. It is impossible to quantify fully the impact Bob Hunter has had on the insurance market, its regulation, and its public policy. We are deeply grateful for his work and thankful that he will continue to provide his insights and expertise even in his retirement.”

CFA Calls on OCC to Address Climate-Related Financial Risks 

CFA is urging the Office of the Comptroller of the Currency (OCC) to take meaningful action to address the existential threats of climate change and the resulting serious economic, environmental, and public health consequences.

CFA submitted comments in response to the OCC’s draft principles designed to support the identification and management of climate-related financial risks by banks with over $100 billion in assets. The comments stressed the fact that climate change presents a substantial risk to banks and the financial system, citing that in 2021 “over 40% of Americans lived in counties affected by climate disasters” and identified climate change “as an emerging and increasing threat to financial stability.”

“The existential threats of climate change will affect every corner of our society, economy, and financial system,” said Rachel Gittleman, Financial Services Outreach Manager with Consumer Federation of America. “Our federal financial regulators must holistically and proactively address and prepare for climate-related financial risk, ensuring their regulated entities are adequately equipped and paying particular attention to low- and moderate-income consumers and communities of color who are especially susceptible to both the effects of climate change and financial risks.”

In order for banks to be prepared for climate change and the related financial risks, CFA recommended the OCC and banks do the following:

  • The OCC should enact mandatory requirements for considering climate-related financial risk and cooperate with other agencies
  • The OCC should work with other federal agencies to comprehensively address climate-related financial risk
  • Banks should take a holistic view of climate risk and stakeholder exposure
  • Banks should gather expertise and authority from climate scientists
  • Banks should prioritize long-term thinking and analysis

According to the comments, “The impacts of climate change will impact every area of the financial sector and create dramatic risks, raising costs for everyone unless sweeping measures are adopted.”

USDA Should Implement More Food Safety Safeguards Before Lifting Line Speeds

CFA joined a coalition of consumer and public health advocates urging the United States Department of Agriculture’s Food Safety and Inspection Service (FSIS) to delay plans to waive line speed limits at certain hog slaughter facilities.

In the letter, the organizations reiterated concerns about changes to hog slaughter inspection rules made under the Trump Administration, dubbed the New Swine Inspection System (NSIS). The organizations wrote that “the agency’s NSIS rule lacks adequate safeguards to protect consumers from foodborne illness threats that are likely to emerge as a result of higher line speeds, a reduced inspection force, and the elimination of microbiological testing standards.” If the FSIS moves forward with the NSIS program, the organizations recommend that they “adopt additional safeguards to better protect consumers from the NSIS program’s deficiencies and better ensure compliance with the agency’s waiver regulations.”

The organizations also wrote that the agency should only “grant waivers to establishments that can demonstrate an established track record of exceptional food safety performance under NSIS,” and that plants must:

  • have a substantially lower non-compliance rate for fecal matter, digestive matter, and milk contamination than plants with comparable production volumes;
  • not have a substantially higher non-compliance rate for failing to incise lymph nodes than other establishments operating under the new inspection system;
  • have substantially lower salmonella positive rates than plants of similar production volumes and not have substantially higher positive rates than other NSIS plants;
  • show the increased line speed will not negatively impact FSIS employee safety or interfere with inspection procedures (e.g., information about safety protocols or line configuration); and
  • document how they obtained this minimal level of performance under NSIS, identifying concrete measures they have taken to address each issue, such as employee training programs; wherever feasible, establishments should incorporate these concrete measures as actions they will take to implement their HACCP plans.

“All else equal, higher line speeds create a higher risk of food safety being compromised,” said Thomas Gremillion, Director of Food Policy at Consumer Federation of America. “Raw pork already causes a significant share of foodborne illness caused by pathogens such as Salmonella, and so companies should have to demonstrate how they are actually improving their food safety performance before being allowed to deregulate.”

Secretary of Education Needs to Deliver on Promise of Income-Driven Repayment Programs

CFA joined 103 organizations urging Secretary of Education Miguel Cardona to deliver on the promise of income-driven repayment (IDR) programs for federal student loan borrowers by creating an IDR restoration project, or IDR waiver.

The organizations wrote that the modern income-driven repayment plans Congress passed in 1992 promising borrowers that federal student loan payments would be affordable and that “through eventual cancellation, their student loans would not be a lifetime burden” have been a failure, and that it is time “for the Biden Administration to restore faith in IDR through the creation of an IDR waiver.”

The organizations noted only “32 IDR borrowers have ever successfully canceled their loans, even though 4.4 million borrowers have been in repayment for 20 years or longer.”

The organizations wrote that it is essential to restore the broken promise of the program, and the IDR waiver should:

  1. On a retroactive basis, count all months since the borrower entered repayment following their grace period as qualifying months toward loan forgiveness, regardless of which repayment plan the borrower was in, whether they were in forbearance, and whether they were in default.
  2. Provide relief automatically. All of the data that the Department of Education needs in order to implement the IDR waiver is readily available through National Student Loan Data System . Borrowers should not need to affirmatively apply for this relief.
  3. Ensure that all federal loan borrowers, regardless of loan program, have access to the IDR waiver. While Family Federal Education Loan and Perkins loan borrowers could be eligible for IDR, many borrowers were not properly advised and so have failed to benefit. The IDR waiver must apply to these borrowers who have been left behind.

“For far too many, student debt has become a lifetime burden,” said Rachel Gittleman, Financial Services Outreach Manager with Consumer Federation of America. “The administration must deliver on the promise that federal student loan payments would be affordable by restoring faith in income-driven repayment programs.”

FDIC Must Stop Banks from Fronting for Predatory Lenders

With a new chairman appointed to the Federal Deposit Insurance Corporation (FDIC), CFA joined a number of organizations calling for the FDIC to stop allowing its supervised institutions to front for predatory lenders that are evading state interest rate limits.

“Last year, Congress took a stand against the harmful rent-a-bank model that is being used by predatory payday and installment lenders to make triple-digit interest rate loans that are illegal across the country by overturning the ‘fake lender’ rule, said Rachel Gittleman, Financial Services Outreach Manager with Consumer Federation of America. “But rent-a-bank lenders are alive and well, using a few FDIC-regulated banks to peddle predatory loans to consumers throughout the country. The FDIC must stop permitting its supervised banks from engaging in this harmful behavior.”

In the letter, the organizations wrote that “FDIC-supervised banks are helping predatory lenders make loans up to 225% APR that are illegal in almost every state.” Consumer advocates are currently aware of at least “six rogue banks fronting for high-cost non-bank consumer lenders.”

The organizations wrote that the FDIC has numerous reasons to stop its supervised banks from engaging in this behavior and that these rent-a-bank schemes:

  • Are an abuse of the bank charter to facilitate loans for non-banks that are the true lender, helping them evade state laws.
  • Lead to abusive lending practices as they divorce lender and borrower incentives, allowing lenders to succeed while causing severe harm to consumers.
  • Pose a range of legal, safety and soundness, and reputational risks to banks.
  • Carry a high risk of jeopardizing compliance with several federal laws, including the Military Lending Act, Community Reinvestment Act, the Equal Credit Opportunity Act, the Electronic Fund Transfer Act, the Fair Debt Collection Practices Act and the Fair Credit Reporting Act.
  • Contradict principles of responsible lending that banking agency guidance has consistently promoted.

“Rent-a-bank schemes have flourished at FDIC banks in the past few years, and it is time for that to come to an end,” the organizations wrote. “The FDIC has the tools that it needs to prevent its banks from fronting for predatory lenders that are evading state law and making grossly high-cost installment loans and lines of credit at 100% to 225% APR. It is now time for the FDIC to put an end to modern predatory rent-a-bank schemes involving longer-term loans that are an even bigger, deeper debt trap.”