For over 50 years The Consumer Federation of America has advanced the consumer interest through research, advocacy, and education. We diligently investigate consumer issues, behavior, and attitudes. We expertly advance pro-consumer policies on a variety of topics. Moreover, we thoughtfully communicate consumer concerns to the public, the media, policymakers and other public interest advocates. We are a non-profit, non-partisan organization that values honesty, transparency, and pragmatism. As expert policy advocates, we closely monitor economic conditions, policy decisions, and their effects on American households. There is little doubt that the US economy is in a precarious position, which may well turn into yet another national economic catastrophe, the likes of which we haven’t seen since 2008.
We write this blog as a warning flare. We see the recurring signs of economic crisis before us, and we call on policymakers to act before it is too late. Over the next few weeks CFA will release a number of issue briefs covering our areas of expertise. These briefs will highlight the current vulnerable position of many American households and how these indicators mirror the prelude to the Great Recession. In our first report, Driven to Default: The Economy-Wide Risks of Rising Auto Loan Delinquencies, we spotlight an auto lending market in distress, with borrowers falling into delinquencies and defaults at a pace that exceeds pre-pandemic levels and rivals the years immediately preceding the 2008 economic crisis. As the report states, “rising auto delinquencies are a canary in the coalmine for large-scale economic problems, and the immediate outlook for auto finance and its impact on the broader economy is grim.”
Subsequently, our series will explore:
The precarious positions of American households in the housing market, as housing has grown increasingly unaffordable. The average age of first-time homebuyers has now climbed up to 38 years old and nearly half of renters are spending more than 30 percent of their income on housing. We will zoom in on the role of Fannie Mae and Freddie Mac, two government-backed mortgage giants that taxpayers bailed out in 2008, amidst the Great Recession and show what perils may be repeating in housing, now almost twenty years later.
The alarming parallels between the current deregulation of the crypto industry and the deregulation of over-the-counter derivatives markets decades ago that led to the 2008 crisis. Starting in 1998, legislators gutted financial market regulators’ ability to apply time-tested laws to exotic derivatives in the name of “innovation.” Deregulation transformed a niche marketplace into a poorly supervised Wild West where hundreds of trillions of dollars in trading activity created a powder keg that was welcomed into the traditional financial system. Today, regulators failing to act and Congress bowing to financial interests threatens to recreate that pattern in the crypto markets, sparking yet another explosion of the entire financial system. And now, just as then, it will be working Americans who pay the price.
The unchecked rise of social media platforms as a cautionary tale for our current approach to artificial intelligence. For years, lawmakers deferred to industry promises of self-regulation, and voluntary safeguards that never materialized; regulators and politicians were persuaded that strict rules would stifle “innovation.” Now, these same arguments, delivered by many of the same companies, are shaping AI policy. We’ll trace how this recycled playbook continues to be used to delay meaningful oversight, risking a repeat of the same regulatory complacency that led to widespread data abuse, misinformation, and eroded public trust.
The risk of a resurgence in foodborne illness as the Administration rolls back food safety protections. Although these protections enjoy broad, bi-partisan support, they have typically only commanded policymakers’ attention in the wake of high-profile outbreaks that expose the food industry’s failure to manage food safety risk. The 2008 E.coli O157:H7 outbreak linked to spinach, for example, led Congress to pass the Food Safety Modernization Act (FSMA) in 2010. But the current Administration has scuttled FSMA compliance activities and made deep cuts to disease surveillance infrastructure that could blind public health officials to foodborne illness outbreaks before they have claimed an unacceptable number of victims.
In the aftermath of the financial crisis, policymakers recognized that federal regulators had far less visibility into the activities of non-bank lenders, even when those lenders offered products nearly identical to those of banks. Today, Congress and the CFPB are repeating that mistake by choosing to ease oversight for certain fintechs—undermining regulatory parity and limiting the ability of regulators to detect emerging risks. This spring, the CFPB reversed a rule that classified Buy Now Pay Later lenders as credit card issuers under the Truth in Lending Act. Soon after, Congress voted to permanently block the CFPB from supervising large non-bank payment apps, creating a harmful gap between the oversight of non-bank apps and faster payment services offered by insured banks.
History may repeat itself, but that does not mean we are destined to make the same mistakes. Right now, Congress and state legislators have an obligation to heed the alarm bells of our affordability crisis which could easily spiral into a nationwide economic emergency without intervention from policymakers. Will they join us in our effort to advocate for everyday people, or will they abandon the American consumer during their greatest time of need? The Consumer Federation of America is committed to supplying the facts, fighting alongside our member organizations, and promoting positive results. We encourage our representatives in government to take heart, and call to mind these patterns of peril.