Prof Elizabeth Warren is a leading candidate to head the new Consumer Financial Protection Agency that Pres Obama signed into law today. She explains how she envisions the new agency will fulfill its duties in an interesting interview on the PBS website.
Today, the Senate voted to move forward with the Dodd-Frank Wall Street Reform and Consumer Protection Act, 60-38. The bill is now on the way to the President to be signed into law.
Today's vote is a victory for consumers. The legislation came about despite the enormous opposition from the financial industry, which spent $1.4 million a day to kill the bill.
The bill creates the Consumer Financial Protection Bureau to guard against unfair, deceptive and abusive practices. Consumers will have a single agency that will put consumers' wellbeing first. The Consumer Financial Protection Bureau will write and enforce rules regarding mortgages, credit cards, financial loans (including student loans and payday loans), debt collection, and consumer reporting agencies.
The law will require companies that deny credit or insurance or take any other adverse action against a consumer based on the consumer's credit score to disclose the credit score used. In most cases, people turned down for credit will see their FICO score.
Prof Elizabeth Warren has been the leading advocate for creation of a Consumer Financial Protection Agency. The proposed new agency is part of the financial reform bill currently being debated in a Senate House conference committee.
Writing on Politico.com, she points out that when lobbyists for the banks announced last year that they would kill the consumer financial protection agency, observers predicted they would succeed given their money and lobbying. But the dire predictions were wrong and the agency is part of the versions of the bill passed by both houses. Of course, the lobbyists have not given up. They are currently trying to convince the conferees to weaken the agency before it is born.
Prof Warren explains that the reason the lobbyists have not undercut the basic sense behind consolidating seven different consumer protection bureaucracies into one streamlined agency that would be accountable to consumers. Everyone can understand there is a crying need for regulation aimed at making credit card agreements and mortgage documents short and readable.
The Senate passed an amendment that will allow consumers free access to their credit score if their score negatively affects them in a financial transaction or a hiring decision. The amendment was offered by Senator Mark Udall, Democrat of Colorado.
Employers are increasingly running credit checks on prospective employees. This practice will be prohibited in California with some exceptions if a bill in the California Legislature is enacted. Assemblyman Tony Mendoza (D-Norwalk)'s bill, AB 482, would restrict credit checks except for jobs that involving handling money or certain personal information.
As reported in the San Francisco Chronicle, Mendoza points out that credit checks discriminate against blacks, Latinos and lower income people who tend to have worse credit. Credit history often has nothing to do with job performance.
George Washington once said:
Discipline is the soul of an army. It makes small numbers formidable; procures success to the weak, and esteem to all.
Letter of Instructions to the Captains of the Virginia Regiments [July 29, 1759]. The advocates of consumer rights, viewing the resources of defense firms and corporate defendants, can relate to the trepidation felt by the out-numbered and out-gunned Continental Army. Because of that disparity in resources, Consumer Attorneys of California ("CAOC") consolidates the voices of consumer attorneys throughout the state to (1) preserve and protect the constitutional right to trial by jury for all consumers, (2) champion the cause of those who deserve redress for injury to person or property, (3) encourage and promote changes to California law by legislative, initiative or court action, (4) oppose injustice in existing or contemplated legislation, (5) correct harsh, unjust and oppressive legislation or judicial decisions, (6) advance the common law and promote the public good through the civil justice system and concerted efforts to secure safe products, a safe workplace, a clean environment, and quality health care, (7) uphold the honor, integrity and dignity of the legal profession by encouraging mutual support and cooperation among members, (8) promote the highest standards of professional conduct, and (9) inspire excellence in advocacy. This post is a multi-blog effort to inform consumer attorneys about CAOC's value and encourage participation in CAOC through membership.
CAOC works tirelessly to protect or advance those causes of import to consumers and their attorneys in California. Often those efforts, though valuable, receive little fanfare. For example, CAOC recently sponsored SB 510, which affects the re-sale of what are known as "structured settlements," in which victims receive financial compensation over a period of time for medical expenses and basic living needs, as determined by a jury. Before SB 510 was signed by the Governor, Courts expressed frustration at their inability to prevent the sale of structured settlements on terms that might ultimately lead to long-term financial hardship for the victim. Now, SB 510 gives judges the information they need to make a reasoned decision about the propriety of a structured settlement sale.
Measures like CAOC-sponsored SB 510 help protect the most vulnerable members of our society and ask for nothing in return. They exemplify the spirit of CAOC. However, CAOC is only as effective in its mission as its membership allows it to be. When consumer attorneys join the ranks of CAOC, its voice gains in power and clarity. But if consumer advocates sit on the sidelines, hoping to benefit from the work of others, CAOC is stretched thin, and we are all at risk as a result.
Now, consumer advocate bloggers from across the state are combining their voices to call upon each and every lawyer and firm that regularly represents plaintiffs to join CAOC, thereby strengthening the consumer's first line of defense. The blogs participating in this unified call to action are:
Show your support of consumers' rights by joining and supporting CAOC. Together we can make an impact that we cannot make alone.
A few days ago, the White House sent Congress a bill to create a Consumer Financial Protection Agency (CFPA). Everyone who favors consumer protection should support this bill. Georgetown University Law School Professor Adam Levitin argued the case for the creation of the CFPA in the "Credit Slips" blog that covers credit and bankruptcy. He states we need the CFPA because the current regulatory structure doesn’t work and it will almost inevitably cause future crises, if not of the scale of the current one, then still too serious to countenance.
Prof Levitin points out that the economic disaster of 2008 is the chief exhibit in showing that the current system doesn't work. There were many factors behind the economic disaster, but bad consumer credit products were an important factor. A major lesson from this crisis is that consumer debt can affect global economic stability (no surprise as consumer spending is something like 70% of GDP).
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Law Professor Elizabeth Warren proposes that Congress create a Financial Product Safety Commission to help protect consumers from predatory and deceptive financial products. To illustrate the need for such a commission, Prof Warren points out that if a consumer goes into an appliance store looking for a toaster that has a 1 in 5 chance of exploding, you won't find one. But if you go to a mortgage broker, you can buy a loan that has a 1 in 5 chance of ending up being foreclosed with you losing your house in the process.
Introduced by Senators Schumer and Durbin, the bill would create a commission responsible for identifying practices that undermine sound markets and to educate consumers on the responsible use of financial products and services.
Prof Warren is the chairwoman of the Congressional Oversight Panel monitoring the Treasury's economic rescue plan and the author of numerous articles and books on the ways in which consumers get into financial trouble.
