Later On

A blog written for those whose interests more or less match mine.

Posts Tagged ‘consumers

Protecting the industry, not the consumer

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Yet again Congress shows loyalty to contributors. Mike Lillis in the Washington Independent:

It’s one of the central components of the Democrats’ plans for reforming the finance industry this year, and among the most vital, supporters say, for protecting consumers from abusive lending practices in a tumbledown economy. Yet as Congress advances legislation reining in the most abusive credit card traps, both the House and Senate proposals have been watered down in recent weeks so that the protections likely won’t help card users for more than a year.

The delay — a concession to the banks, who oppose the changes — means that Congress’ reforms likely won’t arrive anytime sooner than the Federal Reserve’s new credit card rules, scheduled to take hold in July 2010. It also leaves consumers hung out to dry at an unwelcome time, as the recession deepens, unemployment rises and card issuers raise fees and interest rates on even their most reliable customers. Many observers wonder why, if some credit card practices are indeed unfair and deceptive — some say criminal — Congress isn’t acting more quickly to eliminate them. Some consumer advocates say the delay is yet another example of lawmakers prioritizing the banks above working families amid the downturn.

“While we expect the Fed to be weak and buckle under bank pressure, there is no excuse for Congress pandering to the banks and delaying implementation of legislation to stop practices that hurt working families,” Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group, wrote in an email. “Every day of delay is millions of dollars in unfair fee income. Every day of delay means more families cannot buy things to stimulate the economy (or save to buy things later), as they are forced to pay usurious credit card interest rates.”

The debate arrives as Democratic leaders are pushing legislation to restrict some of the finance industry practices that have been largely blamed for the current economic turmoil. Credit card reform is just one item on a list that also includes proposals to tighten regulations on mortgage lending and grant homeowners the option of bankruptcy to prevent foreclosure. But the power of the finance industry to sway Congress is never to be underestimated. Indeed, the mortgage bankruptcy bill has been stalled in the Senate for weeks, and reportedly faces an uncertain future despite robust support from Democratic leaders, including President Obama. The delay in the credit card reforms is just the latest example of what happens when leadership goals smack headfirst into political reality — and a lobbying juggernaut.

That spells bad news for credit card users, as …

Continue reading. There’s a lot more, and it gets worse.

Congress is truly broken. I suggest that election campaigns be paid for by public funds (using a formula based on characteristics of the district (for Reps) or state (for Senators): population, cost of media in that locale, and so on. Then contributions to elected officials should be made illegal. Of course, Congress would have to pass such a law, and Congress for the most part will do anything for money, so it won’t happen.

UPDATE: And now read what’s happening as a result of the above. It’s not good.

Written by Leisureguy

23 April 2009 at 12:09 pm

Posted in Business, Congress, Daily life

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Good letter to the WSJ on mandatory arbitration

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This letter spells it out so that even the WSJ should understand:

“Party at Joan’s”
Wall Street Journal, November 17, 2007; Page A9

Your Nov. 7, broadside (“Party at Ralph’s”) on arbitration was baseless. We oppose mandatory not voluntary arbitration requirements buried in the fine print of consumer contracts  because they shred consumers’ legal rights in favor of a secret,  expensive, business-dominated system.

The consumer attorneys attending a reception at Public Citizen’s office are legal aid and private attorneys who toil in some of the least glamorous corners of the law. They see firsthand the unfairness of this industry-created system to avoid accountability. They work for consumers harmed by home foreclosures, truth-in-lending violations, unfair debt collection practices, predatory lending, auto dealer fraud and other marketplace abuses.

To acquire a credit card, buy a home or car, open a bank account, use a cell phone or get cable television, consumers usually must sign a contract mandating arbitration to settle disputes. A mere signature effectively eliminates their constitutional right to the public courts, extinguishes the right to appeal, favors corporate repeat offenders whom arbitrators want to please and imposes substantial upfront costs.

“Studies” to justify mandatory arbitration, often cited by industry, misleadingly lump together people who voluntarily enter arbitration with those given no choice. In contrast, Public Citizen’s recent report evaluated 34,000 consumer mandatory arbitration cases in California. The results: Consumers lost 94% of the time.

No wonder the Journal editorial page and the paper’s business advertisers love this stacked deck. Your justification for it rests on the deeply flawed Tillinghast Tower Perrin report on the cost of litigation. Yet Tillinghast admits its numbers are not actual costs: Almost a quarter are for insurance industry administrative costs, and most are associated with auto insurance. Conservative jurist Richard Posner challenges Tillinghast estimates as “fictitious.”

Amazingly, the Journal, which lauds a free market, opposes the Arbitration Fairness Act, even though it would allow consumers to freely choose or reject arbitration and not be coerced into it. Congress should move quickly to enact the bill.

Finally, please note that Ralph Nader left Public Citizen more than 25 years ago, during which time I have led the organization, which has grown into a potent force for consumer good. Thus, in the future, please reference our events as a “Party at Joan’s.”

Joan Claybrook
Public Citizen
Washington, D.C.

Written by Leisureguy

21 November 2007 at 6:16 pm

Posted in Business, Daily life, Media

Tagged with ,

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