Our giant spokesconsumer, Health Care Harry (an eight-foot tall interactive version of the Operation game’s “Cavity Sam”), will appear at the House Triangle outside the U.S. Capitol for a news conference Tuesday, 4 Aug at 10am in support of reform. He'll be joined by a doctor and our U.S. PIRG Health Care advocate, Larry McNeely. Harry's been on tour in Maine, with one of our senior consumer advocates, MASSPIRG's Deirdre Cummings. Watch them on WCSH6 (Portland) and FoxMaine and WGME13 Portland. More at PIRG's health care pages.

The Berkman Center at Harvard is webcasting its important "Access To Knowledge" workshop today: Alternative Approaches to Open Digital Libraries in the Shadow of the Google Book Search Settlement. That page has links to the webcast and other materials. Excerpt:

The proposed Google Book Search settlement creates the opportunity for unprecedented access by the public, scholars, libraries and others to a digital library containing millions of books assembled by major research libraries. But the settlement is controversial, in large part because this access is limited in major ways: instead of being truly open, this new digital library will be controlled by a single company, Google, and a newly created Book Rights Registry consisting of representatives of authors and publishers; it will include millions of so-called “orphan works” that cannot legally be included in any competing digitization and access effort, and it will be available to readers only in the United States. It need not have been this way.

Update: The House has approved the executive compensation bill 237-185 -- the public interest position is yes. Our coalition letter of support.

In a report released yesterday, New York Attorney General Andrew Cuomo released a report on Wall Street bonuses "No Rhyme or Reason: The 'Heads I Win, Tails You Lose' Bank Bonus Culture". Today, the House will vote on PIRG-backed executive pay reforms which are a good first step toward reining in taxpayer abuses, addressing the failures exposed by the financial crisis, and enhancing long-term shareowner value. PIRG's Wall Street bailout pages. Associated Press:

The House turns to the legislation one day after New York Attorney General Andrew Cuomo concluded in a report that the nation's biggest banks, including Bank of America Corp., Merrill Lynch & Co., JPMorgan Chase & Co. and Goldman Sachs Group Inc., awarded nearly 4,800 million-dollar-plus bonuses in 2008. Citigroup, which is now one-third owned by the government as a result of the bailout, gave 738 of its employees bonuses of at least $1 million, even after it lost $18.7 billion during the year, Cuomo's office said.

An analysis of the 2008 bonuses and earnings at the original nine TARP recipients illustrates the point. Two firms, Citigroup and Merrill Lynch suffered massive losses of more than $27 billion at each firm. Nevertheless, Citigroup paid out $5.33 billion in bonuses and Merrill paid $3.6 billion in bonuses. Together, they lost $54 billion, paid out nearly $9 billion in bonuses and then received TA~ bailouts totaling $55 billion.

For three other firms - Goldman Sachs, Morgan Stanley, and JP. Morgan Chase - 2008 bonus payments were substantially greater than the banks' net income. Goldman earned $2.3 billion, paid out $4.8 billion in bonuses, and received $10 billion in TARP funding. Morgan Stanley earned $1.7 billion, paid $4.475 billion in bonuses, and received $10 billion in TARP funding. JP. Morgan Chase earned $5.6 billion, paid $8.69 bil1ion in bonuses, and received $25 billion in TARP funding. Combined, these three firms earned $9.6 billion, paid bonuses of nearly $18 billion, and received TARP taxpayer funds worth $45 bil1ion.

From our colleagues at CFA:
Consumer Complaints Up, Resources to Help, Down
Debt Collection is Fastest Growing Complaint in Latest Consumer Agency Survey
Washington, DC – State and local consumer agencies deal with problems that directly impact people’s lives and their wallets. Unfortunately, the latest survey of these front-line agencies conducted by the Consumer Federation of America (CFA), the National Association of Consumer Agency Administrators (NACAA) and the North American Consumer Protection Investigators (NACPI) shows that while complaints went up, the resources to help consumers went down. CONTINUE READING

Washington State Attorney General Rob McKenna (his release, ConsumerMan Herb Weisbaum's KOMO TV story) has filed a lawsuit (excerpt) against Rent-A-Center, the largest rent-to-own company in the nation. RAC is accused of abusive collection tactics.

Rental chain’s customers say collection practices include trying to break down a door, calling customers “ghetto trash”...“While companies certainly have the right to collect on outstanding debts, state law, along with the most basic standards of common courtesy, dictate how companies may collect on those debts,” said Attorney General Rob McKenna. “Attempting to kick doors down, calling the debtor’s friends and relatives, and scaring their children aren’t included in those basic standards.”

The charges are serious and eerily similar to those outlined in a major front page Wall Street Journal expose in 1993 by Alix Freedman, “Peddling Dreams: A Marketing Giant Uses Its Sales Prowess to Profit on Poverty." After that story hit, RAC hired a former U.S. Senator, Warren Rudman (R-NH) to do a "white paper" showing, as I recall, that rent to own is good, that the practices described were not representative of the company's policies and that the actions depicted were solely attributable to a few rogue store managers. Well, I didn't believe the Rudman report then and I don't believe it now. Not much has changed in rent to own except that, since 1993, the industry has increased its so-far unsuccessful efforts to preempt stronger state laws with a weak federal one (previous blog). Consumers should understand this: the predatory rent-to-own industry promises the dream of ownership, then takes it away with impossible contracts and unfair practices.

Especially in a bad economy, job seekers shouldn't be rejected because of errors on their credit reports or because they were victims of identity theft. We just did a press conference with Rep. Steve Cohen (D-TN) in support of his bill to ban the use of credit reports for employment, except in limited circumstances. Also participating were co-sponsor Luis Gutierrez (D-IL), Hilary Shelton of the NAACP, Audrey Wiggins of the Lawyers Committee for Civil Rights Under Law, Ruth Susswein of Consumer Action and Deidre Swesnik of the National Fair Housing Alliance. Many other consumer and civil rights groups, including the National Consumer Law Center, also support the bill. As I said (pdf of my full release):

Rep. Steve Cohen’s Equal Employment for All Act (HR 3149) is the right way to go. Let’s not deny jobs on factors that have nothing to do with potential work performance, especially when those factors could be mistaken and consumers face a nightmare on credit street trying to get the mistakes fixed.”

U.S. PIRG Statement Supporting
“Equal Employment for All Act of 2009,” HR 3149, by Rep. Steve Cohen (D-TN)

By Edmund Mierzwinski, Consumer Program Director
News Conference, Wednesday, 29 July 2009

“PIRG’s “Mistakes Do Happen” reports on credit bureau errors have documented that one-quarter to one-third of credit bureau reports contain errors serious enough to deny credit or employment. Then, there’s the Kafkaesque complaint dispute process. And, many industry observers call our error findings conservative.

In my ongoing review of credit reporting practices since the 1970 Fair Credit Reporting Act I have yet to determine why Congress allowed credit reports to be used for employment purposes in the first place.

With so many mistakes in reports, and such a tough job market out there, it makes even less sense.

Rep. Steve Cohen’s Equal Employment for All Act is the right way to go. Let’s not deny jobs on factors that have nothing to do with potential work performance, especially when those factors could be mistaken and consumers face a nightmare on credit street trying to get the mistakes fixed.”

-30-

Just had a "lower your credit card interest rate" robocall on my cell. These scam artists are a big problem, and not just because consumers pay for incoming minutes. Some people actually "push one" or call back and get roped into the scam. Don't do it. Recently, after receiving a "your car warranty is expiring" robocall, U.S. Senator Chuck Schumer called for action against robocalls and the FTC has promised action.

... doesn't mean we endorse either their product or the use of our work. A company using the domain called creditreport.com is selling over-priced unnecessary credit monitoring services ($14.95/month!, yikes!) and using U.S. PIRG data on mistakes in credit reports in its latest PR release. In this case, they actually also claim some added feature to their product. The company claims some sort of "push-button" dispute reporting system.

"With our new online dispute button, it’s now simple and easy for consumers to monitor and report potential mistakes,"

I wish I could push a button and make credit report mistakes go away. I've been walking around the Federal Trade Commission for years looking for the button that will at least wake them up to take credit reporting mistakes seriously. Also, remember, accurate, but negative information can only be removed by the passage of time. Not with a button.

We've launched the Health Care Harry tour. Harry's a giant prop helping our field staff make the pitch for real health care reform. Find out what's ailing Harry here.

He's being choked by paperwork and red tape, drug companies are trying to pull the wool over his eyes and give him pills he doesn’t need. And if he isn’t careful, insurers might just pull the rug out from under him by dropping his coverage, or slam a door in his face because he’s got a pre-existing condition!

Brian Krebs of the Washington Post reports that web services firm Network Solutions Says Hackers Accessed 573,000 Card Accounts. Officials of the firm then complain that the real problem is with state laws, not their own failure to guard confidential information:

"Network Solutions has begun notifying affected stores by e-mail and postal mail, and it is offering to notify the stores' customers as well. Forty-five states and the District of Columbia have enacted laws requiring customer notification when a data breach or loss jeopardizes the security of information, but the rules for complying with those laws differ from state to state. "We feel terribly about it, to burden them with the notification process, which can be kind of tricky because there is no one federal data breach statute," Wade said."

Consumers: this is why I would never, ever, use a debit card, especially on the Internet. With a debit card, fraud occurs against your own checking account and the law supposedly protecting you -- the Electronic Fund Transfer Act is weak. Plus, it's your own money you're missing until when and if the bank refunds it. Fraud against a credit card, on the other hand, is covered by the stronger Truth In Lending Act and the bank has a greater incentive to work hard to stop it. All plastic should be protected the same way credit cards are. If we get a new consumer agency, that could be one of its first efforts.

First in a new blog series: Reasons we need a new consumer agency. This weekend, occasional New York Times columnist Randall Stross writes that Our Payments Were Automatic. Stopping Them Wasn’t. If you've ever attempted to get your bank or its regulator to take your side in any dispute involving the weak, consumer-unfriendly Electronic Fund Transfer Act, whether it's the Stross problem of a firm refusing to turn off automatic checking account debits or a a debit card fraud ("you must have given someone your PIN!" (Of course, debit cards don't need PINs)) or a debit card blocking problem or the illegal use of a demand draft to rip money from your checking account, then you can attest that we need a new Consumer Financial Protection Agency that will enforce and, where necessary, update this law. More on the weak EFTA law here.

Last week, Steve Bartlett of the Financial Services Roundtable told the New York Times that his goal was to "kill" the proposed Consumer Financial Protection Agency. Here's a letter of opposition from Bartlett's group and over a dozen other industry lobbies who were part of the financial meltdown but prefer business as usual. Meanwhile, the failed regulators who are also not happy about giving up power and turf testified before the House Financial Services Committee Friday. NY Times: Regulators Spar for Turf in Financial Overhaul. Washington Post: On the Hill, Finance Officials Draw Battle Lines on Reform: From the Post:

John C. Dugan, head of the Office of the Comptroller of the Currency, said he was worried that the new law would explicitly give states the right to regulate banks' interactions with consumers, making it harder for national banks to offer uniform products across state lines. "For the first time in the nearly 150 year history of the national banking system, federally chartered banks would be subject to this multiplicity of state operating standards,"

Over at the excellent Public Citizen Law and Policy blog, Steve Gardner of the Center for Science in the Public Interest explains in his post Denny's: Public Health Enemy # 1 why he and CSPI

have filed suit ... in the Superior Court of New Jersey in Middlesex County, seeking to compel Denny's to disclose on menus the amount of sodium in each of its meals and to place a notice on its menus warning about high sodium levels.

New Jersey's consumer protection law — and the laws of other states — make it clear as can be. Companies have a legal duty to let their customers know material facts about what they're selling. Denny's knows that the high amounts of sodium in its meals are important to consumers. It just doesn't want its customers to know the truth.

Great column in the New York Times yesterday by David Pogue, pivoting off Congressional investigations of possible antitrust violations by the cellphone companies. In the column The Irksome Cellphone Industry, he asks "why do text message fees go up?, why do we pay for minutes when we are called as well as when we call?, etc." On text messages, he says:

The carriers can’t possibly argue that transmitting text-message data costs them that much money. One blogger (http://bit.ly/gHkES) calculated that the data in a text message costs you about 61 million times as much as the same message sent by e-mail.

In testimony last week by Fed Governor Elizabeth Duke (a former American Bankers Association official) and yesterday by Fed Chairman Ben Bernanke, the Federal Reserve has argued that it deserves to keep authority over consumer protection. Neither admitted to nor apologized for any of the Fed's abject failures to protect consumers from unfair mortgages that led to the financial meltdown; instead, we heard that the Fed was "strongly committed" to consumer protection. From the New York Times: Bernanke Tells Senate New Agency Isn’t Needed. What a ridiculous conceit. I've taken our joint testimony from June before the House Financial Services Committee and extracted Ten reasons to establish a Consumer Financial Protection Agency instead of trusting that the Fed will change into a consumer agency. See it after the jump.

Ten reasons to establish a Consumer Financial Protection Agency instead of trusting that the Fed will change into a consumer agency.

1. It ignored the growing mortgage crisis for years after receiving Congressional authority to enact anti-predatory mortgage lending rules in 1994, only issuing final rules in 2008, after the crisis had peaked.

2. It took five years simply to consider credit card disclosure regulation, only adding provisions to ban unfair practices after Congress moved aggressively, and only finalizing rules in December 2008.

3. The Fed has allowed debit card cash advances (“overdraft loans”) without consent, contract, cost disclosure or fair repayment terms. Banks earn an estimated $38 billion in total overdraft fees each year.

4. The Fed is allowing a shadow banking system (prepaid cards), outside of consumer protection laws to develop and target the unbanked and immigrants.

5. Despite advances in technology, the Federal Reserve has refused to speed up availability of check deposits to consumers, even after it successfully campaigned to give banks faster access to our money.

6. The Federal Reserve has supported the position of payday lenders and telemarketing fraud artists by permitting remotely created checks (demand drafts) to subvert consumer rights under the Electronic Funds Transfer Act.

7. The Federal Reserve has taken no action to safeguard bank accounts from Internet payday lenders.

8. The Federal Reserve and other banking agencies have failed to stop banks from imposing unlawful freezes on accounts containing Social Security and other funds exempt from garnishment.

9. According to a 2008 GAO secret shopper study, the regulators have failed to enforce the Truth in Savings Act requirement that banks provide account disclosures to prospective customers. Worse, the Federal Reserve’s 1990s regulation implementing the act encouraged this practice.

9. The Federal Reserve actively and successfully campaigned to eliminate a Congressional requirement that it publish an annual survey of bank account fees.

10. Finally, the Federal Reserve missed or ignored the housing bubble, leading to a world-wide economic collapse, failing its primary duty as a systemic risk regulator. If it cannot do its primary job, why should it be expected to be able to accomplish the secondary job of consumer protection?

For more information, see pages 11-21 of the joint testimony of over a dozen consumer and community groups.

Chairman Barney Frank (D-MA) of the House Financial Services Committee has announced that committee consideration of the Obama financial reform plan's centerpiece Consumer Financial Protection Agency will be delayed from next week until September. (The Hill newspaper; Wall Street Journal.) Previous blog-- big banks want "to kill" it. More from Huffington Post today on Elizabeth Warren's efforts to promote the needed agency.

U.S. PIRG's Health Care Advocate Larry McNeely has released a new report: The Small Business Dilemma: How Rising Health Care Costs are Tough on Small Business.

Our efforts revealed that small businesses who do not currently offer coverage would overwhelmingly like to, but are stymied by high costs, complications and red tape. [...] * 78% of small businesses who do not offer coverage would like to do so. * 80% of those owners who would like to offer coverage cite cost as a barrier

... to believe that the financial industry is for any reform at all that affects their failed industry. The head of the Financial Services Roundtable, Steve Bartlett, in today's New York Times story Lobbies Adopt Tone of Accord With President:

“We have sort of a dual goal,” Mr. Bartlett said. “One is to support comprehensive reform, and the other is to kill the consumer financial protection commission.”

I've always thought that the guys running Goldman Sachs were really smart -- Clearly, I overestimated them. [...] Goldman, flush with cash and profits, is squabbling with the Treasury about how much it should pay taxpayers to buy back the stock-purchase warrants it gave the government as part of the TARP deal last fall.

Sloan goes on to say, it wasn't just the TARP money directly to Goldman, it was also the AIG TARP bailout pass-through to Goldman and making Goldman a bank holding company, thereby opening the Fed's taps, and, as Sloan goes on to say, Goldman was helped even more than that:

Rather, I'm talking about the way that U.S. and foreign governments -- in other words, taxpayers -- saved the world's financial system, saving Goldman in the process.

How do we know whether Goldman and others also received billions more from the Federal Reserve, with no strings attached, right after they paid back their TARP funds? We don’t. As a matter of fact, we don’t know the names of virtually any of the big banks that got more than $2.2 trillion in taxpayer assistance from the Fed, because Chairman Ben Bernanke won’t tell us. He’s more interested in protecting bankers than taxpayers. That is wrong. The Federal Reserve has got to understand that this money does not belong to it; the money belongs to the American people.

Allies at the Center for Responsible Lending have a new website -- 400faces.org -- where victims of triple-digit payday loans can tell their stories.

In an effort to show the impact of predatory payday lending across the country and to bring public awareness to this issue, the Center for Responsible Lending has launched the 400 Faces of Payday Lending Campaign. Over the next few months, CRL will collect your stories and your pictures to show policymakers the negative effects of triple-digit interest rates and ask them to implement meaningful and effective solutions, such as a 36% APR cap on all consumer loans.

Over at the Washington Post, reporter Daniel de Vise interviews several students mired in high-cost student loan debt in the story Lifelines in the Student Loan Sea, with an accompanying video. The story explains new student loan payback programs available:

Starting July 1, student borrowers can cap their monthly payments at a modest sum determined by income and family size. A second initiative, the Public Service Loan Forgiveness Program, will erase student debt entirely after 10 years for graduates who work for government or various nonprofit organizations.

"The reality is that students are relying on loans to pay for college," said Chris Lindstrom, higher-education program director at U.S. PIRG, a public interest advocacy group based in the District.

In today's New York Times, the editorial Sharks Circle in Congress warns that it isn't just the bank sharks opposing the bill that the president has to worry about.

But there are other sharks in the water. The administration must also fend off federal regulators, who far too often have placed the bankers’ interests first and consumer protection second and want to preserve the status quo.[...]Federal regulators did more than fail to protect consumers from predatory mortgages and usurious credit card rates. They also made the financial suffering worse by invalidating state fair-lending laws that might have shielded millions of people.

Update: Pam Martens has an extensive story on arbitration in CounterPunch: Judicial Apartheid: Heralded by the Supreme Court as Fair, Vast Private Judicial System Exposed as Fraud.

In a major victory for aggrieved consumers, the arbitration mill known as the National Arbitration Forum has capitulated and settled with the Minnesota Attorney General. In a story first broken today by Business Week and reported also by the Associated Press and Minnesota Star Tribune, Minnesota Attorney General Lori Swanson has brought the arbitration mill known as the National Arbitration Forum to heel. According to her lawsuit last week, the firm had contracted with credit card companies, debt collectors and others in deceptive ways to abuse consumers, some of whom may not have even owed debts, according to previous studies. From Business Week:

After coming under increasing fire for bias towards major credit-card companies, the nation’s largest arbitration firm involved in adjudicating delinquent credit-card debt has agreed to pull out of the business, Minnesota Attorney General Lori Swanson disclosed on Sunday, July 19.

At a news conference this afternoon in St. Paul, Swanson said that National Arbitration Forum was owned by a New York hedge fund that also ran a debt collection agency and that the company was involved in more than 200,000 arbitration proceedings each year.

"The playing field is tilted against the consumer toward the company," Swanson said.

According to Swanson's office, the company's sales pitch to credit card companies included these lines: "The customer does not know what to expect from arbitration and is more wiling to pay. They ask you to explain what arbitration is, then basically hand you the money."

Just as the banks that helped destroy our financial system are fiercely opposing transformative financial reform, the health insurance lobby that has failed to develop a business model that will cover all Americans fiercely opposes the reasonable, but transformative, reform of offering a public plan option. Watch a video with U.S. PIRG's Larry McNeely at U.S. PIRG's Health Care pages. Read a column by Florida PIRG's Brad Ashwell Choice: Public Health-Care Option in the Lakeland, Florida Ledger newspaper. Excerpt after jump:

The reality is that the public option will be well positioned to implement the type of smart cost controls that the private insurers should have adopted long ago, but few of them did. It could create incentives for primary care, prevention and wellness; pay doctors for good health outcomes, not just the number of tests run and procedures performed; create incentives for utilizing patient centered research on which drugs and treatments work best; and ignore the hyperbolic sales pitches of drug company salesmen, instead opting for what is proven to work.

Professor Elizabeth Warren, who first proposed the idea of the Consumer Financial Protection Agency, has made a new Youtube video on the need for the agency. Over at Business Week, she also has an oped explaining why Consumers Need a Credit Watchdog. We were both interviewed for a CNN story yesterday -- I haven't found the video but the story is available: New consumer protection agency meets resistance. Excerpt:

However, the proposed agency is running into some resistance from the financial services industry. According to one of the industry's top lobbyists, stopping the agency is "our No. 1 priority."

In a New York Times story today on Amazon deleting previously purchased copies of several e-books by George Orwell from consumers' Kindle readers (with refunds), computer security expert Bruce Schneier notes one of the big problems of the digital world -- Your e-books aren't as much your own as your paper books:

“It illustrates how few rights you have when you buy an e-book from Amazon...As a Kindle owner, I’m frustrated. I can’t lend people books and I can’t sell books that I’ve already read, and now it turns out that I can’t even count on still having my books tomorrow.”

"was reading “1984” on his Kindle for a summer assignment and lost all his notes and annotations when the file vanished. “They didn’t just take a book back, they stole my work,” he said."

Yesterday's two hearings on the Consumer Financial Protection Agency went well. Joined by several other witnesses who are also members of Americans for Financial Reform at a House Financial Services full committee hearing (previous blog links to event), we pushed back hard against the claims of industry witnesses the day before. My AFR colleagues were Travis Plunkett of CFA, Janet Murguía of National Council of La Raza, Nancy Zirkin of Leadership Conference on Civil Rights, and John Taylor of National Community Reinvestment Coalition (all testimony and video archive). In the afternoon, the FSC subcommittee on the Fed also held a hearing on the reform package, featuring AFR colleagues Lauren Saunders of the National Consumer Law Center and Jim Carr of the National Community Reinvestment Coalition, along with Professor Patricia McCoy of UConn Law School, one of the nation's leading experts on bank agency law. Brady Dennis of the Washington Post has a good recap of the week's events and the growing clash over the whether the world's biggest economic collapse since 1929 warrants real reform. Over at Business Week, Professor Elizabeth Warren, the CFPA's chief proponent, has an oped explaining why Consumers Need a Credit Watchdog.

Meanwhile, as Goldman has recorded a return to massive profitability and massive bonuses (LA Times) due to a TARP assist, WashPo biz columnist Steven Pearlstein has yet another trenchant analysis of Wall Street pay: "The real problem with Wall Street pay is that these firms simply make too much money relative to the economic value they create." In the good news department, the WSJ reports (pd. subs. may be req'd) that at another FSC hearing today on the reform package, the securities lobby known as SIFMA will back heightened fiduciary duty requirements on broker-dealers. It's an important investor protection reform also in the Obama package. After they testify, we'll comment on whether they really and truly back it. Our release on yesterday's hearing.

From the Gainesville Sun: Liz Cox: For Florida’s recovery, swift broadband action is key:

...in 2007, half of Floridians still had no access to high-speed internet, and according to the Pew Internet & American Life Project, as of 2009, home adoption rates for African-Americans and rural residents are still lower than the national average. The most telling reasons for the gap include a lack of availability and high prices. Another disturbing broadband fact for the U.S.: What we consider “speed” actually isn’t.

Jamie Love, director of Knowledge Ecology International, perhaps the key group working anywhere to promote access to medicine by eliminating unfair patent and trade rules that allow brand name drug companies to block low-cost competitors, has a new HuffPo blog entry on the fight over generic competition to biologic drugs. Excerpt from Key democrats back BIO industry against consumers to delay generic medicines (biosimilars):

Unlike for pharmaceutical drugs, there is no easy way to get FDA approval for a generic biologic product (called biosimilars). Congress is considering an FDA reform to fix this. But the reform is being derailed by an effort by BIO, the trade association for the biotechnology industry, to create a long period before generics can enter the market. BIO is asking Congress to approve 12 to 14.5 year legal monopoly on a biologic product, that has nothing to do with the patent status of the product.

We testify today at a hearing of the House Financial Services Committee on the Obama financial regulatory reform plan (my own testimony). Yesterday, a phalanx of bank lobbyists testified as well. Apparently, there wasn't enough room at the table, because bank lawyer-lobbyist Ollie Ireland is joining consumer and community advocates as yet another industry witness today. While the hearings are on the full Obama plan -- safety and soundness, derivatives reform, the Fed, investor protection, etc. -- the banks have aimed the full might of their campaign-cash fueled lobby against the plan centerpiece: establishing a PIRG-backed Consumer Financial Protection Agency. Chairman Barney Frank (D-MA) has announced a committee vote on the agency for the end of the month. My colleague Travis Plunkett of the Consumer Federation of America, who joins me today as a witness, represented consumer groups and Americans for Financial Reform Tuesday at a Senate Banking Committee hearing on the consumer agency. The Washington Post on banker opposition at yesterday's House hearing, the Politico on the fight over reform and Bob Herbert's column Chutzpah on Steroids in the New York Times. Excerpt from Herbert:

What is up with the banks and the rest of the financial industry? The people running this system remind me of gangsters who manage to walk out of the courthouse with a suspended sentence and can’t wait to get back to their nefarious activities.[...]Now the industry is fighting against creation of an agency that would protect taxpayers and ordinary consumers from a similarly devastating onslaught in the future. And at the same time they are scrambling to raise credit card interest rates and all manner of exploitive fees to build a brand new superstructure of questionable profits on the backs of the taxpayers who came to their rescue.

Yesterday, Minnesota Attorney General Lori Swanson filed an important lawsuit against one of the largest arbitration companies, known as the National Arbitration Forum. Her release. USA TODAY's headline: Minnesota lawsuit claims credit card arbitration firm has ties to industry.

The lawsuit will shed important light on this system of private injustice. Just the first few sentences of her legal filing document the problem:

1. Just about every American has a credit card. The credit card companies often require—deep in the fine print of the consumer agreement—that the consumer forfeit his or her right to have any dispute resolved by a judge or jury. Instead, the agreements often require that any disputes be resolved exclusively through a private system of binding arbitration—and frequently through the National Arbitration Forum. The Forum represents to the public, the courts, and consumers that it is independent, operates like an impartial court system, and is not affiliated with any party. The consumer does not know that the Forum works alongside creditors behind the scenes—against the interests of consumers—to convince creditors to place mandatory pre-dispute arbitration clauses in their customer agreements and to appoint the Forum as the arbitrator of any disputes that may arise in the future. The Forum does this so that creditors will file arbitration claims against consumers in the Forum, thereby generating revenue for it.
2. The consumer also does not know—and the Forum hides from the public—that the Forum is financially affiliated with a New York hedge fund group that owns one of the country’s major debt collection enterprises.

Yesterday U.S. PIRG Health Care Advocate Larry McNeely testified at a House Judiciary subcommittee hearing on Biologics and Biosimilars: Balancing Incentives for Innovation. Like their predecessor brand name chemical drug manufacturers, biologic drug companies are arguing that they are special and deserve special protection from generic competition. We disagree. From our news release: “We need markets that drive innovation, not those that reward monopoly,” McNeely said before the House Judiciary Committee’s Sub-Committee on Courts and Competition on Tuesday. The generics industry and public interest advocates support Rep. Henry Waxman’s (D-CA) “Access to Life Saving Medicine Act,” while the pharmaceutical and biotechnology lobbies have lined up behind a House alternative offered by Rep. Anna Eshoo (D-CA).

In the New York Times, reporters Graham Bowley and Jenny Anderson report that TARP recipient Goldman Sachs is back to big profits:

“They exist, and others don’t, and taxpayers made it possible,” said one industry consultant, who, like many people interviewed for this article, declined to be named for fear of jeopardizing business relationships. [...] Analysts estimate that the bank will set aside enough money to pay a total of $18 billion in compensation and benefits this year to its 28,000 employees, or more than $600,000 an employee. Top producers stand to earn millions.

From the New York Times story When a Blogger Voices Approval, a Sponsor May Be Lurking:

And the Federal Trade Commission is taking a hard look at such practices and may soon require online media to comply with disclosure rules under its truth-in-advertising guidelines.

Many forms of online word-of-mouth marketing depend on the perception of unsolicited or personal opinions, said Robert Weissman, managing director of the advocacy group Commercial Alert.
“It’s a contrast to the Tupperware model, where everyone knows what’s going on, and no one’s trying to be deceiving,” said Mr. Weissman, whose group favors stricter oversight of marketing practices.

UPDATE: From the NY Times story UBS and Prosecutors Seek Hearing Delay:

The dispute between UBS and the United States has escalated into a diplomatic drama and has threatened to pierce the veil of Swiss financial secrecy."

The dispute, in which the Internal Revenue Service, backed by the Justice Department, is trying to force UBS to hand over the names of 52,000 wealthy American clients suspected of tax evasion, has escalated into a showdown that has frayed relations between Switzerland and the United States, peeled back layers of Swiss banking secrecy and rattled the world’s private banking industry. UBS and the Swiss have intensified their opposition this week, threatening to send more ripples through the global banking system.[...] In February, the I.R.S. sued UBS to compel it to turn over the names, just a day after UBS agreed to pay $780 million to settle criminal accusations that it had defrauded the I.R.S. by allowing wealthy Americans to hide billions of dollars in taxes in secret offshore bank accounts. The bank admitted to wrongdoing.

Kids, don't try this at home. Swoopo is a lottery -- it's not a store, not even an EBay auction -- and there's no good system for winning a lottery. As Mark Gimein explains in his Washington Post story At Swoopo, Shopping's Steep Spiral Into Addiction:

Unlike eBay, however, on Swoopo you pay 60 cents each time you make a bid. [...] What makes Swoopo so fiendishly compelling is the tendency of people to think of the bids that they have already put in as a "sunk cost" -- money that they have already put toward buying the item. This is an illusion. The fact that you have already bid 200 times does not mean that your chance of winning on the 201st bid is any higher than it was at the very beginning.

Every day, I get a new complaint or read a new story (Nancy Trejos in the Washington Post) about yet another credit card company practice designed to extract fees or larger payments from consumers, many of whom had never been late or over the limit to any creditor. Perhaps the most draconian is Chase raising its minimum payment for many customers from 2% to 5%, with no negotiation apparently allowed. (Eileen Ambrose reports on Chase in the Baltimore Sun.) Could Chase have done this gradually, in a stepped or tiered manner, over time? Sure. But they don't have to care, they're a bank. Some of these tactics may be justified by the souring economy, but how many are just plain unfair? How many are attempts to extend unfair practices until many are prohibited when the new credit card law takes effect next year? Over at his Red Tape Chronicles, MSNBC's Bob Sullivan has a long post with well over 1200 comments, some from people who say "why debt?" but many from outraged consumers. Columnist Henry Unger at the Atlanta Constitution has posts from his enraged readers. Over at the U.S. Senate, Chuck Schumer (D-NY) has asked the Fed to put a lid on rate increases (Hartford Courant).

Some top gun public interest lawyers have new jobs. From the Public Citizen Law and Policy blog:

On July 1, 2009, Allison Zieve became the new director of Public Citizen Litigation Group. Allison replaces Brian Wolfman, who had been with the group for nineteen years, five of them as its director. Brian moves on to the faculty of Georgetown University Law Center, where he will be co-director of the Institute for Public Representation clinic (a position recently vacated by David Vladeck, the new head of consumer protection at the FTC and himself a Public Citizen attorney for many years). Allison's practice at the Litigation Group has focused on health and safety matters, federal preemption, open government, class action fairness, due process issues, and the first amendment.

In her story today, Banks' 'courtesy' loans at soaring rates irk consumers, Kathy Chu of USA Today uses leaked internal industry memos and consultant white papers to explain the way banks and credit unions have become addicted to overdraft fee revenue and how feeding their addiction requires deceiving their customers and manipulating their transactions to increase fee income. It's a great story with lots of detail, including this:

Scott Talbott, chief lobbyist for the Financial Services Roundtable, representing large banks, says it's "unfortunate that low- and moderate-income Americans find themselves (using) overdraft services more often."

Chairman Barney Frank (D-MA) of the House Financial Services Committee has filed HR 3126 to implement the President's proposal for a Consumer Financial Protection Agency. From his release:

"I am confident that we will produce a bill that will provide greater consumer protections while in no way burdening the legitimate activities of responsible banking.”

Excerpt from U.S. PIRG news release from Transportation Analyst John Krieger:

American commuters are wasting 4.2 billion hours, nearly an entire work week per commuter, stuck in traffic. According to data released on Wednesday, traffic congestion also wastes 2.8 billion gallons of gas, which costs consumers $87.2 billion. The Urban Mobility Report, produced by the Texas Transportation Institute, also points to investment in public transportation as an important solution for congestion, showing that drivers would have suffered 646 million more hours of road delays were it not for public transportation. “Traffic congestion is like a tax that we all pay, sapping our time and money,” said John Krieger, Federal Transportation Policy Analyst for the U.S. Public Interest Research Group. “American commuters need better alternatives, particularly more and better public transportation. Each full bus can get fifty cars off the road; each full rail car would remove hundreds more.”

A new U.S. PIRG report released this week -- The Facts About Comparative Effectiveness Research -- finds that:

For the majority of medical conditions, no studies exist to help doctors – and their patients – determine the most effective course of treatment among all the available option. “The information just isn’t out there. Should a patient use a drug, undergo surgery, change her diet? With technological advancement as rapid as it is, the distance between what we know and what we need to know grows daily. We can get the answers, but we need to devote the resources to research them,” explained Jeff Bernstein, Policy Analyst for U.S. PIRG and author of the new report.

As I first read in the Knowledge Ecology International blog, Pope Benedict's new Encyclical Letter has some bold language on growing economic "inequalities."

"In rich countries, new sectors of society are succumbing to poverty and new forms of poverty are emerging. In poorer areas some groups enjoy a sort of “superdevelopment” of a wasteful and consumerist kind which forms an unacceptable contrast with the ongoing situations of dehumanizing deprivation."

On the part of rich countries there is excessive zeal for protecting knowledge through an unduly rigid assertion of the right to intellectual property, especially in the field of health care.

As first reported by Amol Sharma of the Wall Street Journal (pd. sub. may be req'd), the US Department of Justice is investigating AT&T and Verizon -- the not-so-Baby Bells, now known as "telcos" -- as well as airline alliances, the drug industry's "pay-to-delay-generics" deals and Google. Over at Public Knowledge, Harold Feld has an excellent blog explaining the welcome implications of the new leadership at DOJ antitrust re-examining and updating some tired old economic "orthodoxy" that served big firms well, but competition and the public interest, not so much. From Harold's blog, referring to the telco investigation:

The concept of network effect not even formally defined until 1985 [...] has increasingly shaped economic study as networks have become ubiquitous and the power of network effects and switching costs to lock in customers and enhance market power have increased exponentially. [...] Empirical evidence all points to the ability to raise prices and shut out competitors with market share significantly lower than that considered highly concentrated by HHI [a measure of market power developed before 1985 and heavily relied on by DOJ] standards. But whereas the previous generation dismissed such contradictions with approved University of Chicago orthodoxy with the same vigor as the Catholic Church suppressing Copernicus in favor of Ptolemy, the new generation applies a different framework.

In case anyone missed Dean Starkman’s recent cover story in The Nation on New York Times reporter/editor/columnist Gretchen Morgenson, it is well worth the read: The Most Important Financial Journalist of Her Generation.

Before we both testified the other day in the House Financial Services Committee, Professor Elizabeth Warren and I talked about the idea, right there in front of the door, with our videographer-intern, Ashi Soni. Click here or on the picture to go to Youtube. You can go to our action page to support the Consumer Financial Protection Agency. Tom Donohue, of the U.S. Chamber of Commerce, is pictured against. More on industry opposition to this sensible, necessary idea.

Keep checking our home page for more and more U.S. PIRG videos. Right now, Gary Kalman is also up there at uspirg.org -- talking health care reform.

The CPSC has announced its latest recall of Chinese-made cribs from Simplicity and its successor SFCA: "This recall involves all drop side cribs with a different or “newer” style of plastic hardware from those cribs recalled in September 2007." In an accompanying release CPSC Urges Consumers to Check Their Homes for Numerous Simplicity Nursery Product Recalls and list of all Simplicity recalls since 2005, the CPSC leads with:

SFCA Inc., the Reading, Pa.-based company that purchased the assets of juvenile product manufacturer Simplicity Inc. after foreclosure, appears to no longer be conducting day to day operations. SFCA Inc. is no longer answering phone calls, responding to e-mails from consumers, or providing repair kits to fix hundreds of thousands of defective cribs. At least 13 children have tragically died in recalled Simplicity cribs and bassinets. CPSC is urging all parents, caregivers, online sellers and purchasers, daycare providers, and thrift store owners to immediately check if they have one of the following Simplicity-made or Simplicity-branded products and dispose of those units where there is no longer a remedy.

Last week NYPIRG's popular and effective Straphangers Campaign released its latest Subway Shmutz Survey, ranking subway line cleanliness. As the New York Times headline stated, Clean Subway? The No. 7 Line Is as Good as It Gets. From the Queens Chronicle:

If a car was “basically dirt free” or had the occasional ground-in spots but was relatively clean, it was rated clean. Cars were rated unclean if they had a “dingy floor” and “one or two sticky dry spots.” And those that received dunce caps were caught having “heavy dirt, opened or spilled food, hazardous conditions, sticky wet spots and seats unusable due to unclean conditions.” The survey did not rate litter.

(Corrected urls 8/19/09) The American Prospect has issued a Special Report: July/August 2009: The Credit Crisis and Working America. It includes an article Regulation as Civic Empowerment, by me. Excerpt from my article on the CRA, community right to know laws on toxics, and other laws that empower consumers and citizens:

Laws that help citizens or workers build countervailing power are an underused mechanism for building better, more efficient government that intrudes less into markets and achieves better outcomes. [...] All of these citizenship strategies address the same broad problem: the imbalance between the concentrated power of affected industries and the diffuse power of ordinary people. By designing regulation so that it engages and informs citizens, facilitates organizing, and puts citizens into direct encounters with the industry as well as with regulators, these policies energize citizenship, and they begin to redress the structural power imbalance.

Back when the Clintons proposed health care reform in 1993, the health insurance industry helped crush it with a PR campaign based on a massive TV ad campaign featuring a special-interest oriented actor-couple attempting to pass as average consumers and whining about the government. Unfortunately, because the industry had so much money, they did pass as average consumers. The ploy worked in killing the health care plan. Now, after several days of reading whining comments from bank lobbyists about the proposed new Consumer Financial Protection Agency, it appears that the banks -- another industry that has failed us but still has a lot of money, that money buoyed by its taxpayer contributions from the TARP -- is thinking about bringing back Harry and Louise to kill the proposed Consumer Financial Protection Agency. First, here's a typical whining comment, this one from Scott Talbott of the Financial Services Roundtable (Washington Post):

"If you argue against the agency, then you could be incorrectly painted as arguing against consumer protection," said Scott Talbot, senior vice president of government affairs at the Financial Services Roundtable.

Financial industry and other business groups are considering running "Harry and Louise"-style ads to sway public opinion against the Obama administration's proposed Consumer Financial Products Agency. The original Harry and Louise television spot, financed by the insurance industry, helped defeat the Clinton health plan in the early 1990s. In the commercial, a middle-class married couple laments they are worse off under the new health-care regime, describing it as a bureaucratic nightmare.