Payday lenders fighting to repeal a statewide crackdown on their industry on Monday sued two of Ohio's top elected officials, arguing that repeated hurdles the lenders have faced in getting the issue on the November ballot are unconstitutional.

According to today's New York Times story Accounting Plan Would Allow Use of Foreign Rules, by Steve LaBaton, the Securities and Exchange Commission (SEC) is preparing rules changes that would allow U.S. companies to choose to be regulated under either international or U.S. standards. If adopted, the proposals would weaken investor protections. As the story points out:

James D. Cox, a securities law expert at Duke Law School who returned this week from teaching corporate law in Europe, said the shift to international rules amounted to "outsourcing safety standards." "We would not for a moment tolerate having American auto safety standards set by China or India," he said. "Why should we do it for financial safety standards? There has to be some accountability."

U.S. accounting rules, including a number of post-Enron, post-WorldCom (old enough to remember those debacles just 6 years ago?) investor protection reforms enacted as part of the Sarbanes-Oxley Corporate Reform Act of 2002, are so-called "rules-based" standards, while generally more permissive international rules are known as "principles- based" standards. Proponents of weakening U.S. law have used a variety of "apples-to-oranges" and, worse, deceptive arguments to claim that U.S. capital markets are both in the tank and in that tank because of the heavy hand of U.S. regulation. Yet as the the state and provincial securities cops (known as the North American Securities Administrators Association (NASAA), point out:

U.S. Markets Remain a Magnet for Capital

The cornerstone of the principles argument -- a claim of decreased foreign IPOs on U.S. markets -- is questionable, at best. In 2007, U.S. IPOs reached a record high, not seen since the year 2000, bringing in $54 billion, and including a large number of foreign IPOs from China.

Claims that the Sarbanes-Oxley Act (SOX) has driven away foreign companies that are unfounded. Currently, record IPO numbers in themselves argue against this claim. SOX is revered worldwide and SOX-inspired legislation has appeared in several foreign regimes, following the U.S.'s lead.

Foreign investors, counter to popular argument, are indeed drawn to U.S. listings due to the low cost of capital, high financial returns and premiums on home-market listings, and the fact that U.S. markets serve as a proving ground for foreign companies, which must demonstrate to investors and the financial community that they meet the U.S.'s high standards of investor protection and financial integrity.

The S.E.C. also plans to announce details of a pilot program that would enable foreign brokers to deal directly with American investors, while continuing to be largely regulated by the foreign country. The first country in the program will be Australia, although officials hope to eventually include other countries.

Members of the House-Senate conference committee on the CPSC Reform Act, led by Senator Daniel Inouye (D-HI) and Rep. John Dingell (D-MI), will hold their first official (it's public) meeting today at 3:30. Staff for the members have been meeting for many weeks, but several issues remain unresolved, including how many barriers to disclosure being demanded by industry will be appended to a critical new public hazards database requirement in the bill. That provision probably will not be discussed by the principals today, as negotiations are expected to continue into July. As one example of the need for the public database, we've known (from an activist baby blog) for over a month about hazards from Jardine cribs, but we didn't know how many complaints had been filed at the CPSC. Yesterday, we finally learned that at least 42 incidents had been reported, in the CPSC release Jardine Cribs Sold by Babies"R"Us Recalled Due to Entrapment and Strangulation Hazard.

Also today, on page one of the Chicago Tribune, Patricia Callahan and Amanda Erickson report in The Mattel loophole: Congress may back off pledge of independent toy testing that the independent lab testing requirement contains the "Mattel loophole," which we've been unable to remove from the bill. The loophole allows corporate proprietary labs to be approved and certified as independent.

Industry also continues to demand unheard of levels of preemption of state authority to protect their citizens from harm. Here's a story by Annys Shin -- Toymakers Frustrated by Patchwork of Safety Rules -- from yesterday's Post on the preemption debacle and a link to our consumer group letter, which the story refers to.

UPDATE: Alan White of Consumer Law and Policy blog has an item with links to the Illinois and concurrent filings by Washington State and California against Countrywide.

Original post: In today's New York Times, Gretchen Morgenson reports in Illinois To Sue Countrywide that Illinois Attorney General Lisa Madigan will file suit in state court today against Countrywide, the once-high flying predatory lender run by the flamboyant Angelo Mozilo. The firm is at the epicenter of the mortgage meltdown:

"People were put into loans they did not understand, could not afford and could not get out of," Ms. Madigan said. "This mounting disaster has had an impact on individual homeowners statewide and is having an impact on the global economy. It is all from the greed of people like Angelo Mozilo."

In response to eleventh hour efforts by a phalanx of special interest lobbyists demanding that Congress completely eliminate any state authority over product safety as an additional condition of their so-called support for the CPSC Reform Act, we've joined other advocates in a detailed letter urging rejection of the proposal for additional preemption. Previous blog has details on the state of play of the conference.

The word is that the Senate version of a housing assistance bill being negotiated (National Journal story on bill) by Banking Chairman Chris Dodd (D-CT) and ranking member Richard Shelby (R-AL) may not include the important and broadly bi-partisan House-passed Miller-Watt amendment (previous blog) that simply guarantees states the right to enforce state foreclosure laws (there are no federal foreclosure laws).

The American Banker has also reported that "a section on mortgage broker and originator licensing that would have specified that states could enforce stricter standards has been stripped." These are troubling developments.

This week, following a campaign led by the Media Mobilizing Project, a private investment group and Philadelphia's mayor announced (AP story) a plan to save the Philadelphia muni wi-fi project that was abandoned last week by its contractor, Earthlink. This is an important victory. Many observers believe that muni wireless can offer significant community and economic benefits and that the problem here was Earthlink's business model, piled on top of the baggage that the project had had from the start. The pioneering Philly wi-fi project has been under scurrilous attack by telco monopolist Verizon since it was an idea. Verizon sent a cadre of well-paid lobbyists to the state capital in Harrisburg to scuttle the plan, and pass legislation to make it difficult for other Pennsylvania cities to duplicate it, from when it was first announced in 2004. Verizon and its ilk have passed similar laws in other states. Nevertheless, thanks to the work of activists led by MMP, Philly wi-fi has another chance to help link communities together, and to the rest of the world.

The conference committee on CPSC reform is continuing its negotiations to reconcile the House and Senate-passed versions of product safety reform legislation. Along with other consumer groups, we continue to urge the conferees to take the strongest parts of each bill (Florida PIRG Sun-Sentinel op-edit).

Meanwhile over at the National Association of Manufacturers, they continue to say they are for reform, yet continue to push for gutting amendments to key parts of the proposals (NAM letter to conferees).

What does NAM want? Same as ever. Less authority to state attorneys general to protect the public, continued behind-closed-doors secret agreements between CPSC and manufacturers, lots more preemption of stronger state laws, fewer rights for whistleblowers, no Internet disclosure of hazard warnings and, of course, no ban on toxic phthalates. These pernicious proposals undermine the public's safety and should all be rejected.

If negotiations continue smoothly, the conference report could be sent to the President by July Fourth.

Here's a fact you may not know: The fastest growing uninsured population in the U.S. is young adults--of the 6.6 million people that have joined the ranks of the uninsured since 2000, nearly half are 19-34 year-olds.

So, Colorado PIRG Student Chapters have launched Colorado Health Care Alert to "question the myth that young adults in the state don't carry health insurance because we think we are invincible! While there may be a minority of young adults who reject health coverage, the vast majority of us want health care but experience difficulty."

Find out what other young people are saying about how the health care crisis affects them. Tell your story, too, at CoPIRG Student Chapters' Colorado Health Care Alert

Ensuring affordable and safe health care is a priority for all the PIRGs. Here's more on our prescription drug and other health care reform programs from MASSPIRG and CALPIRG.

Today the FCC held a hearing on cell phone early termination fees. At least two witnesses Pam Gilbert, an attorney representing California consumers and Pat Pearlman, a West Virginia state government consumer advocate representing the National Association of State Utility Consumer Advocates (NASUCA), cited our authoritative 2005 Locked In A Cell report. It describes the results of a nationwide survey of consumer opinion against these penalty fees of $150-200 or more that prevent you from switching cell service when you have shoddy service. The ETFs, of course, therefore allow the wireless providers to offer shoddy service, since you happen to be ... locked in a cell phone contract.

What is truly incredible and outrageous is that FCC Chairman Kevin Martin didn't hold this hearing in response to the pleas of the thousands of consumers who complain to the FCC about ETFs each year. He held the hearing in response to requests from a few powerful wireless companies that have asked him to enact a federal rule to protect them from consumers. The federal proposal Tom Tauke of Verizon and other special interest lobbyists back would have the effect of releasing the telcos from the liability they face if ETFs are held to be illegal and unconscionable under state law in several pending lawsuits. The real question is how far will Martin go in his last few months as chairman? Will he actually push for a vote to provide the telcos with an industry safe-harbor federal regulation that retroactively immunizes them from the liability they face for harms they have already caused millions of consumers? That is a bold step.

More and more, the Bush Administration appears to be a one-stop shopping center for companies seeking relief from strong state consumer laws. Previous blog.

Maryland PIRG has a new report: Toxic Baby Furniture: The Latest Case for Making Products Safe from the Start. From the Baltimore Sun story High levels of formaldehyde found in baby furniture by Dennis O'Brien:

The testing was conducted by Berkeley Analytical Associates, an environmental testing firm in Richmond, Calif. "If anything, their calculations are on the conservative side," said Thad Godish, an environmental management professor at Ball State University who was not involved in the report. Newborns and toddlers are more sensitive than adults to formaldehyde in cabinetry and other wood-finished furniture, he said, but cribs may be where babies are the most exposed.

Also today, the New York Times features Answers About Mass Transit from Gene Russianoff, longtime senior attorney for both NYPIRG and its highly-successful subway riders advocacy group, the Straphangers Campaign. From Gene:

You’ve pointed out one of the key challenges and tensions facing the transit system: Can New York afford to expand and still do the necessary repairs to the existing system? The Straphangers Campaign has always cast its lot with the latter, a subway that has 468 subway stations, 6,200 subway cars, 4,500 buses, hundreds of miles of track and tunnel lighting. That's the priority. Having said that, there are strong arguments for moving ahead on a handful of "mega" projects like the Second Avenue Subway, which would move hundreds of thousands of people the day it opens, as well as "decongest" several other lines. It would be great if our elected officials came up with the funding to do both. We will find out in the coming months.

Senator Mark Pryor (D-AR) held an important hearing yesterday exposing yet again the efforts by the Bush administration to write into its proposed auto safety roof-crush rules a provision asserting that compliance with the rule preempted all consumer state common law claims for harm. Incredibly, in his not-so-comprehensive, not-so-encyclopedic all-of-3-pages-long written testimony, the NHTSA bureaucrat James Ports didn't even discuss this critical matter. For that discussion, you'll need to go to pages 18-20 of Public Citizen President Joan Claybrook's encyclopedic testimony with exhibits. Claybrook ran NHTSA under President Carter. Both her testimony and that of Jacquie Gillan, vice-president of Advocates for Highway and Auto Safety, rip NHTSA's halfway effort on its technical merits as well. Of course, Congress never gave NHTSA -- or for that matter, FDA or CPSC -- the authority to claim that compliance with federal standards, no matter how weak, creates immunity from state consumer laws. But they've been claiming that power anyway. In fact, many of these statutes affirmatively preserve state law claims (previous blogs here and here).

FCC chief Kevin Martin has announced that

The FCC will hold a Public Hearing on early termination fees in the Commission Meeting Room directly following the June 12th open agenda meeting.

As I also note in a different previous blog, this unseemly effort is one of many by powerful interests to seek federal protection from enforcement of state consumer and public health laws. Big PhARMA, the car companies, medical device makers, banks and rent-to-own firms making predatory loans and others -- even including makers of flammable mattresses and chemical polluters opposing strong state laws against terrorist attacks -- are lined up before federal agencies, the courts and the Congress asking for protection from the powers of the states to protect the public, even when their products are defective or dangerous or their services sloppy and anti-competitive. While this Congress appears less pliant than previous ones on some matters, the Bush agencies and the courts are proving to be worse than complacent-- they are active aiders and abettors of the industry efforts.

UPDATE: over at his personal blog Gooznews, Merrill Goozner of the Center for Science in Public Interest blogs on the horrible Supreme Court decision in Riegel vs. Medtronic. The court held 8-1 that certain medical device companies whose devices have been rubber-stamped by FDA have immunity from lawsuits by injured consumers. As a commenter Marilyn correctly notes, "This is not a constitutional issue, so it could be remedied by legislation." We expect that even the Supreme Court will be shown that it has put its thumb on the scales on behalf of corporate interests quite a bit too heavily.

Check out this column by Adam Cohen, editorial observer, in today's New York Times: What Ever Happened to (the Good Kind of) States’ Rights?

The Bush administration and its Congressional allies have helped their friends in industry by enacting weak environmental, health and consumer regulations — and arguing that they wipe out more robust state protections.

John Dunbar of the Associated Press is reporting on negotiations between FCC Chairman Kevin Martin and Verizon, initiated at the behest of former Rep. Tom Tauke (R-IA), chief lobbyist for Verizon Wireless. If Verizon wins, Martin would slip a bad excuse of a federal early termination fee regulation into FCC rules, so that Verizon can avoid existing lawsuits under state law arguing that early termination fees are unfair and deceptive efforts to prevent cell phone customers from shopping around. The companies would be required to slightly lower and pro-rate the fees, but not enough to matter. This is an October surprise, in May, and could be scheduled for a vote as early as June 12 down at the FCC.

We issued a report, several years ago, called Locked In A Cell, and also joined AARP, Consumers Union and the National Consumer Law Center in comments to the FCC in its Early Termination Fee docket.

We also joined these groups and the Asian Law Caucus, and Disability Rights Advocates in joint comments and reply comments before the FCC in a related Truth In Billing docket.

Should your car insurance bill be based on how many claims, accidents and speeding tickets you have? Makes sense to us but not to the insurance industry. They want to base your rates on whether you paid your Mastercard on time last month and whether your credit score is high enough. Today, Consumer Federation of America's Bob Hunter (an actuary, a former Texas Insurance Commissioner and a former U.S. insurance czar) will urge the House Financial Services Committee and its Subcommittee on Oversight and Investigations to look at how insurance credit scoring is not based on legitimate insurance rating factors and hurts non-whites even worse than whites. Details in previous blog.

Years ago, the federal government foolishly deregulated interstate moving companies, leaving consumers whose goods are held hostage for punitive additional fees, or delayed weeks or even broken in transit with little recourse. With the arrival of mover advertising on the Internet, as the story Keeping 'Furniture Ransom' Off Your Moving Bill by Kristina Shevory in the New York Times notes, things have only gotten worse. The story does note a few sites where you can get information, at least, including the federal government site protectyourmove.gov and the bad mover warning and consumer advice site movingscam.com. The story notes that Florida and Maryland are among states with strong intrastate moving protections.

On Thursday, during consideration of mortgage meltdown response legislation, the House overwhelmingly passed on a 256-160 vote (Pro-consumer vote is AYE) the bi-partisan Miller-(D-NC)-LaTourette-(R-OH) amendment. This previous blog has details. Over at the Credit Slips blog, Professors Elizabeth Warren and Adam Levitin discuss the vote. Professor Warren (after noting that even the national bank regulator known as the OCC has previously ceded foreclosure law to the states) makes the following points:

There are no federal foreclosure laws. Any mortgage holder--including a national bank or thrift--must abide by the terms of the state's foreclosure laws. But in the past few weeks, national banks have started making a new argument: state laws are pre-empted whenever a national bank holds the mortgage, so the states can't make them follow the local rules.[...] The scope of this argument is stunning. Because there is no federal foreclosure law, would the banks be free to do whatever they wanted? Could they simply order families out of their homes? Would federally-charted banks start buying up troubled loans from other banks, then doing their own vigilante expulsions?

I would only add that for those who believe that we need a legal and policy marketplace with 51 or more -- not just one -- innovation centers, it's nice when we win, even when it appears that the correctness of our position is obvious to anyone with knowledge of the subject. But wherever they can, powerful interests are seeking to make it harder for consumers to obtain justice in the state courts, for state attorneys general to exercise their traditional police powers to protect their citizens and for state legislatures to act as laboratories of innovation. More than a few of the powerful interest efforts can be characterized as vigilante policy power plays, but the current courts and administration players are largely with them. We must exercise eternal vigilance to hold their efforts back.

Note that our letter refers to Miller-LaTourette as an amendment to HR 5830, the American Housing Rescue and Foreclosure Prevention Act. HR 5830 became part of a floor package known as HR 3221, which after consideration of a variety of amendments, passed the full House but faces a complicated road, as noted in today's New York Times story Housing Bailout Bill Seems to Be on Shaky Ground by Stephen Labaton and Steven Weisman.

As for the OCC, I have previously and variously referred to it as not just a regulator but as a regulator-cheerleader-preemptor-in-chief.

We have joined leading consumer community and civil rights groups in a coalition letter supporting a critical Brad Miller (D-NC) Steve LaTourette (R-OH) amendment to HR 5830, American Housing Rescue and Foreclosure Prevention Act of 2008, on the House floor. From our letter:

With two million families holding subprime loans projected to lose their homes due to foreclosures initiated over the next two years, and 40 million of their neighbors projected to lose collectively $200 billion in home equity, it is important that the federal government and the States use the means at their disposal to implement prompt, effective measures to mitigate the impacts of the crisis on homeowners, their communities, and the economy generally.

Meanwhile, the American Bankers Association has sent out letter making the patently false assertion that:

The Miller/LaTourette amendment, expected to be offered during floor consideration of the American Housing Rescue and Foreclosure Prevention Act of 2008, would alter long-standing authorities of the federal banking agencies to preempt state laws which conflict with federal law and which interfere with the safety and soundness and other regulation of national banks and federal thrifts.

This narrowly-crafted amendment does not overturn the recent Supreme Court decision in Watters v. Wachovia or other jurisprudence. Rather, the amendment is necessary to ensure that overzealous federal regulators do not change these current understandings in the future or attempt to use federal law to preempt such laws, to the detriment of families struggling to keep their homes.

When the somnolent regulators over at the regulator/cheerleader known as the Office of the Comptroller of the Currency (OCC) issue a civil penalty (OCC release) against one of the members of their country club --in this case, the nation's #4 bank, Wachovia -- think Halley's Comet, think hundred year flood, think Cubbies win the World Series -- you get the idea. Also think: who got there first and shamed the OCC into action? In this case, it was a Page One New York Times story nearly one year ago by Charles Duhigg, Bilking the Elderly, With A Corporate Assist. That story reported that at last one victim had been scammed as early as 2003, and that several banks had warned Wachovia since then that its accounts were being used to fleece their customers (our previous blog after release of "Yikes! Double Yikes!" Wachovia emails). As Duhigg reported in his story Friday on the settlement:

The bank's actions were "part of a pattern of misconduct" that resulted in Wachovia’s collecting millions of dollars in fees, regulators wrote. Wachovia has agreed to pay a $10 million fine, contribute $8.9 million to consumer education programs and make restitution to victims that could top $125 million. In a statement, the bank said this "situation was unacceptable and we regret it happened."

severed relationships with Mexican foreign-exchange firms in December and January after authorities began their inquiries. Some have struck agreements with the government to improve their efforts to fight money laundering, avoiding prosecution.

In 2005, [Wachovia] introduced the Dinero Directo card to facilitate cross-border remittances. The bank pushed into the business despite well-publicized concerns from U.S. law enforcement that such firms were sometimes used to launder drug money. Wachovia declined to discuss why it pursued this business despite the warnings. Internal emails and documents filed in federal courts in Miami, Chicago and New York describe former ties between Wachovia and money-changing firms.

... Lee has continued to do business with banks and licensed mortgage brokers who fail to detect questionable actions by him and the people working for his companies. Last year, Wachovia, the fourth-largest U.S. bank, funded 196 loans totaling about $54.2 million that Lee brought to the financial institution, according to an e-mail sent to Lee by Scott Davenport, a former national account executive with Wachovia.

Davenport sent the e-mail several months after The Washington Post and other publications reported that cease-and-desist orders had been issued against Lee in Maryland and Georgia for originating loans without a license. Soon after I inquired about Wachovia's business transactions with Lee, Davenport was fired. Wachovia confirmed that Davenport was terminated but declined to comment why.

2 bad 4 us that the big bnks & OCC r BFFs (Best Friends Forever).

Back to Duhigg: His story also points out that not everyone is happy with the OCC action, which requires bilked consumers to run through a complicated, if court-approved, rat maze to obtain restitution:

Under the terms of the settlement, victims will not automatically receive compensation from Wachovia. Instead, they will have to submit claims through a complicated bureaucracy. Because many of the victims are elderly or poorly educated, it is likely many of them will stymied by these obstacles, Mr. Markey said. In previous cases, the comptroller’s office, also known as the O.C.C., has mailed checks to victims of fraud, rather than requiring them to file claims. [Release from U.S. Rep. Ed Markey-D-MA: Weak Wachovia Deal Shortchanges Elderly Fraud Victims]

The Consumer Federation of America's Bob Hunter -- the nation's leading independent insurance expert (actuary, former federal insurance czar, former Texas insurance commissioner) -- has a new report: State Automobile Insurance Regulation: A National Quality Assessment and In-Depth Review of California’s Uniquely Effective Regulatory System , 04/24/08 (109 page pdf). Here is an excerpt from the shorter news release.

[The report] found that rates have risen more slowly in the fifteen states that require insurers to receive advance approval of rate increases from the state. States with “prior approval” regulation also performed well in spurring competition and generating significant profits for insurers. The top-performing state in keeping rates down and providing comprehensive consumer protections was California.

The State Foreclosure Prevention Working Group has released its second major report. This multi-state group is comprised of bank and credit regulators and state attorney generals representing at least 37 states. Here's an article on the study by one of the nation's leading financial reporters, Jonathan Epstein of the Buffalo News. From the WV Attorney General's office release:

Major findings of the Foreclosure Working Group included:
Seven out of ten seriously delinquent borrowers are still not having alternatives to foreclosure identified by their mortgage servicers. The number of borrowers having alternatives to foreclosure identified by their servicer has increased, but it has been matched by an increasing level of delinquent loans; thus, the relative percentage has remained about the same.

One in 33 homeowners is projected to be in foreclosure primarily over the next two years, as a result of subprime loans made in 2005 and 2006.... Defaulting on the Dream: States Respond to America’s Foreclosure Crisis is the first-ever, comprehensive look at what all 50 states and the District of Columbia are doing to try to address the subprime mortgage fallout. The report finds that more often than not, states are at the forefront of developing policies and programs aimed at preventing more irresponsible loans from being made and improving residents’ ability to stay in their homes.

The Washington Post story Chemical Industry's Influence at EPA Probed by Lyndsey Layton reports in detail today on a House Energy and Commerce Committee investigation into whether the "chemical industry has stacked EPA panels" responsible for determining safe levels of toxic chemicals.

According to the story, the committee is investigating whether EPA and the main chemical manufacturer trade group (now known by the benign-sounding name, the American Chemistry Council) worked together to keep scientists with industry conflicts-of-interest on key science advisory panels, but threw off an independent state-paid scientist whose views did not comport with the industry's. Here is the April 2nd Dingell-gram, or information demand, from committee chairman John Dingell (D-MI) and Investigations subcommittee chairman Bart Stupak (D-MI) to the chemistry club. Here is an excerpt from the Post story.

The lawmakers want to know why the EPA allowed the scientists in question to remain on expert panels but removed a public health scientist, Deborah C. Rice, from a panel at the chemistry council's request. Rice chaired an EPA panel last year that reviewed safe levels for deca-BDE, a polybrominated diphenyl ether used as a fire retardant in television casings and other electronics. Deca has been found to cause cancer in mice and is a suspected human carcinogen.

In other toxic chemical news, Vicki Ekstrom over at Stateline.org has a nice story States lead feds in toy safety summarizing all the work being done by the states to protect us from toxic hazards. This week, Washington State Governor Christine Gregoire signed PIRG-backed toxic toy legislation.