Even leaving aside the obvious need to regulate the shadow banking system — if institutions need to be rescued like banks, they should be regulated like banks — why were we so unprepared for this latest shock? When Bear went under, many people talked about the need for a mechanism for “orderly liquidation” of failing investment banks. Well, that was six months ago. Where’s the mechanism?

Annys Shin of the Washington Post is reporting in a story Tighter Lead Rule for Kids' Items that the CPSC will announce today Monday a legal opinion that confirms that the new Consumer Product Safety Improvement Act requires that all children's products containing lead in amounts greater than 600 ppm must be off the shelves by February, and will require that product previously manufactured and in inventory be destroyed. The bad news is that at a recent public meeting, the CPSC all but told industry lawyers and lobbyists that -- (paraphrase) "except for toys with toxic lead (and probably also toxic phthalates) where that pesky Congress has boxed us in, not to worry as we intend to go out of our way and interpret all other effective dates for all new product standards as loosely as possible, so you can keep on selling dangerous products you've already made." I noted this pro-industry slant in my blog after that meeting, as did Annys Shin in her blog. Page 11 of this CPSC slideshow from that meeting explains the rationale for lead and phthalates; previous pages explain why other dangerous products may be treated with less deference to safety.

One observer briefed on the situation described the session as a “game of chicken” between the government and the heads of the major banks.

We must avoid simply merging regulators and hoping for synergies. We need a system that focuses on the prevention of crimes and crises...

He makes the interesting proposal of walls between classes of customers. We are not sure that will be enough of a solution to address the meltdown that has been created by numerous factors ranging from the too-big-to-fail doctrine that placed deposit insurance and taxpayers at risk and the interconnections that created flashpoints and accelerants instead of fire breaks, but it could be a part of a solution. Excerpt:

Seventy-five years later, instead of trying to limit what products innovative financial firms can offer, it would be more prudent to limit the markets to which they can sell their wares. In other words, the customers, not the companies, should be divided. This could be accomplished by extending the current system of government classification of “qualified investors,” used to limit who can invest in things like hedge funds. By demonstrating expert knowledge or the ability to absorb loss (because of high net worth), qualified investors could be given a pass into the caveat emptor world of modern Wall Street. Those without the inclination, the sophistication or the deep pockets to qualify would be limited to the more closely regulated menu of stocks, bonds and mutual funds.

In an exclusive, the Chicago Tribune's Patricia Callahan, one of the nation's leading CPSC watchdog reporters, finds that Feds, Graco withheld bassinet warning:

The U.S. Consumer Product Safety Commission botched the recall of the Simplicity bassinets, telling some American families that they should not put their babies to sleep in the bassinets while allowing others to continue placing their infants in a potentially deadly product.

Federal safety regulators and Graco Children's Products knew two weeks ago that bassinets sold under the Graco name had the same dangerous design that caused two babies' deaths but did not alert the public as part of a larger recall, the Tribune has found.

"Oh, my God," said Cara Smith, Illinois Atty. Gen. Lisa Madigan's deputy chief of staff, who has been investigating the bassinets. "What possible reason would you not get that information out? Utter disregard for the safety of babies. They sat on that information while people continued to use these bassinets believing they were safe."

The CPSC has a new gateway webpage for all things - rulemakings, comment deadlines, notices and more -- related to the implementation of the landmark Consumer Product Safety Improvement Act (CPSIA). Since the new law has some very tight regulatory timelines, the page also allows you to sign up for either an old-school email list or a more modern Web 2.0 RSS feed to learn about updates to the page.

As expected (my previous blog explaining our opposition) the FCC on Saturday issued an order granting AT&T and other telco companies their forbearance requests to provide significantly less information about consumer complaints, infrastructure buildouts and other matters of public concern to the commission. In his statement, Commissioner Michael Copps explains some of what he and Commissioner Adelstein (his statement) were able to salvage for consumer protection:

Rather than having certain ARMIS data that is currently submitted to the FCC disappear into the abyss via forbearance, we reached a compromise with regard to the ARMIS reporting requirements which can keep us from plunging off a cliff. First, the Commission grants covered carriers forbearance from certain ARMIS reporting requirements. Second, forbearance is conditioned on carriers continuing to collect and publicly make available their data on service quality and customer satisfaction for two years. They also must continue to collect infrastructure and operating data for the next two years. Third, we launch a Further Notice of Proposed Rulemaking to, hopefully, accomplish what we have avoided all these years—a reasoned, rational and relevant approach to ensuring that the data necessary for consumers and for state and federal regulators will be available going-forward.[...] For these reasons, I approve in part, concur in part, and dissent in part – a messy vote for a truly messy item.

As expected (my previous blog), Treasury Secretary Paulson (remarks, fact sheets, etc) and the little-known Fannie/Freddie overseer, the Federal Housing Finance Agency director Joe Lockhart (statement), held a Sunday morning news conference to announce the takeover of the quasi-public Fannie Mae and Freddie Mac. Fed chairman Bernanke's statement. Joint bank regulator news release. New York Times website story. Washington Post website story. Floyd Norris in the NY Times. Blog by Dean Baker, an economist and co-director of the public interest think tank Center for Economic and Policy Research: "Yes, this was predictable." More from Baker:

From Dean Baker:

As I said back in September of 2002: "If housing prices fall back in line with the overall rate price level, as they have always done in the past, it will eliminate more than $2 trillion in paper wealth and considerably worsen the recession. The collapse of the housing bubble will also jeopardize the survival of Fannie Mae and Freddie Mac and numerous other financial institutions."

The Treasury Department on Sunday seized control of the quasi-public mortgage finance giants, Fannie Mae and Freddie Mac, and announced a four-part rescue plan that included an open-ended guarantee to provide as much capital as they need to stave off insolvency. At a news conference on Sunday morning, the Treasury secretary Henry M. Paulson Jr. also announced that he had dismissed the chief executives of both companies and replaced them with two long-time financial executives.

Freddie Mac and Fannie Mae have also inflated their financial positions by relying on deferred-tax assets — credits that the companies have built up over the years that can be used to offset future profits. Fannie maintains that its worth is increased by $36 billion through such credits, and Freddie argues that it has a $28 billion benefit. But such credits have no value until the companies generate a profit -- something they have failed to do over the last four quarters, and something that is increasingly unlikely within the next year.

As early as today (Washington Post) the FCC may act on a petition from AT&T asking that FCC weaken its requirements for telecommunications companies to provide it with important data on consumer complaints and other matters, including levels of infrastructure investments. The company makes the absurd claim that consumers can analyze JD Power and other outside rankings instead of analyzing FCC complaints. Last month, we joined Free Press and Consumers Union in a filing opposing the proposal. We said:

The Commission should deny AT&T’s petition on both substantive and procedural grounds. We believe the ARMIS reports continue to serve the public interest by openly providing valuable information to the Commission, consumers, public interest groups and state authorities seeking to protect their citizens.

I just left some of my consumer colleagues at the second half of an all day CPSC seminar on the implementation of the landmark CPSC Improvement Act. The event is being held in an auditorium at the Commerce Department downtown. The building is named for Herbert Hoover but seemed older than that. In addition to the scant ten of us, the other 400 plus seats were full of industry lobbyists. Most of the questioners from the industry seemed to be asking the CPSC to interpret the law in a way that would allow them to keep selling existing but soon-to-be non-compliant inventory. In addition, one CPSC official seemed to directly suggest that for certain products that would become banned hazardous substances six months after August 14 (when the President signed the bill) it would be best to leave the room and book some containers on ships for export as soon as possible.

My analysis is that the CPSC's regulatory culture has always leaned toward interpreting the law prospectively -- that is, in favor of reading newer, more stringent laws to only apply to future products -- but that in some of the important provisions of the CPSC Improvement Act it is clear that the Congress did not intend them to continue to do that. Nevertheless, I got the sense by the tone of many of the agency comments -- and I hope I am wrong -- that they appear ready to bend over backwards wherever possible to find a tortured statutory interpretation that is favorable to continued sale of existing but-soon-to-be-non-compliant inventory.

The executive branch watchdog group known as OMBWatch has a summary of the new CPSC Reform Act available. We expect that the president will sign the bill this week when he returns from the Olympics. The OMBWatch story links to its earlier analysis Product Safety Regulator Hobbled by Decades of Negligence, a useful summary of the agency's history by the numbers.

We've posted a short video (at top right of page) of me explaining why we need to improve toy and product safety by finishing Congressional action on the CPSC Reform Act, now mired in conference committee where industry lobbyists take potshots daily at its most important provisions. It was taped a few months ago. Previous CPSC blog.

Fed Richmond Bank President Jeffrey Lacker and Fed Philly Bank President Charles I. Plosser both gave speeches yesterday (Washington Post and Bloomberg via New York Times) criticizing the bailout of the investment bank Bear Stearns by the New York Fed. The Post story lists a number of other insider critics of the action, which could lead to greater risk-taking. When financial companies can count on the fact that they are seen as too-big-to-fail, they take bigger risks. It's also called moral hazard. Our previous Bear blog.

As long as we're on the topic of the Fed, Professor Robert Auerbach of the LBJ School at the University of Texas has a new book out-- Deception and Abuse at the Fed: Henry B. Gonzalez Battles Alan Greenspan's Bank. Auerbach served as chief economist under Chairman Gonzalez (and other chairs) of the old House Banking Committee. The book is getting good reviews. I look forward to reading it, as among the events it chronicles are the first five years, 1989-94, that I spent in Washington, while Henry B. -- a consumer and community champion -- supervised the savings-and-loan cleanup. Excerpt from the book:

The Fed could not silence or intimidate Gonzalez. Greenspan and his staff of lobbyists made the rounds in Congress without making any sales that mattered to Gonzalez. The congressman saw to it that the Banking Committee would maintain an arm's-length relationship with Greenspan and institute actual checks and balances. Gonzalez wanted action taken on issues that were important to the country. The heat generated by the Fed and its sympathizers never caused Gonzalez to stop an investigation.

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).

In her Washington Post story Scrutiny of Phone Fees May Broaden to TV, Internet, Cecilia Kang reports on Saturday that the 12 June FCC hearing on unfair cell phone early termination penalty fees

may be expanded to include a discussion on similar fees for ending cable and Internet services ahead of schedule, the chairman of the Federal Communications Commission said in an interview yesterday.

A new report, Still Not Safe, from Consumers Union, publishers of Consumer Reports, finds that product recalls are on track to break the record set last year. Here is the news release:

According to the analysis, CPSC has initiated 121 recalls of unsafe products for the first four months of 2008, a total of nearly ten million products. At the current rate, the CPSC will issue more than 800 recalls in their 2008 fiscal year, a 70 percent increase over last year.

Apparently for a few weeks now, the Washington Post's consumer blog called The Checkout has been back up, now with reporters Annys Shin, Nancy Trejos and Ylan Q. Mui posting stories, including this one by Nancy Trejos on the bank regulators' and FTC's mediocre job with the new risk-based pricing notices proposed rule. Took 'em five years, could have done better, a lot better. This was supposed to be a corrective rule addressing a flaw created by a 1996 mistake by Congress when it failed to comprehend the impact of risk-based pricing and took away some consumer rights -- the risk-based pricing notice passed in 2003 had massive potential to correct that wrong but now could end up to be a colossal waste of paper and a missed opportunity to balance the scales between consumers and lenders while teaching consumers about credit.

Over at the Consumer Law and Policy blog, Jeff Sovern blogs on Adam Levitin's response to the ABA Study on Regulation of Credit Cards . For lawyers, in the room, that's the Bankers, not Bar, Association. ABA lobbyists have been running around the hill holding up this study like garlic and silver bullets.

Also, at CL&P, Sovern blogs on the new report What Californians Understand About Privacy Offline by Chris Hoofnagle and Jennifer King.

Today's USA Today has a point-counterpoint on the proposed new credit card regulations. USA Today says: Our view on consumer protection: Feds take overdue first step to curb credit card abuses but urges caution, as the Fed often fails to follow through.

Not surprisingly, Ed Yingling of the American Bankers Association says: "Don't turn back the clock on the credit card market and reverse the advances that have led to lower costs and greater choices for cardholders."

We had a tough loss in the appellate courts last week, when New York State's pioneering airline passenger bill of rights was struck down under the usual weak judicial analysis: vague preemption precedents trump a state's traditional and well-established police powers to protect its citizens, even when no federal law exists. The New York Times editorial Board Blog has an entry Bad News for Airline Passengers, with 71 comments.

Meanwhile, you may be wondering why all your flights are being canceled for inspections. It's because the inspections weren't done on schedule. Why not? Well, it appears that the FAA let the airlines slack off.

So the FAA came under harsh Congressional scrutiny this week for its apparently cozy relationship with its "customer" airlines as the Congress drilled down at the question: "Why did FAA inspectors let Southwest Airlines fly un-inspected planes then found to have cracks in the skin (and still allowed to fly) and why is United all-of-a-sudden grounding flights?" Chairman James Oberstar (D-MN) of the House Committee on Infrastructure and Transportation led the hearing. From Mathew Wald's story Inspectors Say FAA Inspectors Ignored Violations in the New York Times:

"You’re looking at safety as a system, and the system itself has cracks," he said. The F.A.A. now refers to airlines as its customers, he said. "We can’t have a situation in which the customer calls the F.A.A. to complain about their service person, Mr. Boutris, to get him removed,” said Mr. Oberstar.

The FAA's reliance on airlines to voluntarily disclose safety issues "promotes a pattern of excessive leniency at the expense of effective oversight and appropriate enforcement," Inspector General Calvin L. Scovel told the House Transportation Committee yesterday.

By a narrow 51-49 margin at the buzzer, the results are in at The Economist magazine online debate on risk and government regulation: By intervening to regulate business and financial risks, government has made things worse. This previous post links to my featured participant entry as a kind of sixth man off the bench to the "Con" presenter, Paul Moore of the University of Ulster. Of course, we don't support all regulation, as I made clear in my post.

You don't see this very often. In a New York Times story by Edmund Andrews and Steve LaBaton In Washington, a Split Over Regulation of Wall Street about Congressional efforts to reorganize financial regulation, a prominent Washington lawyer and a former top regulator at the OCC (our site OCCWatch), OTS and predecessor agencies admits that the regulatory system creates a race to the bottom. I doubt that any current OCC official would ever say that. Excerpt:

Except for the Federal Reserve, all of the federal bank agencies receive funding from fees paid by member institutions, and some specialists have long argued that the agencies competed with each other to woo institutions with lighter regulation. "There was no federal coordinated oversight, and as a result there was a competition to reach the bottom, both in federal and state organizations," said Brian C. McCormally, a former enforcement chief at the Office of the Comptroller of the Currency.

The weekend papers are full of stories about the New York Fed's extraordinary bailout being extended to the maverick Wall Street investment bank Bear, Stearns. One story -- Run on Big Wall St. Bank Spurs Rescue Backed by U.S. -- in today's New York Times by Landon Thomas, points out that:

Traditionally regulators have helped commercial banks in financial panics, but not investment banks, which do not hold customer deposits. But the 1999 repeal of the Glass-Steagall Act, the Depression-era law that separated investment banks and commercial banks, led to consolidation within the financial industry that has made such distinctions harder to make. "I don’t remember a Fed action aimed at a noncommercial bank; this is the kind of thing you see in this post-regulatory environment," said Charles Geisst, a Wall Street historian at Manhattan College.

The reason for the bailout, from the regulator point-of-view is simple: everything is now connected to everything else.

Regulators thought that the interconnected economy would absorb and diffuse risks. Instead, these interconnections and use of exotic financial instruments no one understands -- coupled with the moral hazard created by the repeal of Glass-Steagall, which allows would-be lords of the universe on Wall Street (their term, not mine) to play with taxpayer-insured deposits at commercial banks -- has force-multiplied local or individual financial problems into world-wide financial crises. No more firewalls or fire breaks-- we now have connections that act as flash-points or accelerants. That so-called moral hazard is amplified when big banks take even bigger risks when they know that they are too big to fail.

But, as Morgenson concludes, not to worry, there's always you and me:

Regulators must do whatever they can to keep the markets open and operating, and much of that relies upon the confidence of investors. But by offering to backstop firms like Bear, who were the very architects of their own — and the market’s — current problems, overseers like the Fed undermine a little bit more of that confidence.[...] That will leave the taxpayer, alas. As usual.

Sorry, I can't comment on every interesting story on this bailout. One more to check out is by Edmund Andrews in the New York Times. He points out in Fed Chief Shifts Path, Inventing Policy in Crisis that while Fed Chair Ben Bernanke once relied on "consistent principles," he now "is inventing policy on the fly."

John Wilke of the Wall Street Journal is reporting on the website (pd. subs. req'd) that FTC Chairman (her official title) Deborah Platt Majoras will resign within a month:

Under Ms. Majoras, the agency stepped up federal enforcement of data-security laws, forcing corporate boards to safeguard consumer data and imposing penalties for breaches. It has also worked to curtail identity theft, and pressed advertisers to curb junk-food pitches to children.

The FTC generally sided with the Justice Department and brought few major antitrust cases. And it had a mixed record in court, most recently losing its effort to stop a merger between Whole Foods Market Inc. and Wild Oats.

In a split with the Bush administration, though, the FTC under Ms. Majoras sued several big drug makers for alleged efforts to delay competition from cheaper generics.

In a Washington Post op-edit Predatory Lenders' Partner in Crime: How the Bush Administration Stopped the States From Stepping In to Help Consumers and in testimony today before the House Financial Services Committee on the economic crisis, New York Governor Eliot Spitzer points the finger at the "obscure" federal banking regulator known as the Office of the Comptroller of the Currency (our archived page OCCWatch). From his op-ed:

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). [...] In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks.

Nothing the OCC has done has prevented the states from regulating and preventing abuses among the lenders that they license -- lenders that are the source of most of today's problems.

It is now obvious that wholesale lenders and securitizers, including many of the largest national banks and federal thrifts and their affiliates, were the driving forces behind the subprime lending boom.

When history tells the story of the subprime lending crisis and recounts its devastating effects on the lives of so many innocent homeowners, the Bush administration will not be judged favorably. The tale is still unfolding, but when the dust settles, it will be judged as a willing accomplice to the lenders who went to any lengths in their quest for profits. So willing, in fact, that it used the power of the federal government in an unprecedented assault on state legislatures, as well as on state attorneys general and anyone else on the side of consumers.

Over at the New York Times, Charles Duhigg reports that Papers Show Wachovia Knew of Thefts. The papers were released in a lawsuit concerning a long-running telemarketing fraud scheme targeting the elderly. It's a followup to his 2007 expose Bilking the Elderly, With a Corporate Assist. In today's story, he reports that internal papers show that while some Wachovia Bank executives were saying "Yikes, Double Yikes," -- others were counting profits from the fees that the fraudsters had to pay the bank after charges were reversed following consumer complaints:

"YIKES!!!!" wrote one Wachovia executive in 2005, warning colleagues that an account used by telemarketers had drawn 4,500 complaints in just two months. "DOUBLE YIKES!!!!" she added. "There is more, but nothing more that I want to put into a note." However, Wachovia continued processing fraudulent transactions for that account and others, partly because the bank charged fraud artists a large fee every time a victim spotted a bogus transaction and demanded their money back. One company alone paid Wachovia about $1.5 million over 11 months, according to investigators.

The story goes on to point out that Wachovia looked the other way while internal fraud investigators, credit unions and even other banks sent it warnings about fraudulent accounts. Meanwhile, I ask: Where was Wachovia's chief regulator, the little-seen regulator known as the OCC (our site OCCWatch) that spends more time preempting state regulators than supervising big banks? It hasn't issued a public civil penalty of note in many years. While Duhigg reports that Wachovia announced some changes last summer, any unreported, private regulatory sanction that may have been imposed by the OCC to inspire such unfettered altruism is simply not enough to reassure this consumer advocate, or the Congress, that enough has been done to deter shabby bank practices that lead to crime against consumers. Public sanctions, including civil penalties, would reassure us that vulnerable populations have the full force of the federal government protecting them from unsavory practices that deplete their life savings.

Louise Story reports in the New York Times that in a letter Tuesday to Mattel chief Bob Eckert, a total of 56 federal Lawmakers Say Mattel Broke Word on Lead:

The letter was prompted by Mattel's decision not to issue a nationwide recall of a blood-pressure cuff in a toy medical kit sold under the Fisher-Price brand. The legislators said they were disturbed by the company's "lack of action." Lead was found in a plastic part of the toy, and current federal laws ban lead only in paint on toys. Lawmakers are considering a law to limit lead in all material in toys.

Meanwhile, in the U.S. Senate, negotiations continue on bringing its CPSC reform proposal to the floor. The House acted in December. If the Senate doesn't finish the job, we'll all have to move to Illinois.

Former Bush economic adviser Greg Mankiw, now back at Harvard but also advising candidate Mitt Romney, has a column How to Avoid Recession? Let the Fed Work in today's New York Times. Mankiw reiterates all the old money-supply arguments and says in regard to the possible "painful" economic downturn we face that "Sometimes, bed rest and wait-and-see are the best we can do."

The problem, of course, is that Mankiw sticks to his Economics 201 discussion of the Fed's central bank role and fails to admit that Alan Greenspan and later, Ben Bernanke, may have mis-played the dot-com and mortgage bubbles. Worse, Mankiw doesn't even discuss that the Fed has other roles than monetary policy that it failed to fulfill. While we can argue about monetary policy choices, there is certainly no argument that the Fed has never performed its consumer protection role adequately. The Fed has long had discretionary authority to rein in unfair lending practices. Since the Fed is loathe even to implement Congressionally-mandated consumer protection rules, you can see the problem in relying on its discretionary authority.

As the Center for Responsible Lending pointed out last week when the Fed finally reacted to the crisis by proposing new rules under 1994 high-cost loan legislation:

An unregulated market has led to irresponsible lending practices where lenders often don't even assess ability to repay. The resulting high rate of foreclosures due to this abusive lending may well bring this country into recession--yet the FRB has chosen to issue rules that leave out many loans or will be unenforceable.

By averting its eyes to both the dot-com and housing bubbles, the Fed lulled even professional investors into believing that commonplace risks could be eliminated through "new era" designs.

The FTC has voted 4-1 not to block the Google-DoubleClick merger on competition grounds, denying a petition from U.S. PIRG, the Center for Digital Democracy and EPIC. Concurrently, the FTC staff have issued a call for comments on a proposed set of "possible self-regulatory principles" on behavioral advertising. In our view, this merger's tremendous transformative impact on online markets and the well-evidenced privacy harms that the Google-DoubleClick combination create should have resulted, at a minimum, in conditions if not denial. We're also disappointed that the full FTC didn't understand, as dissenting Commissioner Pamela Jones Harbour did, that this merger has numerous anti-competitive network effects. We'll read the proposed privacy rules more closely before we comment further. Here is an excerpt from our Center for Digital Democracy colleague Jeff Chester's statement:

By permitting Google to combine
the personal details, gleaned from our searches online and YouTube downloads, with the vast repository of information collected by DoubleClick, the FTC has sanctioned the creation of a new digital data colossus. The FTC is supposed to protect the privacy of Americans in the digital age. The excuse offered by the majority of the commission --that consumer privacy can't be addressed by current antitrust law--reveals a lack of leadership and determination to protect U.S. consumers. It's clear that this merger--and the ones that follow--will be about companies creating the twenty-first-century's equivalent of railroad, steel, and oil monopolies in the past. The FTC was created to protect Americans from the dangers of such monopolies, something the agency failed to do today.

In my testimony Wednesday before a House Financial Services subcommittee. I had some harsh criticism for the Federal Reserve Board, which has failed on numerous occasions to use existing authority to protect consumers. Incredibly, on Wednesday, the Fed even opposed a measured, incremental proposal by subcommittee chair Carolyn Maloney to require the federal bank regulators to implement a shared hotline to help consumers. Even the notoriously anti-consumer OCC supported the bill, with what former Fed chairman Alan Greenspan might have even called "exuberance." But it is always tough to beat Financial Services Committee chairman Barney Frank, who had this to say to the Washington Post about the Fed's latest voluntary mortgage reform proposal:

"If I was going to list the top 87 entities in Washington in order of the history of their efforts on consumer protection, the Fed would not make it," Rep. Barney Frank (D-Mass.) said.

We testified today in support of legislation by Rep. Carolyn Maloney (link to hearing record) that would require the federal bank regulators to create a shared complaint hotline (HR 4332, the Financial Consumer Hotline Act of 2007). We proposed a number of amendments to force the regulators to do a better job handling consumer complaints.

As we say on U.S. PIRG's Right to know pages in the caption under this photo:

Without the Toxic Release Inventory Regulations, industrial facilities in or near our communities like this refinery could put toxic waste into our environment and even drinking water without informing the public.

Twelve states, including New York, New Jersey and Connecticut, sued the Environmental Protection Agency yesterday for weakening regulations that for two decades have required businesses and industries to report the toxic chemicals they use, store and release.

Community groups across the country have used the program to track the amounts of hazardous chemicals in local neighborhoods. Under the program, companies must provide information about the types of toxic chemicals stored at plants and factories in each state, as well as the quantities discharged from each plant.

Over the weekend the Baltimore Sun ran a toy safety column Give product safety agency more clout jointly signed by by Maryland Attorney General Doug Gansler and Maryland PIRG's David Kosmos. Also, the Vermont Times Argus has Wireless phone monopoly a bad deal by U.S. Senator Bernie Sanders as a followup to efforts by him, Vermont PIRG and Vermont's Lake Champlain Chamber of Commerce opposing efforts by the mega-monopoly Verizon to gobble up (one Thanksgiving pun is not too many) a wireless competitor.

With all except small non-controversial amendments refused until full committee by the committee's bi-partisan leadership, the House version of CPSC reform, HR 4040, was approved today in subcommittee and is expected to go to full committee two weeks from today. The manager's substitute that was approved should be posted here at the Energy and Commerce committee soon. We are still reading the bill carefully. Positively, many of the changes from HR 4040 as introduced were pro-consumer. Lead limits were improved and clarified. Also, the definition of children's product was changed throughout the bill so products for children up to 12 years old would come under the bill's protections. Previously, the bill had some protections for children up to 12, but most were only for children up to 6 years old. But, remember, we are still reading the bill carefully. Full committee chairman John Dingell re-affirmed at the meeting that Speaker Pelosi wants the bill approved by the House before the December holiday recess.

Today's New York Times editorial Chemical Industry 1, Public Safety 0 rightly questions new anti-terrorist chemical plant safety regulations, especially in light of Greenpeace research into the industry's "undue influence" over the rulemaking. Research by longtime Greenpeace toxics advocate Rick Hind is deservedly cited:

It is troubling that these industry-friendly rules were developed in part by Department of Homeland Security employees who previously worked for the chemical industry -- and who may one day work for it again. Rick Hind, the legislative director of the Greenpeace Toxics Campaign, contends that such employees have had an "undue influence." The department says it draws on former chemical industry workers simply because of their "relevant prior experience."

Today, we are signed onto testimony of the Consumer Federation of America's Rachel Weintraub before the House Energy and Commerce Committee at its hearing on product safety reform. (Note-- the committee has even posted a front page link to The Year of the Recall, a new Consumers Union report.) Meanwhile, after years of administration attacks (not mere benign neglect) on protecting Americans from product safety hazards, expect the Michael Leavitt-chaired White House import safety working group to back some sort of modest reforms today (New York Times and AP via Washington Post). We expect it will overly rely on self-regulation and the sort of tortured risk analysis favored by the administration over the more sensible precautionary principle, although press reports indicate positively that it will recommend strengthened recall authority at FDA and CPSC. Don't know just what it will say about the hazards to the public of CPSC officials flying around on the industry's planes or the industry's dime. From the Washington Post story today CPSC's Ethics-Review Process For Travel Criticized by Experts by reporter Elizabeth Williamson:

The $3,730 tab for Faulk and Nord's trip was to be paid by the Toy Industry Foundation, whose mission, according to the ethics memo, is to help at-risk children "by meeting a vital, yet frequently overlooked, developmental need often missing in their lives -- play."

The key ethics review memo states at the top that it came from Faulk, whom it describes as the "Designated Agency Ethics Official." But it was signed by someone the CPSC yesterday called "an alternate ethics officer" because Faulk was the traveler.