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Washington, DC-
Leaders of seven of the country’s leading public-interest groups
are calling for the adoption of six major pro-consumer
priorities, including the reinstatement of the White House
Special Advisor on Consumer Affairs. As the economic crisis
deepens, it is more important than ever for government leaders
to deal quickly and effectively with pocketbook issues affecting
every American consumer. The groups have developed an agenda of
the top issues on which consumers should hold policymakers
accountable in the coming Congress and new administration. The
agenda was sent to President-Elect Obama and Congressional
leaders (cover letter enclosed).
Leaders of the seven groups – Consumer Federation of America,
Consumers Union, National Association of Consumer Advocates,
National Consumer Law Center, National Consumers League, Public
Citizen, and the U.S. Public Interest Research Group,
representing millions of American consumers – have united behind
this agenda in response to increasing risks to consumer rights
and protections.
Some recent threats to consumer rights, protections and
standards of living include: the financial crisis and mortgage
meltdown, high and volatile oil prices, growing concerns over
the safety of imports and food, and the rising cost of health
care.
As a result of anti-consumer policies in these areas, the
coalition has developed a six-point agenda to highlight some of
the most critical issues facing the American public today. The
leaders noted that Congressional passage of comprehensive
Consumer Product Safety Commission reform this summer was a
positive step, suggesting that Congress may be ready to consider
other important consumer reforms.
As the events of recent months have shown, weak consumer
protections don’t just harm individual Americans, but the
economy overall. Inadequate laws and poor oversight of credit
and financial services have led to a huge loss of wealth for
many American families and helped trigger an economic
recession. This agenda is not simply a way to protect
consumers, but to increase the economic and health security of
the country. The agenda is a key starting point for raising
questions of policymakers about how they intend to protect the
public interest, said the leaders of the seven organizations.
The consumer leaders are intent on continuing to build an
influential consumer movement that will be a powerful force for
change. The six-point agenda includes (summary followed by
detailed explanations):
1.
Restore the United States Office of Consumer Affairs;
Put a Consumer “Czar” In The White House.
2.
Rein in Wall Street Excesses, Protect Consumers from
Abusive and Predatory Lending.
3.
Protect Consumers from Price-Gouging in Oil, Gas and Electricity
Markets, and Take Steps To Provide Households With Access to
Alternative Energy and Efficiency.
4.
Improve Consumer Access to Justice By Reinstating
Legal Rights.
5.
Guarantee Safe, High Quality, Affordable Healthcare
for Everyone.
6.
Ensure our Food and Products are Safe.
An Agenda to Close Growing Gaps in Marketplace Protections
1.
Restore the United States Office of Consumer Affairs;
Put a Consumer “Czar” In The White House
During this economic crisis, one extremely significant step the
new Administration could immediately take would be to restore an
Office of Consumer Affairs in the White House. Such an office,
run by a prominent advisor to the president, would clearly
demonstrate the critical nature consumer protection issues play
in restoring and maintaining a sound economy. As inadequate
consumer protection has permeated so many of the crises the
nation faces and the work of so many different federal agencies,
having a strong, centralized consumer voice in the White House
is all the more critical.
The United States Office of Consumer Affairs (USOCA) was
established by Executive Order by President Nixon. Under
pressure from Congress, the Clinton Administration allowed the
office to be closed. The office should be reinstated as it
existed under the Carter Administration, the time when it was
most effective.
Under the Carter Administration, the director of the Office of
Consumer Affairs had regular and direct access to the
President. The office gave a voice to consumers and balanced
and supplemented the ever-present and extremely well funded
business lobby and Department of Commerce. The office was
instrumental in victories for consumers, including:
energy-efficiency labels on products; a program that simplified
English in government documents; consumer rights regarding
overbooked airline flights; a cooperative bank that would offer
low-interest loans to public-interest groups; and increased
competition in the trucking industry. The precursor to the
Office of Consumer Affairs, the Special Assistant to the
President for Consumer Affairs, helped pass truth-in-packaging
legislation during the Johnson Administration. The Special
Assistant also worked on bills concerning truth-in-lending and
helping those who have overextended credit. A similarly strong
consumer presence at the highest levels over the last few years
might have prevented the current credit crisis.
The Office of Consumer Affairs should be reinstated as a
well-funded office with a clear mandate to influence
legislation, write executive orders, intervene as a full party
in adjudicatory proceedings, have input at policy meetings,
etc. Ideally, the post should be filled with someone with known
credentials in the consumer world, and consumer advocacy
organizations should be consulted before the director is chosen.
Most importantly, the director of the USOCA should have direct
and frequent access to the President.
2. Rein in Wall Street Excesses, Protect Consumers from Abusive
and Predatory Lending.
The
global economy has been brought to the brink of disaster, and
taxpayers have been forced to bear the trillion-dollar cost of a
financial market bailout, as a direct result of Wall Street’s
reckless misconduct and lawmakers’ and regulators’ failure to
rein in industry excesses. This has
led to a huge loss wealth for many
American families and triggered an economic recession. The
sharp decline in housing prices nationwide caused by predatory
and unsound mortgage lending is a major cause of the now global
credit crisis. Banks, auto lenders, credit card issuers, student
lenders and payday loan companies also targeted low and
middle-income families with unaffordable and high-cost credit.
As a result, home foreclosures, credit card delinquencies and
personal bankruptcies now devastate millions of Americans each
year. The explosive growth of predatory lending has occurred
because consumer protections have been reduced in the last 20
years and new reforms have not been added to rein in harmful
practices. Where states have attempted to prohibit abusive
credit practices, federal policy makers have sought to override
state protections. Meanwhile Congress and federal regulators
have acted much too slowly to enact laws or regulations that
curb these harmful loans. Lenders have fought reform, arguing
that it is more important to preserve a 19th century “buyer
beware” free market than to protect American families from
becoming buried in debt they cannot afford. While new housing
legislation takes modest steps to restore faith in the market,
it does little to help consumers already in foreclosure nor to
prevent continued abusive practices.
Early
warnings about the systemic risks posed by unregulated credit
derivatives, inadequate capital standards at financial
institutions, including Fannie Mae and Freddie Mac, unreliable
credit ratings, compensation practices that promote excessive
risk-taking, and lack of transparency resulting from use of
Structured Investment Vehicles and other off-balance sheet
transactions went unheeded by federal regulators and Congress
alike. Wall Street was able to fend off stronger investor
protections by arguing that increased regulation would stifle
innovation, burden industry, and drive business to less
regulated markets overseas. As a result, investors have seen
their investment portfolios decimated, traditional Wall Street
institutions have either failed or stand on the brink of
failure, and the global economy has sunk into recession.
Actions for Congress and the new administration: 1) develop a
comprehensive financial restructuring plan that puts Main Street
Before Wall Street, cures the flaws in the emergency legislation
and prevents future catastrophes; 2) enact legislation that
effectively prohibits abusive terms in mortgages and other
loans, curbs lending without regard to ability to pay and
provides effective relief to homeowners still caught in the
foreclosure crisis (emergency provisions on foreclosure were
grossly inadequate); 3) provide broad protections for credit
card customers, including prohibiting unwarranted fees,
retroactive interest rate increases, and payment allocation
abuses; 4) protect consumers from predatory small loans such as
payday loans, rent-to-own, auto title lending and refund
anticipation loans, 5) restore bankruptcy as the final safety
net for consumers caught by unaffordable mortgage, credit card
debts and student loans, 6) restore the ability of states and
individuals to enforce laws against predatory lending, and (7)
adopt investor protection legislation and regulations that
increase transparency and accountability of financial market
participants, strengthen risk management practices, minimize
conflicts of interest, and provide for strengthened regulatory
oversight.
3) Protect Consumers from Price-Gouging in Oil, Gas and
Electricity Markets, and Take Steps To Provide Households With
Access to Alternative Energy and Efficiency.
Consumers and the American economy have been hit hard by sharply
rising energy prices, especially for gasoline. Despite
declining gasoline consumption, high inventory levels and
increased production of ethanol, gasoline prices shot past $4 a
gallon nationwide earlier this year. Natural gas, electricity
and heating oil prices have also escalated. Electricity markets,
particularly in states that deregulated and are now subject to
oversight by the Federal Energy Regulatory Commission, have
experienced sharp price increases. Although energy prices have
declined recently, high prices through much of the last few
years have forced moderate and lower income Americans to make
painful choices to cutback spending on other necessities that
are also increasing in price, such as food, healthcare and
medicine. While energy prices are, for the time being,
dropping, the nation cannot afford to be lulled into
complacency. Future price hikes can be expected, home energy
costs remain unaffordable for many families, especially those
hit by the weak economy, and our nation’s continued dependence
on fossil fuels threatens the economy, national security and the
environment.
A major factor in rising gasoline prices has been the decline in
gasoline refining capacity, brought on by mergers in the
refining market and by deliberate decisions by oil company
refiners to keep capacity tight. This has allowed a few very
large companies to gain control of refining supply. The lack of
effective regulation of financial and commodity markets has also
led to the creation of a speculative energy “bubble” for energy
commodities. Over the past two years, the cost of speculative
trading has been over $40 a barrel of oil, or about $1 per
gallon of gasoline. The run up in gasoline prices led to
excessive oil industry profits of over $200 billion above the
normal level since 2002. Meanwhile, Congress has only recently
acted to improve the dismally low fuel economy of passenger
vehicles in the United States.
Actions for Congress and the new administration: 1) The
government must give greater scrutiny to oil and refining
company mergers, require greater competition and encourage the
development of alternative fuels and energy sources that are
environmentally safe and do not affect food prices. This would
lead to lower prices, encourage smarter development of natural
resources, and help make the U.S. more energy independent. 2)
Congress and the Administration must ensure that the
speculative bubble in energy and food commodities does not recur
by closing loopholes created by the Commodity Futures
Modernization Act and by poor oversight of the Commodity Futures
Trading Commission. 3) The Administration must appoint a FERC
chairperson who will ensure that all electric rates are “just
and reasonable.” 4) President Obama must also ensure that the
National Highway Transportation Administration set the highest
possible fuel economy standards under recently enacted
legislation, which requires that passenger vehicles achieve well
in excess of 35 mpg by 2020, and increase funding for mass
transit. 5) Finally, Congress and the Administration should
continue to increase financial assistance to lower income
families who cannot afford increased energy prices or who are
hit by the weak economy, and provide meaningful assistance to
help households afford alternatives to high energy prices such
as rebates to purchase super fuel-efficient hybrid cars,
incentives to make energy efficient improvements to homes and
solar panel installation, financed in part by eliminating
subsidies to the oil industry.
4. Improve Consumer Access to Justice By Reinstating Legal
Rights.
Consumer legal rights have been under assault for years. While
Congress has refused to grant private rights of action in any
new federal consumer laws and has even inserted provisions
attacking the authority of state attorneys general in new
federal laws, powerful special interests have been busy taking
away available state law legal remedies by inserting mandatory
arbitration clauses in all consumer contracts. Meanwhile,
federal regulatory agencies have asserted over-broad authority
to preempt state enforcement and consumer common law rights and
the Supreme Court, most recently in Riegel v. Medtronic, has
upheld them.
Actions for Congress and the new administration: 1) Enact
legislation to restore an unbiased and open justice system that
remedies harms and holds wrongdoers accountable; 2) ensure a
consumer’s right to choose alternative dispute resolution,
judicial review, or a jury by barring pre-dispute mandatory
binding arbitration clauses from consumer contracts; 3) ensure
the viability and enforceability of federal consumer protection
laws by updating outdated liability provisions, preserving
access to counsel through fee-shifting statutes, and permitting
enforcement by state attorneys general; 4) preserve state
health, safety, and consumer protection laws by halting federal
preemption; and 5) ensure that systemic wrongs are righted by
providing for class actions when pervasive and expansive
misconduct occurs.
5. Guarantee Safe, High Quality, Affordable Healthcare for
Everyone.
The U.S. has by far the most expensive health care system in the
world, spending 50% more per person than the next closest
country, Switzerland. As health care costs continue to rise,
families are paying a larger and larger share. Many people are
one illness away from bankruptcy. Nearly 1.3 million full-time
workers lost their health insurance in 2006. At the same time,
insurance companies are spending billions to deny care while
drug companies are spending billions on TV ads for drugs that
most of us may not need.
We need common sense reforms that redirect our nation's health
care dollars into better care and give people real choice,
including the choice to stay with their current doctor.
Insurance companies must compete to give us the best quality
care, rather than profiting by denying care, cherry-picking the
healthy patients, and excluding people with "pre-existing
conditions." Doctors, hospitals and patients should be free to
focus on treating and preventing illness, without the piles of
paperwork and endless hours spent deciphering
codes and bills. Real choices must be grounded in real
information about doctors, hospitals and health plans--not
misleading information created by advertising agencies.
Actions for Congress and the new administration: Ensure that
healthcare is affordable for all consumers by adopting
cost-saving innovations in preventative care, pay for
performance, chronic disease management, evidence-based
medicine, and increased primary care by all payers: private and
public. Create private and public insurance pool options that
allow consumers to share risk and use greater bargaining power
to get a fair price for insurance and guarantee consumers cannot
be denied coverage or face skyrocketing premiums when you change
jobs, get sick, or have a pre-existing condition. Make sure
everyone can take their kids to a doctor, and is protected from
losing life savings due to illness. Give people the tools they
need to choose a health plan, hospital, doctor or treatment that
is right for them. Ensure that treatments and medicines people
take are high-quality, safe and affordable. Medicare should
have the power to negotiate lower drug prices like the Veterans
Administration. We need stronger FDA enforcement on the safety
of drugs, including more inspections of manufacturing facilities
and a moratorium on the advertising of newly introduced drugs
until we learn more about possible side-effects. We need to
adopt information technology that protects privacy while
providing consumers, doctors and pharmacists with important
medical information. And we need broad public reporting about
hospital-acquired infections.
6. Ensure our Food and Products are Safe.
Consumers’ beliefs that our food and product safety systems are
working have been shattered by the many recent recalls involving
tainted meat and produce, and even children’s toys. Lax
oversight, agency cutbacks, and surging imports have resulted in
an unprecedented number of recalls involving everything from
Salmonella-laced peppers, E-coli in spinach, and pet food and
dairy products adulterated with melamine, to children’s jewelry
made of lead. In fiscal year 2007, there were 473 recalls
involving over 25 million products, many involving children’s
toys and cribs. In the first three quarters of this fiscal year,
the CPSC has already announced more than 415 recalls.
We should require FDA to inspect all food production facilities
on a routine basis, both domestic and foreign, and increase
inspections at the border. Providing both USDA and FDA with
comprehensive mandatory recall authority will also enable the
agencies to remove contaminated meats and other foods produce
more quickly than simply relying on the voluntary cooperation of
companies. In order to act quickly and knowledgeably when unsafe
food threatens us, FDA also needs to establish a comprehensive
traceability system for unsafe and high-risk foods. The USDA and
the FDA should also allow the public to know immediately the
names of stores that receive recalled foods so that consumers
have a way of protecting themselves when a contamination
outbreak occurs. With food safety spread across 15 federal
agencies and departments now, federal food safety activities
should be combined into a single food agency governed by a
modernized food safety law. Congress should be commended for
enactment of the CPSC Reform Act of 2008, a comprehensive
pro-consumer reform that reinvigorates and reauthorizes a
long-neglected agency. Similar actions should be taken for the
NHTSA and FDA.
Actions for Congress and the new
administration: Support comprehensive food safety reform.
Adequately fund federal food safety activities by both FDA and
USDA. Increase and enhance inspections of domestic and imported
foods and products before they enter our shores and stores.
Support and enhance activities for FDA and USDA to ensure that
food producers are producing food in a safe and sanitary
manner. Give the FDA and USDA mandatory recall authority to
promptly remove tainted foods, meats and produce from our
shelves. Appoint strong consumer advocates to the restored CPSC,
ensure that it obtains its new, higher authorized
appropriations, and carefully oversee CPSC’s implementation of
the new law. |
