Improving access to information impacting public health: passing the Sunshine in Litigation Act 2010 – National Consumers League

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By Amy Blume, NCL public policy intern

Amy Blume, an intern at NCL this summer, is rising senior at Wesleyan University in Middletown, Connecticut. At Wesleyan she is majoring in government and receiving certificates in international relations and environmental studies. She came to Washington, DC through the Roosevelt Institute, a progressive, student-led think tank, and is president of the Wesleyan Chapter, which publishes annual policy journals and engages in local political discourse. Amy also writes blogs for Mother Nature Network, an online environmental company.

National consumer advocacy organizations are working to pass the Sunshine in Litigation Act (H.R. 5419),1 a bill that will require critical health and safety hazards to be opened up to the public instead of hidden in secret settlements between the parties. The bill will enhance measures already taken by 41 states and 94 federal districts, but will also require consistency in reform of federal courts.

In the past few years, several forms of the Sunshine in Litigation Act reached Congress. None passed, but a variety of testimonies identified the need for such a bill, restricting court-ordered secrecy of case histories and settlements on areas of public health concerns. In a testimony before Congress in July 2008, Federal Court Judge Joseph F. Anderson of South Carolina, with 22 years on the bench, discussed the all-too common trend toward court-ordered secrecy in settlement cases. Anderson noted that lawyers often request court-ordered secrecy in settlements, but when it comes to public health concerns, the public deserves access to information. It can protect consumers and help them make more informed decisions. Anderson gave several examples of court secrecy in decisions involving information critical to public health.

Court-ordered secrecy of important information in cases of public health:

In one case before Anderson, 350 plaintiffs contended that the defendant knowingly dumped harmful levels of PCBs into a river upstate. The toxicity caused severe health problems among residents. Concluding with a settlement in which all parties were satisfied, the judges agreed to court-ordered secrecy, but Judge Anderson said that he had second thoughts on whether this was the right choice. Shouldn’t people have the right to information depicting health concerns associated with a large, local, public body of water where residents might swim, boat or fish?

In another case, a child died from an incident involving a defective go-cart. The case was settled for $1.4 million dollars. The settlement was kept out of the public domain and that same hazardously designed go-cart was still being sold. Reform of court-ordered secrecy allows consumers access to make more informed decisions when purchasing products, decisions that can protect health and safety.

Restricting court-ordered secrecy will not impinge on the court system and districts:

Reform will likely improve information available to consumers without taking a major toll on court systems. Judge Anderson’s federal district in South Carolina adopted court-ordered secrecy reform, the only district in South Carolina to do so by the time Anderson testified in 2008. New companies continued to spring up and thrive despite the changes in settlement secrecy. Interestingly, the court did not see any major increase in numbers of cases. In a testimony for the Sunshine in Litigation Act in 2009, Georgetown Law Professor Sherman L. Cohn mentioned that although reform may lead to decreased sums of money exchanged in settlements, a general “loyalty to society,” and a responsibility to public welfare, should transcend other considerations when matters affect public safety.

Information on the safety of a market product, such as a defective go-cart or other hazardous toys, machinery, jewelry, food and water, or land area, is vital to consumers, especially when the problems associated with a product may be fatal. We can’t afford to keep this information from the public. Let’s protect each other’s families and health by improving access to critical information on court cases relevant to public health and supporting the Sunshine in Litigation Act of 2010.

Data the new voice when it comes to cellular – National Consumers League

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By John Breyault, Vice President of Public Policy, Telecommunications and Fraud

Consumers perusing the New York Times on May 14 who skipped over the Business section on their way to the crossword puzzle likely missed an important story for the future of communications in the U.S. In section B1 was this story, innocuously titled “Everyone Is Using Cellphones, But Not So Many Are Talking,” which noted that according the wireless industry, data and text now make up the majority of U.S. cellular traffic, overtaking voice.

Most of today’s cellphone-obsessed teenagers would probably react with a shrug and a “no duh.” For those of us that have watched the cellphone industry evolve from 1984’s *Motorola DynaTAC 800X (the world’s first cellphone — a bargain at $3,995) to today’s sleek smartphones, however, the shift from voice to data represents a watershed moment for American consumers. Whereas for nearly two decades, the wireless industry’s primary source of revenue was mobile voice service, mobile data revenue is quickly replacing it. As consumers *shift increasingly to using Voice Over IP (VoIP) technologies such as Skype for their mobile voice needs, this trend is only likely to accelerate.

So what does this mean from the all-important consumer pocketbook perspective? For one, consumers shopping for new cellular service should consider the price and quality of mobile data plans offered as or more carefully than they do the voice plans available. Second, consumers should be aware that the major American cellular companies are likely to begin shifting away the so-called “unlimited” or “all-you-can-eat” data plans (in reality usually capped at around 5 Gb of bandwidth per month) that are typically priced at around $30 per month per line. Instead, carriers are likely to offer data plans to new subscribers in buckets or “tiered” plans. This week AT&T announced that it would replace its $30 unlimited data plans with a $15 per month/200 Mb “Data Plus” plan and a $25 per month/2 Gb “Data Pro” plan for new subscribers. Verizon Wireless recently announced that it would be moving in a similar direction.

While these two tiers would cover 98 percent of At&T’s current data plan subscribers, consumer hunger for mobile bandwidth is projected to continue to grow exponentially. The user who is today content with a 200 Mb plan is likely to need to upgrade to the 2 Gb plan or as yet unannounced higher-bandwidth tiers in short order.

Given this trend, consumers shopping for a new cellular plan should carefully consider that number of voice minutes used in a typical month. The goal here is to avoid overbuying minutes. Many users may find that they save money by opting for a data and text plan with the lowest possible bucket of voice minutes. According to CTIA, the wireless industry association, the average U.S. mobile voice call dropped from 2.27 minutes in length in 2008 to 1.81 minutes in 2009. This is largely a result of more users replacing voice calls with texting. An example of this trend is the NCL intern who recently relayed a story of a friend whose voice mail message asks callers to simply send a text message instead of leaving a voice mail. We do not believe this to be an isolated incident.

Going forward, we expect that cellular voice service will become more like an “app” and less like a standalone service. How consumer and regulators in Washington react to the shift away from cellular voice towards mobile data will likely play a key role in shaping the wireless marketplace for years to come.

*Links are no longer active as the original sources have removed the content, sometimes due to federal website changes or restructurings.

Gulf oil spill health implications — for YOU? – National Consumers League

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While your heart might break at the images of oil-saturated birds and the stories of small fishing-based communities losing everything, there are few other ways the gulf oil spill can affect your health – particularly if you live near the Gulf.

For those of you living close to the spill, or who may come in contact with it as it makes its way up the East Coast, the CDC offers a few basic tips:

  • Avoid skin contact; if you’re helping with the clean-up – wear gloves, eye, protection, and cover your arms and legs
  • If you get oil on your skin, wash with soap, water, baby oil, petroleum jelly, or a cleaning paste you might find at an auto parts store.  DO NOT USE solvents, gasoline, kerosene, diesel fuel, or similar products.
  • If you get oil in your eyes, flush them with water for 15 minutes.
  • If you swallow oil, DO NOT TRY TO VOMIT because you may end up with oil in your lungs.
  • If you inhale oil vapors or smoke from burning oil, move to an area with cleaner air. Seek medical attention if you’ve inhaled a substantial amount or if you have trouble breathing or feel dizzy.

If you are worried about your seafood getting contaminated, you can keep tabs on food safety on the FDA’s oil spill site, which includes federal and state links regarding closed waters.  State and federal officials are monitoring the water and the food coming out of the Gulf to ensure that it remains safe to consume. The National Oceanic and Atmospheric Administration (NOAA) a scientific agency within the Department of Commerce focused on the conditions of the oceans and atmosphere, is closing fish and seafood harvesting areas that are contaminated as a precautionary measure.  The FDA states on their site that ‘there is no reason to believe that any contaminated product has made its way to the market.’

To learn more about the air, water, and food monitoring that’s being done by the government to protect your health, visit HHS’ oil spill site.

Changes for asthma medication – National Consumers League

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Recently there has been important news from the Food and Drug Administration about the medications used to treat asthma. Understanding your asthma medications will help you understand your asthma and keep you healthy.

If you have asthma you should be seeing a health care practitioner and have a treatment plan in place, which may include medications. Asthma is usually treated with two kinds of medications – fast-acting inhalers (or rescue inhalers) and long-term controllers. Recently the Food and Drug Administration (FDA) made some important announcements regarding both long-term controllers and fast-acting inhalers.

Long-term controllers: long-acting beta-agonists (LABAs)

LABAs are used as long-term asthma controllers relax muscles in the airways and lungs. They can help patients breathe easier and lessen symptoms of asthma such as wheezing and shortness of breath. Because of safety concerns, FDA is requiring changes to how LABAs are used to treat asthma. Studies have shown that use of LABAs increase the risk of hospitalization and even death.

FDA is now requiring the following to appear on the label to ensure the safe use of the LABAs:

  1. LABAs should only be used by those who cannot control their asthma with other medications, and then only for the shortest possible time.
  2. LABAs should never be used without also taking an asthma controller medication, like an inhaled corticosteroid. Medications that include both a LABA and an inhaled corticsteroid are Advair and Symbicort. Single ingredient LABAs such as Serevent and Foradil, should not be used alone.
  3. Children and teens should be prescribed only the combination LABAs to ensure compliance with both medications.

In addition to the label changes, FDA is requiring the manufacturers of LABAs to study the drug’s safety when combined with other drugs, such as inhaled corticosteroids. The manufacturers must also develop risk evaluation and mitigation strategies. These include new medication guides for patients and an education plan for healthcare professionals about the appropriate use of LABAs,

Fast-acting inhalers

Recently the FDA announced the phase out of seven fast acting inhalers that use chlorofluorocarbons (CFCs). Due to concerns about how CFCs damage the earth’s ozone, which protects life from the damaging effects of the sun’s ultraviolet rays, the US has been banning the use of CFCs since the 1970s. CFCs, which make the contents of a canister spray out, have been banned in most consumer aerols, (such as hairspray) for decades. CFCs aren’t harmful to people. Medical devices using CFCs are among the last to be affected.

Many manufacturers have reformulated or are reformulating their inhalers so they don’t contain CFCs. Four of the seven inhalers that were part of FDA’s announcement are no longer being made. The three other inhalers will be phased out over the next three years, and will be banned after the end of 2013. A new way of delivering asthma medications has started replacing CFCs and is called hydrofluoroalkane (HFA). It has been used in inhalers for more than a decade and will continue to replace CFC inhalers as they’re phased out.

The asthma medication in the new inhalers is the same. Only the way the inhaler gets the medicine to your lungs is different. If you use one of the CFC inhalers being phased out, talk to your health care practitioner about using another type of inhaler that does not use CFCs

For more information on the devices that are no longer being made and whose sale will be forbidden after 2013 see the FDA’s announcement.

Medicare Part D rebate checks – coming to a mailbox near you – National Consumers League

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Under the new health law, Medicare beneficiaries are set to experience a variety of changes in an effort to deliver higher quality care and reduce waste and fraud.

As the government tries to close up the Part D coverage gap by 2020, beneficiaries who reach the gap this year will begin receiving $250 rebate checks beginning June 10th, and they will continue to be sent monthly as people reach the “donut hole”. CMS reminds beneficiaries that there are no new forms to fill out for this rebate; if someone is asking you to do so; you should report it as fraudulent behavior. You are not required to give any personal information to obtain this check.  

For more information related to Medicare and the new law, call Medicare directly (1-800-MEDICARE (1-800-633-4227)). If you suspect Medicare-related fraud or scams, visit NCL’s Fraud Center to issue a complaint.

Labels reveal nutritional minefield in afterschool snacks – National Consumers League

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By Sally Greenberg, NCL Executive Director

Like many Americans, I like having nutritional labels on the foods. And I pride myself on being savvy enough to read them carefully and parse out the fat, sodium, protein, and calories and most importantly, how many servings per container.  In that spirit, I recently arrived home triumphantly clutching a new item that would serve as alternative to the Lean Pocket afterschool snacks I usually buy for my 14-year-old son. He wants something quick and tasty, and I want something that gives him good nutritional.

Lean Pockets are pretty good on calories and fat, but they have 490 or so milligrams of sodium per serving, and each package has 2 servings, and my growing kid eats the whole thing without blinking. A recent New York Times article this week described the food industry’s growing resistance to government and consumer groups’ demands that the amount of sodium be reduced in processed foods.

As the article noted, “By all appearances, this is a moment of reckoning for salt. High blood pressure is rising among adults and children. Government health experts estimate that deep cuts in salt consumption could save 150,000 lives a year.”

So my organic alternative quesadillas looked like a great option; they had same number of calories, cost the same, but had 1/3 the sodium per serving. I grabbed the box from the freezer and asked my kid to read over the ingredients so he could see why I chose the organic version. But he quickly pointed out that the so-called healthier choice was a 3- serving a box cheese quesadilla at 260 calories a serving – that’s 780 calories for a snack! And nearly 600 mg of sodium at three times 190 mg of sodium per serving (600 mg is one fourth of the daily recommended allowance for salt).

This compared to the Lean Pockets snack, which, granted, has way too much sodium at 710 mg per serving but only 330 calories, 7 grams of fat and a whopping 20 grams of protein. I thought the organic alternative was Lean Pockets’ superior equivalent, but how wrong I was! So all in all, the Lean Pockets are a healthier choice (despite having about 110 mg more of sodium). Unfortunately I had exuberantly purchased five of the organic quesadillas, only to have to exchange them for our old standby.

Which just tells you that even a consumer advocate, who should know better, can misread labels and make poor choices. Let the buyer beware, I say, and to my fellow consumers, first read those labels carefully but before you make a final choice, consider having a 14-year-old check your work!

Unsanitary shipping pallets posing threats to food safety? – National Consumers League

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By Courtney Brein, Linda Golodner Food Safety and Nutrition Fellow

As the Linda Golodner Food Safety and Nutrition Fellow at the National Consumers League, I work on a wide range of food safety and nutrition issues. While, on the food safety front, the topics on which I focus run the gamut, ultimately, they all share a common purpose: improving the safety of the food that American consumers purchase, serve, and eat.

Due in part to a string of recent foodborne illness outbreaks, and in part to an administration that has chosen to prioritize improving food safety, the environment is ripe for making significant changes to – and expansions upon – the mechanisms currently in place for protecting our food supply. More than a year ago, President Obama created a White House Food Safety Working Group co-chaired by Secretary of Health and Human Services (HHS) Kathleen Sebelius and Secretary of Agriculture Tom Vilsack. The group has recommended a public health focused approach to food safety that prioritizes prevention and strengthens surveillance and enforcement, among other measures. On the Congressional front, FDA food safety modernization legislation passed in the House last summer and is slated to come to the Senate floor soon. The United States Department of Agriculture (USDA) recently set new performance standards for Salmonella and Campylobacter in young chickens and turkeys, in an effort to help prevent tens of thousands of illnesses every year. To help consumers stay up-to-date on recalls and other food safety issues, HHS and USDA launched www.foodsafety.gov last September. The list goes on.

Central to the creation of an effective food safety system is the assurance that measures are in place to protect products at every step of the way along the path from “farm to fork,” as the saying goes. While regulations and inspections help to ensure the safety of food grown on farms and produced in factories, and consumer education helps to reduce cross-contamination and unsafe cooking practices in the home, the area in between – the transportation of food from production to purchase point – remains largely overlooked and under-regulated.

Several months ago, NCL Executive Director Sally Greenberg and I began to wonder what role, if any, the pallets used to transport food might potentially play in the contamination of the food supply. Our first tip-off was McNeil’s recall of Tylenol and several other products this past December and January. The company linked the moldy, musty odor – and the unpleasant side-effects it caused in many individuals who consumed the products – to the wood pallets that were stored in the area where these products were made. According to McNeil, when a chemical used to treat the pallets started to break down, another chemical called TBA formed in the air and contaminated the products. When we realized that these pallets were, at least generally speaking, the same as the ones stacked behind many grocery stores, we started to wonder why the shipping platforms that transport food were being stored outside, and if there were any regulations governing the use of pallets.

Our research revealed that pallets are, in fact, more or less overlooked in the regulatory sphere. We decided to conduct exploratory testing of the pallets used to transport food, to determine whether the issue warranted a call for FDA’s consideration. We’ve been at this a long time – NCL first drew attention to potentially harmful products in 1904, when NCL volunteers staffing a booth at the 1904 St. Louis World’s Fair demonstrated to fairgoers that canned green beans touted by food processors as a labor-saving home product were adulterated with green dye. More than 100 years later, we continue this work; this past December, the League called on the FDA to investigate a “sweetened dried cranberry” product that our commissioned lab tests found to be mostly sugar, and made of cranberry skins rather than whole cranberries as advertised.

For this investigation, we tested pallets in the Miami/Tampa area and in Houston. We located a highly regarded lab that gave us strict instructions on taking samples and shipping them back, which we followed to the letter. Many of the pallets I saw – and tested – were really dirty, sullied with items ranging from bird droppings to fish scales. They were stored outside, exposed to the elements, and easily accessible to rodents, insects, and birds. I became intimately familiar with these shipping platforms – both wood and plastic – and the precise, methodical way in which one takes samples to send to a lab. In all, we took samples from 35 plastic pallets and 35 wood pallets in each metropolitan area, totaling 140 samples. We had no idea what our results would be.

As it turned out, our findings were significant – and alarming. The lab found E. coli on 10 percent of the 70 wood pallets we tested, and on 1.4 percent of the 70 plastic pallets. The lab report also revealed the presence of Listeria on 2.9 percent of the wood pallets, half of which further tested positive for Listeria monocytogenes. None of the plastic pallets tested positive for Listeria. High aerobic plate counts, which reflect unsanitary conditions of the pallets, were found on both types of pallets, with approximately one third of the wood pallets and one fifth of the plastic pallets showing the high counts.

While our exploratory testing included only a small number of pallets, we think it gives some indication that the sanitation and safety of the pallets used to transport food in the U.S. deserve a closer examination. This past Tuesday, therefore, the League sent a letter to FDA Commissioner Margaret Hamburg, sharing our findings, urging the agency to do its own testing, and calling on FDA to set standards that will help to ensure that pallets are cleaned and stored properly, thus minimizing the possibility that they will be implicated in the spread of foodborne illness. Additionally, we videotaped our testing – check it out.

Safety precautions at Deepwater Horizon could have spared lives, environment – National Consumers League

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By Sally Greenberg, NCL Executive Director

This has been a terrible season for American workers engaged in dangers jobs. Last month, 29 coalminers died when the Massey mine in West Virginia collapsed; and 11 oil rig workers died April 20 after the massive explosion in BP’s Deepwater Horizon operation. The Wall Street Journal reported on May 18 (“Deepwater Oil Rigs Lack Preparations for Disasters”) that many of the companies engaged in offshore drilling operations – a very lucrative business but one that is fraught with potentially catastrophic consequences when things go wrong – did not put in place, and weren’t required to put in place, safety measures when things do go wrong.

Not only are workers dead, but the Deepwater Horizon disaster has thousands of barrels of oil gushing into the Gulf of Mexico every day. It’s hard to know where to start when tallying up the disastrous consequences of this environmental and workplace catastrophe caused by lax regulation and careless management at BP.

One place is increasing the deterrents against such indefensible corporate behavior by removing the $75 million cap on liability for companies involved in oil spills. There should be no cap at all. NCL signed a letter with other consumer groups asking to remove it. The Obama Administration has also pledged to tighten up what appears to have been a dangerously cozy relationship between regulators and the oil industry. This includes the Coast Guard and the Minerals Management Service, resulting in permits being given to companies to drill without those companies having to go through the usual process of documenting how they intended to ensure both worker and environmental safety.

Numerous congressional hearings are scheduled on the Deepwater Horizon oil rig disaster in the coming weeks. And Senator Joseph Lieberman (D-CT), who chairs the Homeland Security and Governmental Affairs Committee and will preside at several of the hearings, has said there will be no more permits issued for offshore drilling until the proper safety measures are in place. It’s sad that it takes a tragedy like this – and 11 innocent workers’ lives – to get regulators and companies to do what they should have done all along: put in place basic safety precaution that would have prevented this catastrophe.

NCL calls on FDA to regulate industry after tests reveal hidden pathogens on pallets used to transport food – National Consumers League

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May 26, 2010

Contact: 202-835-3323, 
media@nclnet.org
Washington, DC – In the wake of the recent recall of E. coli-tainted romaine lettuce, the nation’s oldest consumer organization, the National Consumers League (NCL), is urging the U.S. Food and Drug Administration (FDA) to set minimum sanitary and safety standards for the “unregulated but crucial” pallets that are used to transport food throughout the United States.

The move by NCL comes following recent exploratory tests conducted by the organization on pallets to determine whether they are potential carriers of pathogens, as concerns grow about the link between pallets and contamination of food and pharmaceuticals. The consumer group tested pallets for foodborne pathogens, including E. coli and Listeria. The findings were alarming: 10 percent of the wood pallets tested had E. coli present (though not the most virulent strain, E. coli O157:H7). In a letter to the FDA, NCL described the results of its exploratory testing of wood and plastic pallets used to transport food in the greater Houston, Texas and Miami/Tampa, Florida, areas. Testing was conducted in late April and included 70 wood pallets and 70 plastic pallets in total. NCL shipped the samples overnight to an independent microbiology lab that provides testing services for a wide array of commercial, industrial, regulatory, and law enforcement clients.

[Read NCL’s letter to FDA]

[View positive samples from testing]

“We believe it is essential to ensure that pathogens are not introduced at any step along the food transport system, from farm to fork. Our testing of pallets has shown that these relatively unregulated but crucial parts of the food transportation system can and do harbor dangerous pathogens that could potentially contaminate the food supply,” said Sally Greenberg, the League’s Executive Director.

In addition to the presence of E. coli, 2.9 percent of the wood pallets tested positive for Listeria, and half of these, when further tested, contained Listeria monocytogenes, one of the most virulent foodborne pathogens. This strain of Listeria is linked to a 20 to 30 percent rate of clinical infections resulting in death and causes approximately 2,500 illnesses and 500 deaths in the United States every year. Listeriosis is more likely to cause death than any other foodborne bacterial pathogen. Of the 70 plastic pallets tested, 1 – or 1.4 percent – came back positive for E. coli. None of the other plastic pallets tested positive for pathogens.

Finally, high aerobic plate counts, which reflect unsanitary conditions of the pallets, were found on approximately one third of the wood pallets and one fifth of the plastic pallets.

As the recent outbreak of E. coli underscores, the threat of foodborne illness remains a serious concern in the United States.

“Looking at the safety of pallets is crucial. Even if farmers, manufacturers, retailers, and consumers were all to follow food safety plans and practices to the letter, the introduction of dangerous pathogens into the food supply during transport could negate these efforts…With approximately two billion pallets currently in circulation in the United States, the presence of dangerous pathogens on even a small percentage of those pallets presents a potential threat to the safety of the food supply,” wrote Greenberg in her letter to the FDA.

Several different aspects of pallet use and storage present potential food safety concerns. If a pallet is absorptive – i.e., has the capacity to absorb water and harbor bacteria – or difficult or impossible to fully clean, it could contaminate food products like fresh produce or meat. A pallet that carries raw seafood on ice to a given destination, then heads of lettuce or apples to the next, could potentially contaminate that produce and lead to foodborne illness. In a just-issued report prepared for the FDA, Eastern Research Group, Inc. highlights the use of “good quality pallets” as a preventive measure. The agency has said it will use the report to inform the development of new rules to increase the safety of food during transport.

Furthermore, regardless of the materials from which it is made, any pallet that is not properly cleaned between trips increases the likelihood of cross-contamination. Storing a pallet outside, in unsanitary areas, in places accessible to vermin, or near potential contaminants increases the chances that the pallet could harbor dangerous pathogens. In conducting our testing, we observed that wood pallets – which we found to have a higher incidence of pathogens – are more often stored outside and exposed to weather, rodents, bird droppings, and insects. Among additional considerations is the use of damaged wood pallets; splinters or sharp points can damage the packaging of products, creating an entryway for pathogens from which sealed products would otherwise be protected.

NCL’s findings build on the growing concern about the potential dangers of unregulated pallets to consumers. In January of this year, McNeil Consumer Healthcare issued a recall of several of its over-the-counter products reported to have a moldy odor and that, in some individuals, were thought to have caused gastrointestinal distress. In a press release dated January 15, the company stated: “McNeil Consumer Healthcare has determined that the reported uncharacteristic smell is caused by the presence of trace amounts of a chemical called 2,4,6-tribromoanisole (TBA). This can result from the breakdown of a chemical that is sometimes applied to wood that is used to build wood pallets that transport and store product packaging materials.” The FDA issued the same statement on its Web site.

NCL is urging the FDA to do its own testing and set standards that will help to ensure that pallets are cleaned and stored properly, thus minimizing the possibility that they will be implicated in the spread of foodborne illness.

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About the National Consumers League

Founded in 1899, the National Consumers League is America’s pioneer consumer organization. Its mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. NCL is a private, nonprofit membership organization. For more information, visit www.nclnet.org.

Financial reform bill a major turning point for consumers – National Consumers League

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By Sally Greenberg, NCL Executive Director

This week marked a historic turning point in the fight for financial reform. A bill passed by the Senate will help protect consumers from usury by banks, payday lenders, and car dealer financing schemes that rip off hardworking Americans. The Senate now joins the House in having passed this landmark legislation – now the bills will need to be reconciled in conference and sent to the President. A big shout-out goes to Americans for Financial Reform – a vibrant coalition of consumer, labor, and civil rights groups – for helping get the Senate bill over the finish line

What’s in the bill for consumers? Well, everything really; this is a bill that came out of the consumer movement. The idea of a regulatory body to protect consumers from harmful financial products emanated from Harvard Professor Elizabeth Warren, who made an interesting point – when you buy a toaster you’re not expected to look at the wiring diagram in the product manual to see if it’s safe. The same should be true of a financial product. It should be safe and transparent for consumer. But today it is not, whether it’s a credit card, a mortgage, or a payday loan, consumers rarely know or understand what lurks inside the 30-page agreement they are signing.

The Senate bill creates a new federal regulatory agency, housed within the Federal Reserve but independent, to write and enforce rules protecting consumers of financial products like checking accounts, mortgages, and payday loans and auto loans. The Senate version also allows state regulators – notably the Attorneys General in the states – to enforce these protections – instead of preempting them from doing so, as Congress has been inclined to do to many times in the past (thereby destroying yet another line of defense for consumers).

The Senate bill includes auto dealers, but the House bill unfortunately exempts them from oversight and coverage under the bill. This is a serious mistake; dealer-financed auto loans are notorious for ripping off middle and lower income consumers, including young enlisted men and women and their families. Too many dealers have been willing to play games with buyers, insisting they can’t find them a lower interest loan, telling them their financing fell through at a lower rate but they can find them a loan a few percentage points higher – then the dealer pockets the difference when the unwitting consumer pays more. This is an industry that cries out for regulatory oversight. NCL hopes in the days to come that the Senate won’t be forced to capitulate to the auto dealers’ lobbing juggernaut.

There are many other important provisions in the bill, including regulation of derivatives, curbs on financial institution borrowing and spending to avoid the “too big to fail” scenarios we’ve seen all too much, and investor protections. Hats off to Americans for Financial Reform and the Senators who supported these landmark reforms. NCL is proud to be part of this coalition.