The context of this call is that, in the wake of the financial meltdown
that engulfed the country last year largely caused by fraud and
predatory lending, Congress is now debating the Consumer Financial
Protection Agency Act (CFPA Act, H 3126).
The act would create a consumer product protection agency for
financial products analogous to the Consumer Product Safety Board.
Whether out of circumstance or an emerging trend, where state authority
was at issue, this term the U.S. Supreme Court overwhelmingly deferred
to state decision makers-- a significant reveral from last year.
According to The Wall Street Journal, "Fed and Treasury
officials have identified the disease. It's called de-leveraging, or
the unwinding of debt. During the credit boom, financial institutions
and American households took on too much debt." But let's not buy into a false equivalence of "financial
institutions" and those "American households" borrowing beyond their
The headline above is a quote from former West Virginia Supreme Court
Justice Richard Neely, describing what his role was as an arbitrator at
the National Arbitration Forum (NAF), a for-profit company
to enforce mandatory arbitration clauses for credit card consumer
loans. "NAF is nothing more than an arm of the collection
industry hiding behind a veneer of impartiality," says Richard Neely.
In a devastating expose
by BusinessWeek, Neely
and other former arbitrators describe an arbitration system
against consumers-- a system where creditors win 99.8% of all disputes
involving companies ranging from Bank of America to Sears to Citgroup.
Arbitration clauses buried in the fine print of credit card
offers means consumers lose the right to have disputes decided in an
independent court and instead are forced into corporation-selected
Giving into corporate efforts to protect banking interests, Minnesota Governor Tim Pawlenty vetoed SF 3396,
which would have put a temporary hold on foreclosures while still
requiring borrowers to make payments on their loans. The bill would
have required homeowners with a sub-prime or negative amortization
loan to pay either 65 percent of the payment owed when the loan
defaulted, or the minimum monthly payment when the mortgage was first
created, whichever is less, for a one-year foreclosure deferment
period. The bill passed both chambers of the Minnesota Legislature with a wide margin, only to be vetoed (part of Pawlenty's record number of vetoes for a single session). In the meantime, home foreclosures are projected to increase
39 percent this year in Minnesota, with one out of every 31 Minnesota
households experiencing a foreclosure between 2005 and the end of this