End Predatory Lending

Protecting State Consumer Protection from Preemption in Federal Financial Reform

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.

The Supreme Court and the States 2008-2009: Trend Defending State Authority Emerges this Term

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. 

Arbitration: "Set up to squeeze small sums of money out of desperately poor people"

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 hired 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 stacked completely 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 arbitration firms.

Minnesota Governor Pawlenty Vetoes Bill to Help Stop Foreclosures

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 year.