House Passes Anti-Investor JOBS Act

As expected, the House of Representatives approved the JOBS Act (H.R. 3606) last week with strong bipartisan support despite growing expressions of opposition from investors, seniors, unions, and securities law experts.  Backed by the Administration, the bill packages together a number of measures that purport to ease access to capital for small companies but that roll back important investor protections in the process.  “Despite its name and the wave of bipartisan support that has helped speed it through the House, there is no reason to believe the JOBS Act will result in jobs growth,” said CFA Director of Investor Protection Barbara Roper in a press statement responding to the bill’s passage. “The bill focuses exclusively on proposals to reduce compliance costs associated with raising capital while ignoring the likely effect on the cost of capital,” she explained.  “In fact, by rolling back important investor protections, undermining market transparency, and increasing the risk of fraud, the bill threatens to drive up the cost of capital for the small companies it purports to benefit.  That will be bad for investors, bad for small companies, and bad for the economy as a whole.”

The measure now moves to the Senate, which introduced its own jobs package late yesterday.  A broad group of public interest groups wrote to the Senate last week urging them to adopt a more thoughtful, balanced approach.  “Where the House has gone after regulatory protections with a hatchet, we urge the Senate to use a scalpel, carefully targeting provisions that may be undermining capital formation without destroying essential investor protections in the process,” the groups wrote.  “Such an approach would not only better protect investors from a recurrence of the scandals, frauds, and crises that have devastated the markets over the past decade, it would also be more likely to produce sustainable job growth.”  Based on an initial review, the Senate bill appears to be less damaging than the House bill but still well short of what is needed to ensure that both investors and the integrity of our capital markets are adequately protected.

Administration Urged To Defend Country-of-Origin Labeling

The nation’s largest consumer groups wrote to the Obama Administration last month urging an appeal of the November 2011 ruling by a World Trade Organization (WTO) panel against U.S. country-of-origin labels on meat. The ruling followed a case brought by Canada and Mexico in December 2008 against the popular U.S. law, which was also opposed by large agribusiness corporations in the United States. The COOL law – implemented in March 2009 – was a result of a decades-long struggle to assure consumers are provided with basic information about the origin of meat products, fish and seafood, certain nuts and fresh fruits and vegetables. “Consumers have been pushing for country-of-origin labeling for decades only to have the new law challenged at the WTO,” said Chris Waldrop, Director of CFA’s Food Policy Institute. “If upheld on appeal, the WTO ruling will undermine consumers’ faith in the fairness of these international institutions.”  A news release on the issue is available here.

CFA Praises Administration Privacy Plan, Advocates Multi-Stakeholder Privacy Process

The Administration issued an online privacy plan last month that CFA and Consumers Union praised as providing “an important path forward for consumer groups, industry, and government to work together to address concerns on this critical issue.” While still calling for comprehensive privacy legislation, the White House announced a strong set of baseline principles for protecting data online and outlined a process for bringing together consumer groups, industry and government to help develop voluntary standards for the collection and use of consumer information.

By including a Consumer Privacy Bill of Rights, the government emphasized the importance of transparency, individual control, and the ability to access and correct personal information, and recognized there may be a need to for heightened protections for children and teens on the Internet.  “We are encouraged by this announcement today, but we urge the Administration to ensure that it carries out this process in a fair and transparent manner, and that consumer voices are heard and acted on,” said CFA Director of Consumer Protection Susan Grant.

CFA joined with other consumer and privacy organizations to issue a statement of principles in support of a multi-stakeholder privacy process.  “Efforts to impose unilateral solutions by governments, companies or civil society groups, no matter how well intended, are doomed to fail,” the groups warned. “Either they will not work because it is impossible to control the flow of information without the widespread support of the important stakeholders, or they will be forced to impose such draconian conditions that they will undermine the flow of information and seriously diminish the value of the digital economy.

Policy must strike a balance between information flow and control,” they added. “The only way to find that balance in the digital economy is through participatory governance.”

New Study Documents Twilight of RALs as Big Business

As tax season shifts in to full swing, the National Consumer Law Center (NCLC) and Consumer Federation of America (CFA) issued their annual report on the refund anticipation loan (RAL) industry. The report documents how the FDIC’s settlement with the last bank making RALs spells the end of these loans as big business.  Unfortunately, as the report also documents, with the end of RALs made by banks, a few high cost fringe lenders have stepped into the fray.  “Consumers should avoid any loans offered along with tax preparation services by financial outlets,” warned CFA Financial Services Director Jean Ann Fox. “Beware of lenders that try to divert your hard-earned tax refund dollars to repay high-cost loans or make down-payments on bad deals.”