ISDS rules give special rights to multinational corporations that are not available to domestic businesses. They provide corporations with the ability to sue a government for compensation outside of the countries’ domestic legal and court systems. ISDS claims are often in the millions or billions of dollars. An unaccountable three-person tribunal decides the fate of each case. The ISDS regime has been especially detrimental to public health, climate and environmental protections, Indigenous land rights, financial regulations, and democratic sovereignty.

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“This decision not only impacts the ability of the EPA to regulate under the Clean Air Act, but also could have vast implications on rulemaking by agencies generally,” stated Rachel Weintraub, Legislative Director and General Counsel with Consumer Federation of America.  “Americans depend upon all of our regulatory agencies to protect them: to ensure the air they breathe, products they purchase and food they eat are safe, and that our financial services and marketplace are fair. This decision gives regulated market participants and others who want to oppose regulations another tool to thwart necessary protections.”

Contact: Rachel Weintraub, 202-939-1012

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 “CFA believes that the bill strikes the right balance in the effort to restore decentralized, competitive markets in the digital sector and throughout the economy,” Dr. Mark Cooper, CFA’s director of research, and author of the Issue Brief, said.  “The dynamic economy that the uniquely American commitment to guardrails and guidance provided by antitrust and regulation requires aggressive, but disciplined action to reverse the mistakes of the past four decades.”

“A great deal of “unsound” precedent must be overcome, and that is where legislation may be necessary to recalibrate the practice of competition policy,” Cooper added, “but the practitioners of competition policy (federal and state antitrust and regulatory agencies, and private actors) have moved swiftly to challenge those erroneous precedents.

“Above all,” Cooper said, “it is possible to rebalance competition policy without abandoning the fundamental principles that served the U.S. economy well.” The rebalancing that enjoys widespread support among the analyses reviewed includes:

• shifting burdens of proof,
• adopting narrow definitions of relevant markets,
• adopting broad definitions of harm,
• focusing on competition and inequality,
• resurrecting structural solutions,
• putting efficiency and consumer welfare in its proper, long-term place by including quality, consumer choice, and innovation, and
• directing courts to place competition at the center of antitrust policy,
  • to stop giving dominant firms the “benefit of the doubt,” and
  • to treat anticompetitive conduct as the serious threat to consumer interests that it is.

The Issue Brief builds on five background analyses published in 2020, as well as a dozen and half peer-reviewed articles published from 2000 to 2016.

The forthcoming analyses summarized in the Issue Brief begins with the work of Louis Brandeis and concludes with Amy Klobuchar’s book Antitrust. In between the series looks at the Neo-Brandeisians, updates before broadband, the Golden Age of Capitalism, the challenges of digital technology, contemporary federal antitrust practice, other antitrust practitioners (state attorneys general and private antitrust activities), and legislative proposals for recalibrating competition policy.

• The analysis identifies 20 specific concerns about lax enforcement or the recent near total neglect of competition policy, organized in five broad categories (I. Lax Enforcement, II. Traditional Challenges, III. Long Standing Issues, IV. Magnified Old Abuses, V. New Challenges).
• It then outlines over two dozen proposed responses, organized in seven categories ( Purpose & Need for Reform, VII. Recalibration, VIII. Regulation, IX, Measuring Value, X. Rebooting, XI. Political Action: Collective, XII. Political Action: Individual).

The key principles to guide reform that appear in a straight line from Brandeis to Klobuchar, and almost all the analysts in between, include the following elements.

• Regulated competition (Brandeis’ term) is very much a capitalist undertaking with the goal of restoring and promoting a decentralized market economy.
• Efficiency is important (as Brandeis emphasized in his support for scientific management), because it yields economic progress for all involved in the production process.
• But, only if economic market power is not abused and political power does not multiply the advantage of dominant firms, their owners and highly skilled labor (as argued by Shepherd).
• Competition is the disciplining force, but it is not likely to occur or endure on its own. The capitalist solution strikes a balance between innovation and entrepreneurship, on the one hand, and the guardrails and guidance of antitrust and regulation, on the other.
• The key constraints require checks and balances to prevent barriers to entry and abuse of economic and political power, horizontally (across the branches of government), vertically (across the levels of government, i.e., federalism), and internally (through industrial democracy within productive enterprises).

“The big digital platforms are rightly the central focus at present because they have become so important and because they have been allowed to get away with so much consumer harm,” Cooper concluded, “but ultimately the entire economy is afflicted by a market power problem that should be addressed.”

Contact: Mark Cooper, 301-384-2204

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In addition to taking a broad view of competition and consumer protection, the Consumer Federation of America (CFA) believes the bill strikes the right balance.  It will significantly benefit consumers by restoring competition on big data platforms because it addresses one of the critical problems that has emerged in the digital sector, anticompetitive conflicts of interest, but it will not stifle innovation by being overly prescriptive.

Everyone, except the big data platforms, seems to agree that the Klobuchar/Grassley bill is a good start on defining competition policy in a manner that reforms antitrust practice.  The Consumer Federation of America believes it is more than that.  It is a roadmap to effective competition policy in the digital economy.

First and foremost, it will restore and ensure that competition from products that use the platform to reach consumers will be decided on the merits and no longer be victimized by the self-preferencing behavior of dominant platform providers.  Choice and innovation will be unleashed so that consumers are restored to a position of sovereignty and can choose the combination of services and suppliers that best meets their needs. This bill does enough to make a big difference.

Second, and of great importance, it does so within the framework of the competition policy of traditional antitrust law.  The recent economic theory that put competition policy into a “deep freeze” was a radical narrowing and misinterpretation of the principles of that guided the political economy to a remarkably successful, pragmatic, progressive, decentralized competitive market in the 20^th century. This bill changes that in a manner that is faithful to the long tradition of competition policy.

Third, it adopts a lower standard of proof, a preponderance of evidence that gives both sides an opportunity to make their case on a level playing field (i.e., where precedent is not a barrier to enforcement). This bill provides essential relief in a new and challenging area by going back to what worked, not trying to invent a new theory of competitive market and antitrust.

Fourth, while it focuses on the traditional antitrust approach of dealing with anticompetitive conduct under the antitrust laws after the abuse has occurred (ex post), it contains elements of “before-the-fact” (ex ante) rulemaking by defining a violation of the law as a potentially “unfair method of competition.”  The bill makes any such conduct a violation (rather than demanding a case-by-case demonstration of abuse), for this kind of conduct in this sector.

Fifth, the bill identifies and addresses the structural problem (the market power of large dominant platforms) that give rise to the significant avenues of abuse of power (leverage, grounded in vertical integration, foreclosure and exclusion, grounded in gatekeeping, and undermining potential competition, grounded in the exploitation and abuse of data).

Finally, as a practical matter, the bicameral, bipartisan support for this legislation that defines competition policy actually has a good chance of passing.  Because it is solid on policy grounds and feasible on political grounds, it is a clear signal of how to reform competition policy and antitrust in the digital age.

It would be possible to tweak this bill to make it stronger and remain within the parameter of the above principles, and other legislation may be necessary to address competition problems more broadly (above all increasing the resources of those with responsibility for enforcing competition policy, e.g., Competition and Antitrust Law Enforcement Reform Act.  However, it also seems clear that vigorous enforcement of the new authority and power in this bill will address the key problem in the digital communications sector in an effective and balanced manner.

For this reason, we view this bill as more than a first step. It is an important template. Those who want to do less to reboot competition policy are likely to fail to meet the new challenges to competition.  Those who wish to alter the underlying nature of competition policy (expressed in antitrust law) may be seeking unnecessary changes that could do more harm than good and may fail to garner the necessary support in Congress.  Thus, those who want to do too little or too much are likely to leave consumers and the economy much worse off.

Contact: Mark Cooper, 301-384-2204

[1] CFA took this view over two decades ago in the Microsoft case and reiterated it last year in the case of big data platforms: Mark Cooper, Monopoly Power, Anticompetitive Business Practices and Consumer Harm in the Microsoft Case (Consumer Federation of America), December 1999, Mark Cooper, “Antitrust as Consumer Protection In The New Economy: Lessons From The Microsoft Case, Hastings Law Journal, 52: 4, April 2001, first presented at Conference On Antitrust Law In The 21^st Century Hasting Law School, February 10, 2000; Mark Cooper, Amina Abdu, Big Data Platforms, A New Chokepoint in the Digital Communications Sector Meeting New Challenges with Successful Progressive Principles, Working Papers on Pragmatic, Progressive Capitalism, WP # 4, September 2020. Senator Amy Klobuchar, Chair of the United States Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights, argues for this view of policy in Antitrust: Taking on Monopoly Power from the Guilded Age to the Digital Age (Alfred A. Knopf, 2012),Top 25 policies,  #24, pp. 347-348.  

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“The industry has taken the position that any constraint on its actions will end the digital revolution and dramatically increase costs for consumers. The Consumer Federation of America emphatically disagrees,” said Mark Cooper, CFA’s Director of Research.

“The House Judiciary Committee and Antitrust Subcommittee is doing exactly what Congress should do to reboot needed oversight of the dominant incumbent digital platforms. The Committees have identified general practices that must be reformed, given concrete recommendations, and provided increased resources for implementing these needed actions,” Cooper added.

Finally, said Cooper, “We also support and recognize that the recommendations keep Congress out of the business of trying to pick winners, when they are just as likely to pick losers. Instead, all the remedies on the table empower antitrust and regulatory experts to use their judgement, based on the clear goals defined by Congress, to build adequate consumer protections in the world of big data.”

Contacts:
Mark Cooper, 301-384-2204
Amina Abdu, 202-656-1282

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“This is exciting news from the FTC,” said Amina Abdu, CFA’s Antitrust Advocacy Associate. “The new group sends a clear signal that the FTC intends to use all the tools at its disposal to curb anti-consumer and anti-competitive practices. We are hopeful that rulemaking will allow the agency to act more efficiently to promote competition than enforcement alone. That’s key in digital markets where things move quickly.”

CFA has advocated in the past for agency rules to increase consumer protections, make the marketplace fairer, and supplement antitrust law in promoting competition, ranging from interoperability and nondiscrimination to banning deceptive terms and conditions. CFA has long supported strengthening the FTC’s Funeral Rule, first adopted in 1984. CFA has also advocated for increased resources for the FTC, which will be crucial as it undertakes new rulemaking.

“This is a very promising first step,” said Susan Grant, CFA’s Director of Consumer Protection and Privacy. “We now know that all solutions are on the table when it comes to the FTC’s mandate to protect consumers from unfair and deceptive practices. We look forward to working with Chairwoman Slaughter and the FTC in its efforts to promote consumer interests and corporate accountability.”

Contact: Amina Abdu, 202-656-1282

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“Senator Klobuchar’s bill is an important step in the right direction,” said Amina Abdu, CFA’s Antitrust Advocacy Associate. “For decades, market power has been allowed to grow unchecked, with little scrutiny given to blatantly anticompetitive mergers or conduct. This bill is a long overdue effort to redress these harms and protect consumers from rampant market power abuse.”

“Enforcement has always been the cornerstone of antitrust. We are excited to see a bill that recognizes this and takes steps to strengthen oversight, while refusing to have Congress try to make decisions that are better left to the expert agencies,” said Mark Cooper, CFA’s Director of Research.  “Klobuchar recognizes what Congress should and should not do.  Her bill reaffirms and clarifies goals, encourages and supports enforcement, and weeds out practices and defenses that should never have been allowed but have become embedded in antitrust practice. Importantly, it does all of this without setting specific limits or picking winners and losers among companies.”

In a recent article in Competition International, we have outlined the steps necessary for “Rebooting Antitrust and Regulation for Digital Communications.”

After the Trump administration’s effort to essentially repeal the Communications Act of 1934 and abandon the Federal Communications Commission’s (FCC) authority to other agencies, the U.S. must restore effective oversight and pull the strands of policy into a coherent overall approach. This effort will require a mix of regulatory and legislative actions including:

1. Reversing the theory of “sufficient” competition and the deregulation to which it gave rise
2. Asserting full Title II authority over nondiscrimination and universal service
3. Bringing the full weight of Title II authority to bear on achieving universal service to broadband
4. Restoring full dual jurisdiction by repealing the Trinko decision that quashes antitrust even when there is only a whiff of regulation present

The principles of antitrust and regulation must also be adapted to new industries given the enormous power wielded by dominant players in emerging industries such as Big Data Platforms. While the principles on which antitrust and regulation rest remain the same, these practices must be adapted to the new techno-economic relationships in the economy[i]. Antitrust and regulation need to be rebooted, after a long period of inactivity and explicitly redefined to meet the challenges of the new economy.

“We commend Senator Klobuchar for proposing a balanced and thoughtful approach to rebooting antitrust.  Congress needs to enact this legislation and let the agencies do their job before it tries to micromanage the structure of this vital sector,” concluded Cooper.

[i] Other recent CFA papers provide the historical grounding of this approach;  From Brandeis To Stiglitz: Into & Beyond The 2020 Election: The Brandeis Protocol and the Stiglitz Model Create a  Framework for Pragmatic, Progressive Capitalism, especially Chapter 4, https://consumerfed.org/wp-content/uploads/2020/08/Pragmatic-Progressive-Capitalism-Report-8-13-20.pdf, and a detailed discussion of Big Data Platforms, A New Chokepoint in the Digital Communications Sector Meeting New Challenges with Successful Progressive Principles, especially, Chapter 5. https://consumerfed.org/reports/big-data-platforms-a-new-chokepoint-in-the-digital-communications-sector/

Contacts:
Mark Cooper, 301-384-2204
Amina Abdu, 202-656-1282

[i] Other recent CFA papers provide the historical grounding of this approach;  From Brandeis To Stiglitz: Into & Beyond The 2020 Election: The Brandeis Protocol and the Stiglitz Model Create a  Framework for Pragmatic, Progressive Capitalism, especially Chapter 4, https://consumerfed.org/wp-content/uploads/2020/08/Pragmatic-Progressive-Capitalism-Report-8-13-20.pdf, and a detailed discussion of Big Data Platforms, A New Chokepoint in the Digital Communications Sector Meeting New Challenges with Successful Progressive Principles, especially, Chapter 5. https://consumerfed.org/reports/big-data-platforms-a-new-chokepoint-in-the-digital-communications-sector/

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The Coalition for Sensible Safeguards (CSS) – led by Public Citizen, Consumer Federation of America, the AFL-CIO, the Center for Progressive Reform, the Economic Policy Institute and the Union of Concerned Scientists – is touting the poll’s findings, saying they bolster the case that the Biden administration should rebuild the regulatory process to better serve people and communities.

“Our message to the incoming administration is this: Likely voters support bold regulatory action. Government officials should not be afraid to commit to rebuilding our weakened regulatory system and resolutely advancing the public interest through effective use of regulations,” the polling memo reads.

The polling found that:

• 81% of Democrats and 62% of Republicans back regulation;
• 65% of voters want public and community input reflected in the rulemaking process, including input from workers (64%) and scientists (51%), while 55% want billionaires to have less of a say in federal regulation;
• At least three out of four voters want regulators to safeguard workers (81%), protect everyday people (77%), save lives and reduce injuries (76%), and protect our environment (75%);
• At least three out of five voters want regulators to deal with climate change (67%), reduce income inequality (65%) and promote gender equality (60%);
• Nearly three out of four voters want to depoliticize the rulemaking process by requiring disclosure of White House interference in the rulemaking process; and
• In addressing the coronavirus, voters want protecting public health prioritized over the economy when they conflict by a 35-point margin.

“This polling serves as a correction to the conventional wisdom that ‘regulation’ is a dirty word,” said Ethan Winter, analyst for Data for Progress. “A majority of voters – including a 62% of Republicans – think that regulations serve an important role in protecting the environment, keeping workers safe and ensuring a fair economy. President-Elect Joe Biden should take his election for what it is: a mandate from the voters to use aggressive regulatory action for the benefit of everyday Americans.”

“The American people want their government to act to keep their food safe, their water clean, their air breathable and their pharmaceuticals affordable,” said Robert Weismann, president of Public Citizen and co-chair of CSS. “They want safe workplaces and an end to financial rip-offs. That means – as the data show – they want strong regulatory protections and enforcement.”

“The results of this important poll are clear: The majority of Americans simply believe that regulations are needed to protect them from unsafe food, dangerous products and unfair financial services,” said Jack Gillis, executive director of Consumer Federation of America and co-chair of CSS. “Sensible safeguards in the marketplace not only meet consumer expectations for fairness, health and safety, but protect companies from substandard competition.”

Contact: Rachel Weintraub, 202-904-4953

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This report addresses the structural features of digital markets that have given the largest tech companies outsized influence over the economy and over communications.  The paper puts big data platforms in the larger context of structurally similar markets, like big broadband networks, internet service providers, and business data services, to understand the progressive policies that have been successful in the past and can be adapted for the digital age.

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“The policy failures and lack of competition we’ve seen in Business Data Services epitomize the challenges of building a dynamic, competitive communications sector in the digital age,” said Dr. Mark Cooper, CFA’s Director of Research. “While the growth of BDS embodies the immense progress that has taken place during the digital revolution, these services exhibit ongoing problems in market structure, conduct and performance that have made BDS a key chokepoint in the communications sector.”

The report, entitled Business Data Services: Another Failure of Free Market Fundamentalism to Promote Competition or Prevent Abuse of Market Power, proposes a conceptual and empirical framework to analyze core concerns about market power both for Business Data Services and beyond. It shows that the early deregulation of the BDS industry was based on erroneous theories of contestable markets and sufficient competition that did not play out in reality. These theories continue to drive free market fundamentalism to this day, culminating in the Federal Communications Commission (FCC)’s “Flip-Flop” order in 2017, which reversed the 1996 Communications Act’s emphasis on competition in favor of abandoning federal oversight.

The report argues that this decision was an enormous policy failure that will have disastrous effects for consumers, deregulating the key chokepoint where the ocean of data flowing through the digital communications sector becomes a stream delivered to individual customers.  The sector is dominated by a “tight oligopoly on steroids” where the market power that results in high levels of concentration is magnified by strategies of geographic separation, technological specialization, and product segmentation that all of the dominant firms use to diminish rivalry by avoiding head-to-head competition.

“The evidence is clear that two firms are not enough to ensure competition. Sometimes six firms is not enough to ensure competition,” said Amina Abdu, CFA’s Antitrust Advocacy Associate. “And yet, we’ve allowed a handful of companies to control this crucial bottleneck in the digital economy because of a notion of potential competition that never materialized. That’s a problem.”

“Local phone companies used their control of the network inherited from the franchise monopoly period to raise prices, increase profits and undermine competition,” concluded Cooper. “Antitrust and regulatory oversight must be restored in the communications sector. This is not just a problem with Business Data Services, but a larger problem of abuse of market power in tight oligopolies across digital markets.”

Contacts:

Mark Cooper, 301-384-2204

Amina Abdu, 202-656-1282

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The Consumer Federation of America is quite convinced that the antitrust and regulatory oversight of the digital communications sector is in desperate need of a reinvigoration after decades of extremely lax enforcement that has failed to promote competition and protect consumers.  We also believe that immunity from liability is a serious and important issue that should be addressed as antitrust and regulatory oversight are recalibrated to deal with the digital economy.

However, we believe it would be a mistake to deal with these challenging issues in a piecemeal, “siloed” approach.  A much more comprehensive review of antitrust and a new regulatory agency are necessary to address the many harms that have been visited on consumers by the dominant players in the digital communications sector.

To ensure that policymakers address the problems of the digital communications sector, we have launched a series of reports entitled “The Quarterlife Crisis of the Digital Revolution: Great Potential, Benefits and Harms that Can Only be Addressed by Pragmatic, Progressive Capitalist Policy.” The working papers examine two industries that are directly relevant to this proceeding, big broadband networks and big data platforms.

While the immunity that dominant big data platforms claim based on Section 230 has anticompetitive impact, this impact is a very small part of the anti-competitive structure of the big data market.  Moreover, it is a very small part of the anticompetitive conduct that permeates the big data platforms market.

We seriously doubt that a section 230 proceeding instigated by a blatantly politically-driven goal can come to any good.  This is particularly the case when that proceeding is being conducted by an agency, the Federal Communications Commission (FCC), which has sought to deregulate the core sectors of the digital communications ecology, failing to ensure nondiscrimination in the carrying of internet traffic or prevent abuse of the control of the Business Data chokepoint.

Section 230 liability raises many issues that are not simply economic in areas like privacy and universal service where the FCC has been entirely ineffective. Over-broad immunity also has implications beyond the communications sector in product safety, where platforms use section 230 to avoid liability under safety laws. The FCC, acting on its current authority, is likely to be severely constrained by limitations on its power, even if it was inclined to do something meaningful.  Given its recent decisions to abandon oversight over anticompetitive conduct, we are dubious of its intentions.  Moreover, its own deregulatory words are certain to be thrown into its face.

While commenters may recognize the weak positions that the FCC has taken on issues that are in its jurisdiction, by choice, it is also extremely important to recognize that the FCC is likely to take very weak action when it comes to issues that fall outside of its jurisdiction.  Because of CFA’s very broad coverage of consumer issues, we recognize the importance of safety implications since platforms can use 230 as a liability shield and an explanation for why they do not need to comply with safety laws; but the FCC should not have anything to do with that.

Serious rebooting of antitrust and regulation of the digital communications sector is in order, but this proceeding and this agency are neither the time nor the place for such an important challenge.

Contacts:

Mark Cooper, 301-384-2204

Amina Abdu, 202-656-1282

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“The past century of nondiscrimination policy has shown us the key ingredients for success are strong, before-the-fact regulation, antitrust, and flexible, ongoing oversight,” said Dr. Mark Cooper, CFA’s Director of Research and author of the report. “These principles should be restored in the broadband industry and guide policy moving forward in the emerging digital platform market,” added Cooper.

The report is entitled: Pragmatic, Progressive Capitalism at Its Best: Network Neutrality, How an Entrepreneurial State Used Public Policy to Foster Experimental Entrepreneurialism and Create the Internet. It outlines the historical, legal, and economic underpinnings of regulation and oversight of communications networks in the U.S. that created its success and leadership in the development and deployment of the digital communications sector. The report demonstrates that the recent rollbacks of net neutrality protections threaten to undermine a long record of American entrepreneurial success online.

CFA’s new report identifies the failure of “Free Market Fundamentalism,” which advocates lax antitrust enforcement and little or no oversight of the market of the Big Broadband Network owners. The report demonstrates that abandoning oversight to the Federal Trade Commission (FTC) will be disastrous for consumers. By analyzing four decades governed by the principle of network neutrality, the report charts a path forward.

“The report shows the FTC has a remarkable record of failure in the digital age,” said Amina Abdu, CFA’s Antitrust Advocacy Associate, “starting with the Microsoft case in the early 1990s and ending with a complete failure to adopt effective protection for consumer privacy from the mid-1990s until today.”

“After two decades of debate over Title I and Title II authority to ensure nondiscriminatory access to consumers, a debate in which both Democrat and Republican Federal Communications Commission members recognized the need for that oversight, in 2016, the courts upheld a light-handed Title II approach,” Cooper noted. The Trump FCC instantaneously did a complete “flip-flop”, seeking to repeal the Communications Act by taking a “Title ‘0’,” approach.”

The report points out that the majority of the court that reviewed the recent FCC “flip-flop” order felt the FCC had totally botched the empirical analysis, but they felt bound by the “deference” the Supreme Court would give to the agency. Even the third member of the court admitted that the FCC could use Title I or Title II authority to endeavor to protect competition and promote universal service.

“The extreme deference given the agency, the history of abuse of market power, the overwhelming evidence in the record, and the clear evidence that the FCC action violates the intent of the legislation, guarantees that this decision will be revisited and reversed in the future,” Cooper concluded.

Contacts:

Mark Cooper, 301-384-2204

Amina Abdu, 202-656-1282

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It outlines the historical, legal, and economic underpinnings of regulation and oversight of communications networks in the U.S. that created its success and leadership in the development and deployment of the digital communications sector. The report demonstrates that the recent rollbacks of net neutrality protections threaten to undermine a long record of American entrepreneurial success online.

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“We know that throughout the shutdown big business remained in touch with the Trump administration, even the shut-down agencies. But for the public, it was a complete mystery whether their right to submit formal comments to government agencies was operational or suspended. The only solution to this confusion is for the Trump administration to extend all notice-and-comment deadlines for 35 days to make up for the period of the partial shutdown,” said Robert Weissman, president of Public Citizen and CSS co-chair.

“The federal government has a responsibility to fully analyze all of the comments submitted by the American public before proceeding with final regulatory action. The regulatory clocks needed to stop during the shutdown to ensure government staff could fully incorporate comments into regulatory proceedings when the government reopened,” said Jack Gillis, executive director of Consumer Federation of America and CSS co-chair.

Notice and comment procedures under the Administrative Procedure Act are integral to public participation, transparency and accountability in the rulemaking process. During the partial government shutdown that lasted from Dec. 22, 2018 through Jan. 25, 2019, roughly a quarter of federal agencies, including OMB, were paralyzed. As a result, the main vehicles for public participation in rulemaking – Regulations.gov and FederalRegister.gov – were not fully and continuously operational. Numerous comment periods closed during the shutdown, and more than 400 comment periods are due to close in the next 30 days. Moreover, there was never a definitive statement from administration officials as to whether public comments or requests for agency action were being accepted and considered during the shutdown.

The U.S. Office of Information and Regulatory Affairs (OIRA), the White House office that reviews regulations, sent mixed and often cryptic messages as to whether it would conduct regulatory review during the shutdown. The agency issued an update stating that it would review some regulatory actions during the shutdown but failed to articulate a clear standard for which ones. As with the notice-and-comment process, there was considerable confusion over whether OIRA was even open to members of the public who wished to share their views on rules undergoing review. In addition, the shutdown may have prevented agencies from scheduling public hearings or responding to requests for public comment extensions.

CSS believes that a blanket extension of all comment periods for 35 days would resolve these uncertainties without jeopardizing the public’s right to participate in the rulemaking process.

CSS is an alliance of more than 160 labor, scientific, research, good government, faith, community, health, environmental and public interest groups committed to advancing our system of regulatory protections. The coalition is co-chaired by Public Citizen and Consumer Federation of America, and is led by an executive committee that includes the AFL-CIO, the Center for Progressive Reform, the Economic Policy Institute, the Natural Resources Defense Council and the Union of Concerned Scientists.

Contact: David Rosen, (202) 588-7742

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This legislation rolls back important consumer protections and repeals or weakens a number of achievements in the Dodd-Frank Act and other critical laws designed to ensure consumers, investors, and honest market participants are appropriately protected from abuses in the marketplace.

“This bill makes a future banking crisis more likely,” explained Christopher Peterson, Financial Services Director at Consumer Federation of America. “At the same time, Congress is turning its back on millions of Americans struggling to make ends meet.”

Among other problematic features in the bill:

• Eliminates monitoring, standards, and oversight that was designed to prevent giant banks from collapsing. The bill undermines the ability of the Federal Reserve to ensure adequate oversight of large banks, including some banks that contributed to the financial crisis of 2008. The asset threshold for enhanced regulatory controls would go from $50 billion to $250 billion eliminating enhanced oversight of 25 of the largest 38 banks in the country. The bill also creates a new loophole that will allow banks to engage in speculative trading with their customers’ deposits.
• Creates a blind-fold for the government on data and patterns in the home mortgage markets. The bill exempts 85 percent of banks from the Home Mortgage Disclosure Act’s data reporting requirements making it more difficult to spot discrimination and reckless lending patterns.
• Opens the door to abuse of millions of vulnerable families by eliminating key protections from manufactured-home loans. The bill exempts manufactured-home retailers from the mortgage originator compensation rule that that prevents borrowers from being steered toward loans that are more expensive than those for which they qualify. This change will increase the cost of a home by thousands of dollars over the life of the loan and poses a particular threat to low-income Americans living in rural communities.
• Weakens crucial consumer protections: the Consumer Financial Protection Bureau’s Qualified Mortgage (QM) rule and Ability-to-Repay standards for home mortgage loans. The bill expands an exemption to the QM rule for financial institutions that have less than $10 billion in assets and hold their loans in portfolio. This means that many banks will be free to avoid  the common sense rules requiring that borrowers have the ability to repay their home mortgage loans. Some lenders are likely to take advantage of this exemption to bring back exotic loans that lead to a high risk of foreclosure.

“The Bank Lobbyists Act’s elimination of protections for manufactured-home mortgage borrowers is particularly mean spirited,” said Peterson. “This change will make it more difficult for families that are struggling to find basic shelter in areas of the country where opportunities can be scarce.”

“Instead of solving pressing national problems, Congress and the Trump Administration are doing favors for their friends in the banking industry,” said Peterson.

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