Newsletter 77 - Spring 2015

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Regular order
Consumer financial protection bureau
Electronic edition
Pacific Legal Foundation
Book reviews
Video corner
SAFE Board
About SAFE

Regular order - With a majority of the House since 2011 and the Senate since January, congressional Republicans are seemingly in a position to influence government policy by passing laws and exercising the “power of the purse.” Thus far, however, they have had limited success.

FIRST, the president and other administrative officials seem intent on testing the limits of (or exceeding) their legal authority. The Supreme Court struck “recess” appointments of three NLRB members in 2013. Court challenges are pending re: IRS recognition of tax credits that did not comport with the Affordable Care Act, EPA curbs on carbon emissions, administrative orders affecting the status of some 5 million illegal immigrants, and an FCC attempt to regulate the Internet. If current negotiations with Iran result in a nuclear deal, indications are that it won’t be submitted for Senate confirmation.

SECOND, 60 votes (a 3/5 supermajority) are required under Senate rules to take up (let alone pass) most legislative proposals, so the Democratic minority can filibuster bills they oppose. Only one Republican-brand proposal (Keystone Pipeline bill) has run the legislative gauntlet recently, after months of effort, and the president promptly vetoed it.

THIRD, Republican budget proposals are under heavy attack. While details of the House and Senate plans differ, the general thrust is to cut projected deficits over the next 10 years by some $5 trillion, balance the budget by the end of the period, and refrain from raising taxes. Democrats apparently want to keep the spending party going, and it’s hard to foresee a constructive result. GOP budgets face uphill battle,

Speaking from a policy standpoint, we would offer these observations: (1) Executive branch overreach is undermining the US political system, and it needs to be stopped. (2) Republicans are right in pushing for a balanced budget, and tax increases should not be needed as the federal government is awash with wasteful spending. As for tax reform, see SAFE’s
SimpleTax proposal.

CFPB will rewrite lending rules, Daniel Kerrick, Esq. - If you aren’t familiar with the Consumer Financial Protection Bureau, rest assured, your lender and everyone else involved in the financial services industry is, and they are all holding their breath given the agency’s regulatory power and goals.

The CFPB was born from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. So why create a new federal agency when federal consumer protection laws – not to mention countless regulations at the state level - were alive and well? At a time when consumer debt was and remains high, the average American’s credit scores were lower, and the jobs picture was dismal, the 2010 Congress saw an opportunity to “protect” consumers of financial products.

The CFPB’s mission, according to their
website, “is to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.” To this end, the agency is authorized to write rules, supervise lenders et al., and bring enforcement actions.

The stated goals of the CFPB are to (1) prevent financial harm to consumers while promoting good practices that benefit them; (2) empower consumers to live better financial lives; (3) inform the public, policy makers, and the CFPB’s own policy-making with data-driven analysis of consumer finance markets and consumer behavior; and (4) advance its performance by maximizing resource productivity and enhancing impact.

So how can the CFPB do all these things? Seemingly, they would have to be involved in every consumer transaction or have an opportunity to review every alleged financial harm. Enter the CFPB website, which allows consumers to submit complaints about financial products or difficulties with lenders and requires lenders to respond. Each lender or lender agent must be registered with the CFPB, and the CFPB website. The complaint process has forced lenders and lender agents to focus more on processing complaints and compliance with CFPB rules and less on what they do best – lending money.

Over 85% of the complaints submitted are adequately addressed by financial service providers, CFPB data indicate, and most of the others could be viewed as mere inquiries. Fewer than one in a hundred of the complaints result in enforcement action by the CFPB.

Many lenders have reconsidered debt collection practices and whether or not to enforce lending agreements after consumer defaults, simply to avoid the inevitable consumer complaint or inquiry. Additional bad debt and compliance costs have added to their overhead, which must, of course, be passed on to consumers through higher fees and/or penalties.

The CFPB’s virtually unchecked regulatory power and nearly $600 million 2015 operating budget allow it and other federal agencies to shape future lending practices and credit opportunities for consumers. Based on the CFPB complaint data and the many reports available on its website, the value and need for the CFPB seems questionable. Lenders and the lending industry are uncertain as to what steps the CFPB will take to prevent financial harm and promote good practices to benefit consumers or if there will be any benefit at all.

Electronic edition – As some members have already discovered, reading this newsletter online offers several advantages. Same great (we hope) content as the print edition – faster delivery (you’ll be notified by e-mail as issues are posted) - ready access to sources or videos – ease of forwarding the newsletter (or stories in it) to your contacts – freedom from recycling. And now, as a way to save printing and mailing costs, the SAFE Board is reducing the annual dues of members who subscribe to the electronic edition from $10 per year to zero.

We anticipate continued demand for the print edition and plan to keep producing it. But if you would like to “go electronic,” please let us know ( and your faithful editor will take care of the rest.

Although electronic list members will be dues free, we would appreciate continuing contributions to SAFE. This will ensure sufficient funding to maintain our website and other outreach efforts. And remember that SAFE is a Section 501(c)(3) organization, so contributions should be tax deductible for those who itemize.

One liners - What is the biggest lie ever? “I have read and agreed to the terms of use.”

The bank says this is my final notice. Isn’t it fantastic that they’re not going to .bother me any more?

Police were called to a daycare center today. A two-year old boy was resisting a rest.

Keeping governments in line – SAFE Treasurer Edgar Fasig arranged a talk by Todd Gaziano of the Pacific Legal Foundation at the March 20 meeting of the Retired Men’s Luncheon Club.

A University of Chicago Law School graduate, Mr. Gaziano is a member of the Texas state bar, the US Supreme Court, and other federal courts. He joined PLF in 2014 as executive director of their DC Center.

Todd’s talk began with a history of the Pacific Legal Foundation, which was organized in 1973 while Ronald Reagan was governor of California. The goal was to take on legal causes that would serve the public interest and might not otherwise be represented, to be funded by donations from people who approved of this activity. The concept was a novel one at the time, but there are now some 40 public interest legal organizations.

PLF does not win all of its cases, nobody does, but it has an impressive track record. One stat of particular pride is winning
all 7 of the cases it has been privileged to take to the US Supreme Court. And even when a particular case is lost, that’s not necessarily the end of the story. Remember the many losses of civil rights groups over the years before they finally prevailed in Brown v. Board of Education and established a legal precedent for ending school segregation.

As examples of the cases PLF takes on, Todd recapped a few of them.

(1) An upstart mover in Kentucky contested a requirement to obtain a certificate of necessity and convenience before starting a business.

(2) A Massachusetts coastal erosion commission granted six homeowners permission to rebuild their houses, which had fallen into the sea as the result of a jetty constructed by the Corps of Engineers, but refused permission to build a protective seawall.

(3) The EPA told Idaho homeowners that a pond on their property constituted wetlands and they would have to eliminate it or pay a fine of $37.5K per day for noncompliance.

(4) A challenge to GovCare (currently pending) is based on the 2012 decision that levies for noncompliance are a tax, as this “tax” bill did not originate in the House of Representatives.

(5) The US Fish and Wildlife Service enraged property owners in Utah by decreeing that human beings would be criminally prosecuted if they interfered, for
any reason, with activities of a supposedly endangered subspecies of prairie dogs.

(6) Under a San Francisco rent control statute, a couple faced a lump sum liability of $118K if they required a renter in a third bedroom in
their home to move out so they could use it as a guest bedroom.

If cases like these tickle your fancy, there’s lots more information on PLF’s

Book reviews – Have you read any good books lately? If not, you might want to check out the Book Reviews section of our website, which has just been upgraded by SAFE member (and technology consultant) Davis Jefferson.

Recent reviews (be sure to check the 2012, 2013 and 2014 folders) now come with an executive summary so it’s easy to identify books that you’d be interested in learning more about, or possibly even reading. For example:

• Mistakes were made (but not by me), 3/17/15 – Carol Tavaris & Elliot Aronson: Human beings have an uncanny ability to rationalize their behavior, beliefs, and even memories so as to minimize intellectual dissonance. That includes politicians.

•America, 6/25/14 – Dinesh D’Souza argues that this country is under assault, not by external enemies, but by internal critics who abhor American traditions of freedom and individual responsibility.

•The tipping point, 4/24/13 – Malcolm Gladwell: Why do some ideas go over while others fall by the wayside? Success takes a combination of abilities: connectors, mavens and salespeople.

•The debt bomb, 5/6/12 – Senator Tom Coburn delivers a sobering lecture on the coming fiscal crisis, addressed to his colleagues (at the time) in Congress.

Video corner – Here are three recommendations, which range from serious to fun: (A) Michael Tanner of Cato explains (5:52) why the “war on poverty” has been such an abysmal failure, namely it gives beneficiaries a perverse incentive not to work; (B) College students flounder (3:07) on serious questions, such as who won the Civil War, while nailing the pop culture stuff; (C) Use this link to play the number one song on your date of birth.

SAFE Board
Andrew Betley, (302) 239-9679
Suzie Dickson
Edgar Fasig, treasurer, (302) 999-0611
Dan Kerrick, (302) 658-7101
Steve McClain, (302) 998-3910
Jerry Martin, (302) 478-5064
rycK Stout, (302) 478-9495
Bill Whipple, president, (302) 464-2688
For e-mail addresses see:

About SAFE - SAFE is a non-partisan, all-volunteer organization that was founded in 1996. We advocate smaller, more focused, lower cost government, to be achieved by cutting spending, restructuring “entitlements,” simplifying taxes, and rationalizing regulations.

The SAFE agenda is promoted through: (1) Our
website, including issue statements, a weekly blog, and a “Delaware Chatter” microblog; (2) Letters to the editor, public events, legislative contacts, etc., which are also posted and/or recapped on the website; (3) This quarterly newsletter, available in print (since 1996) and now electronic editions; and (4) Posts on Twitter and/or Facebook (click icons on the website to access).

SAFE dues are $10 per year for subscribers to the print edition of the newsletter and zero for electronic subscribers. Contributions are also appreciated and may be tax deductible (SAFE is a Section 501(c)(3) non-profit organization).

To join SAFE. renew your membership, or make a contribution, please print and complete this
form and mail it with your check to SAFE, 214 N. Spring Valley Road, Wilmington, DE 19807. Thank you!