House Democrats are working to protect the rights of America's consumers, and ensure that our families and children are safe from toxic toys, food, and drugs. We worked with President Obama to pass a Bill of Rights for credit cardholders, and to help students pay for college by making student loans more affordable, increasing Pell Grant scholarships, and rewarding public service through loan forgiveness.
We are focusing on protecting consumers by reforming our financial system that led to today's economic crisis, and demanding accountability. In May, Congress and President Obama enacted two key bills to protect consumers and ensure accountability as we begin to rebuild the economy: The Mortgage Reform and Anti-Predatory Lending Act and the Fraud Enforcement and Recovery Act.
The Mortgage Reform and Anti-Predatory Lending Act will curb abusive and predatory lending--a major factor in the nation's highest home foreclosure rate in 25 years. The bill would outlaw many of the egregious industry practices that marked the subprime lending boom, and it would prevent borrowers from deliberately misstating their income to qualify for a loan. The Fraud Enforcement and Recovery Act provides critical funding and updated tools to help law enforcement pursue and prosecute the mortgage and corporate fraud that impacted millions of Americans and led to the worst financial crisis in decades. The bill also establishes an investigation like the Pecora commission that examined the causes of the Stock Market Crash of 1929.
Congress Passes Credit Cardholders' Bill of Rights
On May 20th, the House passed the final version of the Credit Cardholders' Bill of Rights, H.R. 627 and the President signed the bill into law on May 22nd.
The Credit Cardholders' Bill of Rights will give consumers the rights and information they need to make educated decisions about their financial lives and could save some families thousands of dollars.
This legislation will apply common-sense regulations that would ban unfair rate increases and forbid abusive fees and penalties. For example, it will prohibit retroactive interest rate hikes on existing balances, double-cycle billing (charging interest twice for balances paid on time), and due-date gimmicks. It will also require 45-days' advance notice of interest rate, fees, and finance charges hikes, require payments to be applied fairly to the highest interest rate balance first, and strengthen credit card protections for young people.
It mandates greater transparency to give consumers clear information, such as requiring credit cards to post their agreements online, and holds those responsible who engage in deceptive practices that hurt families and consumers, by beefing up monitoring, enforcement, and penalties for violations of the law.
Helping Students Pay for a College Education
The cost of paying for college is becoming even more burdensome for Americans in this economy. While families are losing income, benefits and jobs, college tuition prices continue to rise. The average student now graduates with over $22,000 in total student debt, including federal and private student loans. This year's class of graduating college seniors also enters one of the toughest jobs markets in decades for recent graduates. Of the 1.2 million jobs lost last year, 60 percent were held by workers aged 25 or younger.
Given these challenges, new benefits went into effect on July 1, 2009 that will make student loan payments manageable for millions of Americans. (These benefits were signed into law in 2007 as part of the College Cost Reduction and Access Act.) They include:
- Cheaper interest rates on need-based (subsidized) federal student loans. On July 1, the interest rates on subsidized federal student loans decreased from 6 percent to 5.6 percent. This is the second of four annual cuts in this interest rate; it will continue to drop until it reaches 3.4 percent in 2011.
- Reasonable and affordable monthly college loan payments for borrowers. On July 1, a new Income-Based Repayment program went into effect that caps borrowers' monthly loan payments at just 15 percent of their discretionary income (15 percent of what a borrower earns above 150 percent of the poverty level for their family size). Any current or future borrower whose loan payment exceeds 15 percent of their discretionary income is eligible. After 25 years in the program, borrowers' debts will be completely forgiven.
- Higher Pell Grant scholarships that cover the average tuition at public universities. Due to funding provided by both the College Cost Reduction and Access Act and the American Recovery and Reinvestment Act, the maximum Pell Grant scholarship for the 2009-2010 school year will be $5,350 - more than $600 above last year's award.
Landmark Consumer Product Safety Legislation Becomes Law
Americans should trust that the products they buy are safe for their families. But headlines revealing lead paint in imported toys, daily recalls of faulty products, unsafe food in our grocery stores, and questionable medicines in our cabinets have made parents and consumers anxious. Our government must play a responsible and competent role - partnering with corporate leaders and parents - to better ensure product and food safety. In July of 2008, Congress passed the final Consumer Product Safety Improvement Act. This landmark, bipartisan legislation takes several key steps to make children and all Americans safer, including essentially eliminating lead from toys and children's products; prohibiting the use of dangerous phthalates in children's toys and child care products; and providing the Consumer Product Safety Commission with significantly greater resources and personnel. The bill was signed into law on August 14th, 2008.
Watch Speaker Pelosi speak in support of the bill>>
This critical legislation is supported by the nation's consumer groups, including the Consumer Federation of America and Consumers Union. In its letter to the conferees in support, a coalition of seven key consumer and public interest groups states, “This ground-breaking measure will help ensure that the Consumer Product Safety Commission (CPSC) has the resources and regulatory authority it needs to protect consumers and repair our long-broken product safety net. Thanks to your efforts, our children will be living in a safer world.”
This bill is urgently needed. There were 45 million toys and children's products recalled in 2007 - including Barbie accessories, Thomas the Tank Engines, toy magnets, and lead-coated jewelry. As a result, the Consumers Union labeled 2007 “The Year of the Recall.” Certain toys and children's products were found to contain nearly 200 times the legal amount of lead.
Furthermore, the problem is growing worse. This year, the number of recalls of toys and children's products is actually up 29 percent over the first half of 2007.
Also, over the last several years, at the same time of these record toy recalls, the Consumer Product Safety Commission has been starved for resources. Indeed, the agency lost 15 percent of its workforce between 2004 and 2007. In 2007, even the Commission's acting director Nancy Nord complained that there was only one “lonely” toy tester at the commission.
This critically important bill will strengthen the ability of the Consumer Product Safety Commission (CPSC) to prevent dangerous toys from getting to market in the first place, get unsafe products off the shelves more quickly, and increase fines and penalties for violating product safety laws.
Finally, the bill also responds to recent reports of potential conflicts of interest at the CPSC, including such provisions as banning industry-sponsored travel by CPSC Commissioners and staff.