2011 highlights in consumer protection
The Consumer Financial Protection Bureau is up and running. AT&T didn't swallow up T-Mobile. And Bank of America pulled back on a controversial new debit-card fee.
2011 highlights in consumer protection
Since I was away much of December on vacation and furlough, I didn't do the usual year-in-review column. But 2011 was noteworthy for those of us concerned about consumer protection, and my counterpart at the LA Times, David Lazarus, wrote a piece I'm happy to second.
Lazarus says the year's three consumer-protection highlights were the establishment of the Consumer Financial Protection Bureau, the successful pushback against Bank of America's planned $5-a-month debit-card fee, and the withdrawal of AT&T's attempt to swallow up T-Mobile thanks to resistance from the Justice Department and the Federal Communications Commission.
Looking toward 2012, Lazarus sees further hope:
... that regulators will apply the brakes to megabillion-dollar mergers that make the big a whole lot bigger but place consumers at a distinct disadvantage.
That became clear when the Justice Department filed a lawsuit to stop AT&T's $39-billion merger with rival T-Mobile on antitrust grounds, followed by the Federal Communications Commission challenging AT&T's assertions that the deal would result in lower prices, better service and jobs aplenty.
In a move that would have been unthinkable under the merger-friendly Bush administration, the FCC not only questioned the legitimacy of AT&T's claims but released a staff report all but calling AT&T's pie-in-the-sky assertions outright lies.
AT&T responded with a statement saying the report was "so obviously one-sided that any fair-minded person reading it is left with the clear impression that it is an advocacy piece, and not a considered analysis."
Just the opposite is true. This was an example of regulators doing the job they were appointed to do: Safeguarding the public from self-interested businesses that place market control ahead of providing customers with the best possible product at the best possible price.
There's nothing inherently wrong with mergers. But companies shouldn't stretch the truth in justifying such moves. AT&T erred in selling its marriage to T-Mobile as a boon to consumers and the country. It wasn't.
Lazarus says he hopes President Obama will regain his voice as "consumer advocate in chief," which he earned by pushing for the new consumer-protection bureau and universal access to health-care coverage but seemed to relinquish through subsequent compromises. You can read his whole column here.
As the Iowa caucuses and the rest of the political season loom, it's clear that consumer protection could play a key role in the electoral process.
Republicans, even those less absolutist than Ron Paul and his fellow libertarians, have embraced anti-government, free-market rhetoric since the Reagan era, and are doubling down on their beliefs even in the face of the recent and massive market failures that dug us into a large economic hole. It's astonishing to watch, but they routinely tout further deregulation as the tonic for an economy damaged by largely unregulated financial derivatives and loosely regulated mortgages.
It remains to be seen whether Democrats, led by Obama, can sell the country on a more balanced approach that recognizes that government has a key role to play in protecting consumers and making sure that markets work for everybody. The biggest danger may be that they'll be sucked into the usual crony capitalism by big-money interests that play such a large role in our politics, especially now that the Supreme Court's Citizens United decision has opened the floodgates for corporate political spending.
One bellwether will be Obama's willingness to tackle tax loopholes such as the "carried interest" rule for hedge-fund managers. Another will be the national profile of Elizabeth Warren's race for the U.S. Senate in Massachusetts - whether Obama builds on her common-sense arguments that families need a "cop on the beat" in Washington, as he did when he championed the new consumer-protection agency she first proposed, or seeks to distance himself from her as Republicans try unfairly to cast her as an extremist.
But Lazarus is right: On several important counts, 2011 was a good step in the right direction.