With worries about the economy and the war in Iraq dominating campaign debates and speeches, there hasn't been much discussion about consumer protection issues. That might not sit well with Red Tape readers, who complain constantly about bank fees, credit card policies, misbehaving cell phone firms and even unsafe toys.
But Barack Obama, Hillary Clinton and, to a lesser extent, John McCain all have staked out positions on these vital issues.
Democrats Clinton and Obama both have released detailed proposals calling for a number of consumer protections, with a heavy emphasis on credit card policies and mortgage lending practices. Most of Obama's proposals are laid out in a white paper available online; Clinton's proposals have been made in a series of statements issued by the campaign.
Republican McCain hasn't proposed any specific consumer protections, but his campaign, which was the only one of the three to agree an on-the-record conversation on the subject, says it will be laying out his positions on a number of issues as the campaign goes on.
"The basic instinct of the senator is it's not enough to go in after the fact and trumpet a lot of regulations," said Doug Holtz-Eakin, McCain's chief economic adviser. In some cases -- such as the mortgage lending market -- government must intervene on behalf of consumers to ensure "fair and open competition," he said.
The two Democrats' plans for protecting consumers against credit card and lending abuses are fairly similar -- both call for new limits on credit card interest rates and fees. Clinton, however, has called for a hard cap on credit card interest rates at 30 percent -- a proposal that lenders say would ultimately restrict the flow of credit to consumers.
She also calls for creation of a Financial Product Safety Commission, which would review lending products in the same way that the Consumer Product Safety Commission reviews toys and other products.
"There is currently minimal enforcement against abusive practices," Clinton's campaign said in a January 2008 statement announcing her "Fair Credit for Families Agenda." The new commission would "ensure that the government is fulfilling its responsibility to protect the public from predatory financial products."
Clinton's credit card proposals would also mandate that issuers could not raise rates without gaining written consent from the consumer.
Obama calls for a new consumer "Credit Card Bill of Rights," which would prohibit credit card companies from raising rates and retroactively applying the new rate to old balances. It also would bar issuers from charging interest on penalty fees, and it would make banks apply payments to highest-rate balances first, rather than low-rate balances -- a sticking point with consumers who take advantage of cut-rate balance transfer offers.
He also would create a five-star rating program for credit card offers. The Federal Trade Commission would be instructed to rank credit cards and banks according to a series of consumer-friendly practices and publish these ratings.
Bill Hardekopf, who runs consumer information site LowCards.com, said he was glad credit card issues were being raised during the campaign -- but he is skeptical of some of the particulars.
"I don't know how practical it is to get written consent before raising interest rates, for example," he said. He also thought Clinton's proposal concerning uniform payment due deadlines was impractical, and he wasn't fond of Obama's five-star rating plan either.
On home lending, Clinton would require federal registration for mortgage brokers and urge new licensing standards. She would also end mortgage prepayment penalties, which largely impact subprime borrowers.
Obama calls for creation of a simple indicator to tell consumers how expensive their mortgage might someday become -- called a HOME score, or Home Obligation Made Explicit. This score would call attention to possible unexpected costs of adjustable rate mortgages and other potential booby-traps in home loans. Obama would also change the tax code to make it easier for low and middle-income tax filers to get home mortgage tax deductions.
On other lending issues, Obama would create a 36 percent cap on all short-term payday loans. Already, such loans are capped at 36 percent when granted to military families.
Holtz-Eakin, McCain's adviser, said that while the presumed GOP nominee has made no specific proposals about home lending, the candidate would back changes that would "raise lending standards." Some of those changes are already in the works, he said, and "maybe by January 2009 we'll have done the right thing with our regulatory agencies. If not, (McCain) will fix it."
Both Obama and Clinton have talked a lot about rising college costs and the burden of student loans during the campaign; their proposals to revamp college financing, however, are incremental. Click here to see a comparison of their proposals.
Both would replace the current public-private lending program known as FFELP (Federal Family Education Loan Program) with loans issued directly by the federal government in an effort to cut costs. And both would add tax credits for college students. In January, Clinton issued a statement calling for creation of a Student Borrowers' Bill of Rights that would address abusive lending practices by private college loan issuers. Both candidates support income-based repayment plans for students that would tie monthly payments to job income.
Mark Kantrowitz, who runs college loan information site FinAid.org, said that neither of the Democrats' plans offers the most important upgrade to college loan programs -- direct aid to students which would make them less reliant on loans.
"I personally believe that we need to double the maximum Pell Grant now, not at some indefinite point in the future, and that this will require an influx of new money," he said.
Toy and food safety
Obama and Clinton also have similar plans on consumer product safety issues. Obama talks frequently in stump speeches about the dangers of lead paint and the need to ensure toy safety. Clinton would require third-party toy inspections for imported toys. She also would move all food safety issues to a single federal agency. And Clinton would mandate "country of origin" labels on all imported products.
When asked about top consumer issues for McCain, campaign officials pointed to his record of supporting the "Do Not Call" list, the Internet tax moratorium, and reduction of excessive cell phone taxes. They also said McCain has supported creation of a simple one-page mortgage form, as a way of cracking down on unscrupulous mortgage brokers, and new protections for consumer privacy.
Holtz-Eakin said McCain had not issued more specific policy statements yet on other issues, but in general, the Republican candidate supports "fair and open competition. Sometimes that means you intervene on behalf of consumers and at times on behalf of (industry)."
Many conservatives philosophically reject regulation and government intervention as a solution to social or economic ills, but Holtz-Eakin said McCain would support new marketplace rules when warranted.
"Everyone would acknowledge there's a role for government in setting the framework for markets to work well," he said. "That's not at odds with conservative values."
Of course, any of these proposals could be at odds with Congress. In recent years, Congress has passed several bank-friendly laws, such as the 2005 bankruptcy law. Since few of these proposals could be implemented without persuading Congress to pass legislation enacting them, new consumer protections likely face an uphill battle no matter which candidate heads to the White House next year.