At a recent gathering of amateur consumer advocates in New York City, discussion turned to this thorny topic: How do you focus the rage people feel about rip-offs on fixing the problem?  Consumers are quick to anger when a company unjustly charges a $35 late fee, but they seem far more reluctant to get involved as Congress debates legislation that would make the $35 fee illegal. Why? One obvious reason: Congress is slow and the legislative process is confusing.  

So here's a quick scorecard on the debate over creation of the proposed Consumer Financial Protection Agency, which would be the first new federal consumer protection agency since the 1970s.  While the congressional made-for-TV kabuki dance that will decide its fate won't take place for another several weeks, the real end game is happening right now, as Washington, D.C., appears to be slumbering under three feet of snow. So this is a good time to pay attention.

In case you missed the last episode, here's a quick background: Harvard bankruptcy professor Elizabeth Warren proposed a new agency several years ago that would regulate consumer contracts on financial matters like credit cards and mortgages. Warren, now a bit of a cult hero in consumer advocate circles, is currently chair of the oversight panel Congress set up to monitor the TARP bailout. Banks don't like her much, but she's the odds-on favorite to head the new consumer agency should it be signed into law.

During his campaign, President Barack Obama supported the idea of a new consumer protection agency, and he has called for its creation several times in the past year. In December, Rep. Barney Frank, D-Mass., ushered legislation through the House of Representatives -- barely -- that would create the agency. The Wall Street Reform and Consumer Protection Act passed by a 223-202 vote.

Note that this bill does much more than create a new consumer agency; it includes a full set of financial regulatory reform proposals. But creation of the consumer agency appears to be the most divisive issue.  Supporters say that only an independent agency could act as a worthy adversary to the banking industry. Opponents argue that it's folly to create a single-purpose bank regulator that has no interest in the safety and soundness of the institutions or the overall health of the industry.

Given the tight House vote, debate in the Senate was expected to be difficult,  and so far it has not disappointed.

Retiring Sen. Chris Dodd, D-Conn., is head of the Senate Banking Committee, which now controls the fate of the legislation. Last year, he'd indicated unflinching support for it. But in January, he flinched. Numerous reports indicated his willingness to negotiate away creation of the agency in exchange for other regulatory concessions from Republicans – specifically the senior Republican on the Banking Committee, Sen. Richard Shelby of Alabama.

The news sent consumer groups into a tizzy, with some predicting this meant the death of the Consumer Financial Protection Agency.

But turned out the obituaries were premature.  Last week, Dodd's office announced that he had reached an impasse with Shelby, and that he was abandoning efforts at a compromise. Instead, he said, he would propose legislation that resembled the House bill.

Warren, meanwhile, fresh from preaching to the choir during an appearance on Jon Stewart's "The Daily Show," penned an impassioned op-ed in the Wall Street Journal reiterating the need for the agency.

"The same Wall Street CEOs who brought the economy to its knees have spent more than a year and hundreds of millions of dollars furiously lobbying Washington to kill the president's proposal," she wrote.

On Wednesday, Senate reform talks got a jump start, when Dodd opened negotiations with a different Republican on the Banking Committee, Sen. Bob Corker of Tennessee.  Both made public statements about the renewed talks on Thursday.

"Senator Corker has proved to be a serious thinker and a valuable asset to this committee," Dodd said in his statement. "For that reason, I called him Tuesday night and asked him to negotiate the financial reform bill with me. We met in my office on Wednesday and given the importance of these issues he agreed. I am more optimistic than I have been in several weeks that we can develop a consensus bill to bring about the reforms the financial sector so desperately needs to prevent another economic crisis."

But does that mean creation of the agency is likely now?  Not at all.  Corker said Friday he is merely picking up where Shelby left off

"Like most Republicans I believe a stand-alone agency for consumer protection or separating those protections from safety and soundness are nonstarters," he said, according to Reuters.   

What are they taking so long talking about?

There appear to be two issues which have bogged down -- and might ultimately kill - the agency.  The first  is independence. The second, a bit more subtle, is an effort to protect the independence of state-level consumer protections.

By now, creation of a completely independent CFPA -- something Republicans have compared to the Environmental Protection Agency -- seems off the table. Most reports indicate that the agency will survive only if it is part of another regulator. It might be housed in the Treasury Department or be a part of the Federal Reserve, but could retain some independent rule-making authority.  And that's the sticking point.

In October, while there was a flurry of stories concerning the potential watering down of the new agency, Warren spoke to msnbc.com and appeared to draw a line in the sand. At the time, some areas of regulation, such as car loans, were removed from its purview by the House of Representatives. 

"I draw the line at independence," she said. "If the new agency isn't independent, it isn't worth doing."

But this week, a source familiar with the negotiations said consumer groups have warmed to the idea of the agency being housed in the Treasury Department, as long as it has full independence within the department, comparable to the Office of the Comptroller of the Currency, which is also technically part of Treasury.

Balber, from Consumer Watchdog, said the key distinction involves independent rule-making authority,

"It would depend on how something like that is structured," she said.  "The key is that no one would have veto power or some other form of power to weaken the agency's decisions. So a stand-alone agency that's part of Treasury could work," she said. "I don't think it would work if it were housed within a prudential banking regulator (such the Federal Reserve). They are looking first and foremost at bank profits."

Meanwhile, state officials are worried about an issue that rears its head every time Congress considers consumer protection legislation – pre-emption.  Nationwide firms and industry groups often argue that federal law should trump, or pre-empt, state law, so that they don't have to abide by 51 different sets of rules. For example, a new federal law to require 45-day notice when raising a consumers' interest rate would override an existing state provision that requires a longer warning period. Obviously, state lawmakers and attorneys general have bitter distaste for pre-emption, which reduces their power and ability to regulate.

Because of hang-ups over the independence of the agency, negotiators haven't even begun to deal with the thorny issue of pre-emption yet, according to another source familiar with the talks. That means there are still significant obstacles in its way.

Meanwhile, opponents continue to voice their objections to creation of the agency. The U.S. Chamber of Commerce is leading the public fight, airing commercials that say the agency would hurt small businesses and making its case at the Web site Stopthecfpa.com.

Noted Republican pollster Frank Luntz has even gotten into the act, recently publishing a talking points memo called "The Language of Financial Reform." In it, he advises opponents of the Consumer Financial Protection Agency to paint it with the broad brush of "big government."

"Creating another costly government bureaucracy on top of existing bureaucracy isn't a solution - it helped cause the problem," he advises, according to the memo obtained by The Huffington Post. He also instructs opponents to appeal to their voters by saying the legislation is full of "lobbyist loopholes" for industries like car dealers and pawn brokers.

There are two other x-factors that might become part of the discussion.  If a large U.S. bank supported creation of the agency, that would make it more palatable to Republicans.  Earlier this month, Bloomberg reported that Bank of America CEO Brian Moynihan has told White House officials that the bank was not "lobbying against the agency." The bank stopped short of supporting it, however.

Meanwhile, it's unclear how much the force of Elizabeth Warren's personality and popularity might be adding to the financial industry's aversion to the agency.  Banks are used to dealing with faceless, nameless bureaucrats.  A popular consumer advocate with a ready-made bully pulpit might be part of the reason they are digging in their heels. 

So the future of the agency, and the legislation, seems entirely up in the air, a moving target -- another reason that U.S. consumers might find it difficult to engage in the debate.  Most observers feel that Dodd has the votes he needs to pass even the most liberal version of the bill through the Banking Committee, and that he intends to bring some financial reform bill to a vote on the Senate floor, probably in March. There, it is likely to find the same fate as health reform -- it won't have 60 supporters and will die a parliamentary death unless at least some Republicans support it.  A source familiar with the discussions said Rep. Barney Frank wants to force a Senate vote, which would require Republicans opponents to cast a potentially unpopular vote against consumer reforms.  Balber is among many consumer advocates who would like to see issue come to a head.

"We are still concerned that something less than consumer agency will come out of this," she said. "Right now, things are constantly shifting. We are calling on Dodd to make his position clear. … Meaningful financial reform must make the marketplace safer for everyday Americans."

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In the 1960s and early 1970s, U.S. consumers who found themselves in a maddening battle with corporate America had a friend in the White House. That friend was Esther Peterson.

As White House special assistant for consumer affairs, Peterson worked under both the Johnson and Carter administrations for consumer protections that still have an impact on every trip consumers make to the grocery store. For example, she was largely responsible for a series of food labeling improvements that led to unit pricing, which allows apples-to-apples comparison shopping. She also worked to establish new requirements for nutritional information that we take for granted today. Peterson lived to be 91, and before her long career was over she was granted the Presidential Medal of Freedom.

Sadly, when Peterson died in 1997, the concept of consumer advocacy in the federal government largely died with her. At about the same time, during the Clinton administration, Peterson's old job -- White House special assistant for consumer affairs -- was unceremoniously eliminated.

That hasn't panned out very well.

We can't bring back Peterson, but we can restore her spirit. The time has come to put a consumer advocate back in the White House.

A coalition of consumer groups has petitioned President-elect Barack Obama, asking him to restore Peterson's old office. Doing so would be a respectable down payment from the new president on campaign promises he made about restoring fairness to America's marketplace.

My colleagues in the business section often remind me, correctly, that it's impossible to pin today's economic disaster on one single cause. But poor consumer choices -- stemming from both bad judgment and fraudulent advice -- would be the first suspect I'd bring in for questioning if I were prosecuting the case.

The inability of federal agencies to protect consumers in recent years is obvious. It hasn't helped that budgets for many of these agencies have been continually slashed -- the Federal Trade Commission has about half the employees it had during the late 1970s. Still, consumers really have nowhere to go when locked in an entrenched battle with a company, save the few who have the time and money to pay for their day in a civil court. Consumer rights in America today have been reduced to millions of David vs. Goliath battles, and unfortunately, David can't always win.

Instead, bankers, credit card companies, cable TV firms and other large corporations have been given a clear signal: bullying is good business. Punitive fees, sneaky charges and anti-competitive practices are fine, as long as they don't go too far. Selling mortgages that all involved know won't possibly be repaid? Well, that was just good business, too.

Once in a while, a company that misbehaves egregiously, like the credit bureau Experian with its FreeCreditReport.com site, is forced to return its ill-gotten gains. But even then no other punishment is levied. So there is really no risk for bad behavior.

'A megaphone'
A "consumer czar," as some have called it, couldn't change this environment overnight. The job, as it's been described by the Public Interest Research Group, Consumers Union and other interest groups making the request, wouldn't have any direct regulatory oversight. The office couldn't fine anyone or make law. Legally, it would be simply be a voice in the White House. But symbolically, it would be a lot more.

"The person would have a megaphone to go on television about consumer protection issues, and say I will tell the president 'That's unfair,'" said Edmund Mierzwinski, consumer program director at the Public Interest Research Group. "We don't want just be somebody in a little cubby hole in the White House."

Mierzwinski said the office should have a single hot line that consumers with problems could call and be directed to the appropriate federal agency for help.

During his campaign, Obama promised that the Consumer Product Safety Commission and the Food and Drug Administration, agencies with budgets that have long been neglected [or reduced?], would be reinvigorated. More food and toy safety inspectors are obviously necessary – remember, at the height of the lead toy scare last year, the New York Times reported that the CPSC had only one inspector for all imported toys.

But the problem of consumer protection is so vital to the economy that it needs more than just a tune-up. It needs a new home.

Ultimately, Mierzwinski favors the creation of a full-fledged federal consumer protection agency. An effort to create such an agency during the 1970s, spearheaded by Ralph Nader, fell short.

"We have an Environmental Protection Agency. ... With the financial meltdown and the health care mess, the lives of American consumers are just as much at risk as environment," Mierzwinski said.

Protecting consumers is good business
Restoration of a White House consumer affairs advisor would be a baby step toward that rather ambitious end. With perhaps a few dozen employees, it would necessarily be more a policy office than an advocacy office. It would hardly be in a position to fix individual consumers' problems. But it would put companies on notice that the environment for taking advantage of consumers is changing.

It's important to understand that basic fairness in the marketplace isn't a liberal or conservative goal, and neither is the notion of protecting consumers. The influence of Esther Peterson's old office had wilted under Republican presidents, but it was then scuttled by a Democrat. Instead, protecting consumers is simply good business.

No one would benefit from relaxed rules allowing automakers to produce cars without trustworthy brakes; even if you are an incredibly careful driver, you'd end up paying for the increased number of car accidents. Ditto for food safety rules in restaurants; maybe you wouldn't mind eating at places that never have to face a health inspection, but you'd end up paying for all the illnesses that resulted. And today, we all are paying the bill -- an enormous bill - for the hazardous mortgage marketplace that was allowed to fester.

For years, many have been seduced by the notion that consumer protection was a merely a pesky impediment to the forward march of profitable companies and the Dow Jones Industrial Average. Now, we should know better. Obama has many, many interest groups lining up to make their cases about what his priorities should be. But restoring faith and trust in the American marketplace deserves one of these top slots, and a respected public advocate deserves a seat at his table in the White House.

Not since the 1960s, when seat belts became standard equipment in cars, has the atmosphere been so favorable for consumer-friendly reform. After decades of hands-off capitalism and shrinking consumer protection agencies, the Wall Street meltdown has unmistakably changed the nation's attitude toward regulation. And Americans have just elected a president who has promised to reform the credit card industry, bankruptcy law, and toy safety, to name a few.

So you'd think that Ralph Nader, the father of the modern consumer movement in America, would be happy.
You'd be wrong.

Nader is worried that fundamental reforms of Wall Street, banking and workers' rights issues will remain elusive.

"The Democrats are more corporate than ever," he said in an Election Day interview with msnbc.com. "You know about K Street. (Lobbyists) are just shifting their money to Democrats and they are happy to get it."
Many Democrats in Congress receive sizable campaign donations from Wall Street and other financial firms, the very industries Democrats will now be asked to re-regulate.

For example, he said, Sen. Christopher Dodd, D-Conn., who runs the powerful Committee on Banking, Housing, and Urban Affairs, received more than half the funding for his aborted presidential campaign from banking and insurance companies. Dodd will be a key figure in any proposed banking reforms.

Nader also noted that Vice President-elect Joe Biden has received more campaign donations for his Senate campaigns from credit card issuers than any other industry. True regulatory reform is impossible when Congress members have built-in conflicts of interest from campaign donations, he said.

President-elect Barack Obama, meanwhile, raised and spent more money than any candidate in American history.

"And now he's going to propose campaign finance reform after opting out of the public financing system during the election? He has no credibility now," Nader said.

Nader described his own campaign as a success, citing the fact that he managed to get his name on 45 of 50 state ballots. As of Thursday, however, he had garnered only about 655,000 votes, far less than 1 percent of those cast and well below his high-water mark of 2.9 million votes in 2000. On the plus side, however, it was the second-highest total of his four presidential runs and places him first among this year's third-party candidates (Libertarian candidate Bob Barr received just shy of 500,000 votes).

No excuses
While he's not expecting any fundamental reforms on consumer issues, Nader said he's glad that Obama won so easily and that Democrats added to their majority in Congress. "They have no excuses now, no blaming the Republicans," he said.

To support his pessimistic view, he points to the recent $700 billion bailout bill passed by Congress.
"For once, Washington had Wall Street over a barrel," he said. "Wall Street wanted that money fast. But what happened? Congressional Democrats got 'stuffed' on the bailout. They gave up $700 billion and got nothing in return." By not tying Wall Street reforms to the bailout, Nader said, Democrats surrendered all their potential negotiating leverage.

Nader said he would have paid for the bailout by instituting "speculation taxes" on Wall Street transactions such as the buying and selling of derivatives like oil futures. He claims a one-tenth of one percent tax would generate about $500 billion each year.

"Right now you go out to buy essentials like furniture and pay 5, 6 even 7 percent sales tax. But you can buy $1 million in oil futures and pay nothing," he said. "We had a stock transaction tax during the Civil War and the Spanish American War." (For more, click here)

He also called for expanded shareholders' rights laws, which he said would rein in abuse of power by CEOs.

"It's more important than ever to give shareholders real power," he said.

Reforms already begun
Some other reforms Nader advocates are already under way. The Federal Reserve has proposed a series of reforms on credit card issuers that would bar many practices that penalize consumers, such as retroactive interest charges. A "Credit Card Users Bill of Rights" has already passed the House of Representatives. Food and toy safety were a popular topic of both Sen. Hillary Clinton and Obama early in the campaign. But with such a long legislative agenda, such reforms could easily get lost in the shuffle, Nader warned.

"New regulation will require some kind of legislative deadline to make sure it happens, like we did with seat belts," Nader said.

Obama has offered a series of proposals to protect consumers; most are laid out in a white paper that was published a year ago.

Among them: A rating system for credit card offers managed by the Federal Trade Commission. Cards with risky terms would get low ratings. He also proposed simplified mortgage application forms, which would help consumers understand the real cost of their loans.

So far, there has been no public speculation about who Obama might name to run consumer-oriented agencies, like the Federal Trade Commission.

But Nader is not persuaded that Obama will get far with such rules. While voters have a strong appetitive for new banking regulation, financial firms will argue that new restrictions will only slow the economic recovery and back the new president into a corner, he said.

"Obama will be overwhelmed by the economic crisis," Nader predicted. "There is a real need to shift the power away from corporations and to the people. Perhaps (Obama) will rise to the occasion … but he does not have a challenging personality, that's why he always talks about unity and so on. And these corporations need to be challenged."

The stock market's spasms and the housing meltdown have dominated the presidential campaign for the past several weeks. The distraction of the "Down Jones" industrial average, however, means we might be forgetting how we got into this mess in the first place: through the abysmal state of consumer protection and the general unfairness of our marketplaces.

Presidential candidates John McCain and Barack Obama have risen to the occasion -- if you want to call it that -- by trading barbs about old scandals and offering up partially baked plans to restore the economy. That's sad, because both have made some serious proposals aimed at restoring fairness and integrity to U.S. markets. One can only assume consumer protection is no longer among their top priorities.

It should be. Not only is rampant unfairness bad for the consumers it cheats, it's bad for the economy as a whole. As we've seen, ill-gotten gains earned by deceptive companies create an economic house of cards – one that eventually must collapse. The only way to prevent the next boom and bust is to ensure a fair marketplace.

The stock market is supposed to act like a canary in a coal mine, with super-smart traders signaling economic trouble in advance by bidding down shares. In this case, however, Wall Street seemed to be the last to know that things were headed south.

Cracks in the U.S. regulatory system began to show early this year. There was poisoned imported food, sudden dog deaths from tainted pet food and lead-laden toys from China. (The New York Times found that The Consumer Product Safety last year had only one person inspecting foreign-made toys. How many of your child's toys are made in the U.S.?)

Is it any wonder, then, that as recently as last year mortgage brokers continued to flood the airwaves with advertisements for "1 percent" mortgages, even after the housing collapse had begun? There was no one in Washington, D.C., or New York listening to the screams of "iceberg, dead ahead." The collapse of the stock market indicates that the ship is going down and we're all scampering for the limited lifeboats. But women and children aren't getting them: Guess who is?

There is hope. Digging through two years of speeches and policy papers from the candidates, an enterprising voter can find references to this general unfairness, and plans for restoring the various malfunctioning marketplaces.

Sen. Obama's proposals are more fully formed than Sen. McCain's, but the McCain camp says that's by design. In an interview several months ago, McCain economic adviser Dough Holtz-Eakin said that McCain would do whatever it took to restore fairness to the mortgage market and other consumer hot-spots, but would need flexibility to deal with current market conditions as they exist in January 2009.

"The basic instinct of the senator is it's not enough to go in after the fact and trumpet a lot of regulations," said Holtz-Eakin. Despite the Republican Party's longstanding hands-off economic stance and anti-regulation bias, he said McCain was persuaded that there is a place for government intervention to ensure "fair and open competition."

Housing proposals
Holtz-Eakin wasn't kidding. McCain surprised nearly everyone during the second presidential debate when he proposed perhaps the most active government intervention since The Great Depression, saying that if elected he would direct the Treasury Department to buy up $300 billion worth of ill-conceived consumer mortgages.

The plan, while very late in coming, is at least a good start. The notion of direct government purchases has been around for a while, proposed by Hillary Clinton's campaign much earlier this year and championed by a variety of economists. It is the first sweeping plan that would deal with the fundamental problem of the housing meltdown and the current recession: the growing glut of empty homes for sale.

The original bailout plan -- buying up $700 billion of nearly worthless mortgage backed-securities and other loan paper on Wall Street -- is an indirect solution that simply might not work. In fact, it has already been partly abandoned, with Treasury now using much of that money to buy direct stakes in banks instead. So a massive direct home purchase and refinance plan is an idea worth developing.

I wish McCain's economists had developed it, however. It has at least one massive flaw: The government would buy the mortgages at their full "hold-to-maturity" value, rewrite them to reflect their lower market value and eat the loss. That means the plan would be a bonanza for the banks that made all those crazy loans, and force taxpayers to eat the bill. That's a terrible policy that wouldn't survive a single congressional hearing.

Structured other ways, however, direct housing repurchase has a place in the economic recovery plan. For one model, look to the Illinois attorney general's office, which recently settled a lawsuit with the former Countrywide Mortgage for predatory lending. Under the deal, Countrywide's new owner, Bank of America, must restructure some 400,000 loans and eat the loss.

There are other holes in McCain's plan. The biggest: Who gets the help? Wouldn't some homeowners be incentivized to stop paying their mortgages so they could qualify for the great new rate, offered by Uncle Sam? You don't have to be a naysayer to imagine the chaos of implementing such a plan.

Still, it's worth exploring. And it's certainly no more complex than figuring out how to buy up credit default swaps. Unfortunately, right now, you get the sense that in Washington, direct home purchase is the absolute last bullet that will be fired in the rescue plans, the last boat lowered from the deck of the Titanic. History will view that as a great strategic error.

Unfortunately, Sen. Obama has rejected McCain's home repurchase plan, at least for now. Instead, he unveiled a measured economic plan last week with stop-gap measures such as a 90-day moratorium on foreclosures and extended unemployment benefits. Keenly aware of his lead in the polls, it appears Obama sees no need to risk bold proposals now.

That's too bad, because Obama has made bold proposals in the past, offering far more specific plans on many consumer issues than McCain. An Obama policy paper on new consumer protections can be read here.

McCain's economic plan can be viewed here.

Credit cards
In the realm of credit cards, Obama has long supported 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 policy aimed at sticking it to consumers who take advantage of cut-rate balance transfer offers.

Obama may yet get to put his vote where his promises are. Last month, the House passed a Credit Card Bill of Rights. The Senate could take up a companion measure, but it will likely be postponed until the new Congress convenes next year.

Obama has said he would go further, and 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. Critics have said the plan is unlikely to work and would create an enormous new responsibility for the Federal Trade Commission.

McCain's office has not issued a policy position on the Credit Card Bill of Rights.

Mortgage safety
Even if the federal government figures out a way to solve the empty house problem, there still is the important matter of making sure this kind of mortgage mess never happens again. Ensuring fairness in the mortgage marketplace is a big part of that. To that end, Obama has called for creation of a simple indicator to tell consumers how expensive their mortgage could become -- called a HOME (Home Obligation Made Explicit) score. 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.

McCain hasn't issued specific policies on mortgage clarity.

Neither camp has said enough about direct culpability for those who take advantage of consumers. The best way to stop predatory lending is to aggressively enforce existing laws that make unfair and deceptive practices illegal. The home mortgage market is too important to self-regulate. A special task force from the Department of Justice, the Federal Trade Commission and banking regulators should be given wide latitude to enforce Truth in Lending laws and other regulations.

Earlier in the campaign, Sen. Clinton proposed creation of a Financial Product Safety Commission, modeled after the Consumer Product Safety Commission. That's an idea worth exploring.

College costs
Obama has made some bold proposals about college borrowing. He would return to President Bill Clinton's model of shifting student loans to the federal government, replacing 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. Obama would also add tax credits for college students, and has said he would support income-based repayment plans for students that would tie monthly payments to job income.

McCain has called for the Department of Education and state agencies to step in if the credit crunch limits college students' abilities to obtain loans.

Toy and food safety
Earlier this year, during the primary season, Obama would frequently punctuate stump speeches with sweeping statements about the dangers of lead paint and the need to ensure toy safety. He has said he would double the size of the Consumer Product Safety Commission. In 2005 and 2007, he introduced the Lead-Free Toys Act, which would ban toys with more than trace amounts of lead. Last year, he suggested he'd be willing to ban toys from China, but later toned down the position after harsh reaction from the Chinese government.

John McCain hasn't said much about toy safety, but according to press reports, he mentioned the issue in an April speech, saying ""If I were president of the United States, the next toy that came into this country from China that endangered the lives of our children … would be the last toy that came into the United States." He appears to have said nothing else on the topic.

On the issue of food safety, both campaigns have offered general statements. Obama has said he would hire additional food inspectors and instruct the Department of Agriculture to consider new food safety laws. McCain's Web site, he says only that "Americans should be able to trust in the safety and reliability of their food, regardless of its origin."

More from Briefing Book: Issues '08

Science goes under the political microscope

McCain, Obama in sharp contrast on abortion

Shooting for the sweet spot on guns

Feeling fleeced by hidden fees, surcharges, fine print and other "Gotchas"? That's because you are getting fleeced. Sneaky pricing has become the American way of doing business in the past decade. But don't look now -- things are going to get much worse before they get better. Tough times and shrinking profits will spur on cash grabs the likes of which we've never seen. Like a wounded animal, I expect many a desperate corporate boardroom to authorize unconscionably tricky tactics, aiming to stave off a bad report to shareholders for one more quarter by sucking more quarters out of your wallet.

In this spirit, today we open up a new institution to memorialize all this chicanery: The Gotcha Hall of Shame. The first inductee is so deserving that it actually inspired creation of the award: JetBlue Airlines and its $7 pillow.

I know, I know, it's not just a pillow, it's a blanket, too. And both, apparently, have super-powers that block micro-toxins, whatever those are. But if the blanket works so well, why hasn't my doctor given me one?

Even with reduced visibility and a low cloud ceiling, we can all see through JetBlue's pillow ploy. On a plane, you're a captive consumer. There is no shopping around for good pillow prices. You're sleepy, and you will you fork over $7 for a chance to take a nap.

Of course, you could bring your pillow on board, but that would take up your precious carry-on baggage allotment, which could push you to check more baggage. And JetBlue now charges extra for that, too.

You should know that JetBlue had stiff competition for the inaugural Gotcha award -- from within its own industry. US Airways, [changed from US Air] which is said to be considering its own pay-to-sleep fee, gets honorable mention for deciding to charge passengers $2 each time they ask for water. Curiously, coffee is only $1 per cup. C'mon US Air! That's going to hurt pillow sales.

As for circumnavigating the water fee, don't bother. The Transportation Security Administration is in on this, too. Bring water to the airport and you'll lose that at the security checkpoints.

Meanwhile, it feels like all the airlines have involved been in a perverse kind of auction to see who can squeeze consumers the most for checked bags ($15 for a second bag. Do I hear $25? Ok, $25 to Delta Airlines. Do I hear $50? OK, $50 to Delta Airlines!)

The death of pricing
What's going on here? Analysts are politely calling this a move to a la carte pricing. I have another name for it (I'll bet you have a few too). I call it the death of pricing.

These "after charges" make it nearly impossible for consumers to buy airline tickets intelligently. The normal method of searching for flights and sorting by price has been murdered by $10 meals and $50 baggage fees. A $245 flight can be cheaper -- much cheaper -- than a $189 flight. A Delta $100 baggage fee (remember, checked bag fees are one way) can turn a good deal into a bad deal very quickly.

Now, the critical question: How are consumers supposed to do the math when shopping for airline tickets? Can you predict how many bags you'll pack when you're buying a ticket?

This isn't just annoying. It's an assault on capitalism. Companies with the best prices and the best products are supposed to win in our Darwinian economic system. Instead, sneaky charges and tack-on fees prop up poorly performing companies. Instead of rewarding the best performers, we are rewarding the members of the Gotcha Hall of Shame.

Already last year, flying became a textbook example of what economist Caroline Baum calls inflation by degradation. When people pay the same for a product, but get less from it, that's a form of inflation, Baum says. For example, when people pay to get from New York to Chicago in two hours, but the actual travel time is four hours, they've been hit with a hidden form of inflation.

Last year, airline schedules turned into fiction novels, with some planes on some routes arriving on time as infrequently as 10 percent of the time. Yet prices didn't fall, they rose. And now, they are rising again, through the layering of fees so fantastic you'd think Franz Kafka owned an airline.

Come to think of it, even Kafka wouldn't make one of his characters pay for a pillow. No one would buy it.
Congrats, JetBlue Airlines, for earning the first spot in the Gotcha Hall of Shame.

Red Tape readers, feel free to file nominations for the next inductee below.

(While I'm at it, here's a pretty good reference on baggage fees)

When Marco Zaldivar purchased four T-Mobile cell phones for his family a few years ago, he had no interest in text messages. They came anyway, and by 2007 unwanted texts were adding $20 to $30 to his bill every month, he claims. When he asked T-Mobile to shut off text service, the firm said that was impossible. Instead, he was given a Hobson's choice -- either sign up for a bundled text message plan with a monthly fee, pay $800 in early termination fees to cancel the service or turn the phones off for the remainder of his two-year contract.

Zaldivar decided on a fourth option -- he's suing T-Mobile for violating consumer protection laws. The lawsuit, which seeks class-action status, got a small green light last week from a U.S. District Court in Seattle, which rejected T-Mobile's motion to dismiss the case.

"When T-Mobile customer service told me I could always take the battery out of my phone to avoid the charges, I couldn't believe this was happening to me," Zaldivar, a corrections officer in California, said in an e-mail statement to msnbc.com. "It left me no choice but to try to stand up for myself, and others in the same situation."

A number of the texts received by Zaldivar were unsolicited advertisements, said Zaldivar's lawyer, Jeff Friedman. Even when unopened, his client was still charged for the messages, he said.

T-Mobile said it would not comment on the lawsuit, but a spokeswoman said the company has recently added a feature that allows consumers to essentially turn off texting.

"T-Mobile is committed to providing the best customer experience in wireless and does offer customers the ability to block chargeable text messages," the spokeswoman said. "T-Mobile also has extensive filters built into the network to help detect and block spam text messages being sent to customer's handsets that originate from internet IP addresses."

Last year, when the Red Tape Chronicles explored the topic of text message spam, a T-Mobile spokesman said text message service could not be shut off because it was used for internal billing purposes.

"The text messaging feature on your account is actually a mandatory feature and cannot be removed," the spokesman said. "This feature is needed because it's where voice mail and billing notifications are delivered."
If Zaldivar's lawsuit is given class-action status, T-Mobile could have a large case on its hands.

Friedman said about 17 million of the 27 million T-Mobile customers are not signed up for a text message bundle currently, and about 4 million of them have never sent a text message, indicating their lack of interest in text service. The lawsuit will attempt to include all those consumers in the class.
T-Mobile would not discuss how many subscribers pay for text message bundles.

The lawsuit maintains that T-Mobile, which is based in Bellevue, Wash., made text service "mandatory," while never making that pre-condition "clear and conspicuous" in its contracts. That violates Washington state's consumer protection laws, the lawsuit alleges.

"This is a matter of a long line of abuses, where people with the carrier have very little choice," Friedman said. "(Zaldivar) was damned if he did and damned if he didn't. He felt trapped, and that he was put in an unfair position."

Verizon, AT&T and Sprint allow consumers to shut down delivery of unwanted text messages.
The T-Mobile lawsuit comes at a time when all carriers are turning up the heat on consumers to sign up for monthly text bundles. In August, T-Mobile will increase its basic text message cost by 33 percent, from 15 cents to 20 cents per message. Other carriers made that jump earlier this year.

Consumers can avoid those high prices by signing up for a bundle -- 400 messages for $5 a month, for example.

Critics say the basic price of text messages is excessive compared to other cell phone data-related charges. Because they carry only 160 text characters, text messages consume a tiny amount of bandwidth -- about 1/4000th as much as a typical song, according to the blog GThing.net. But downloading a 4-megabyte song costs only about $1 on a standard cell phone data download service -- or roughly five times the price of a single text message. At test message prices, music downloads would cost almost $6,000 each, the site argues. You can double-check the Gthing.net math here.

And remember, cell phone companies make 20 cents twice on each message -- when it's sent, and when it's received.

Friedman says he expects a federal judge to rule on certification of the proposed lawsuit class by the end of the year.

RED TAPE WRESTLING TIPS• Many people are signed up for a per-message text plan and don't realize it. If that's you, shut it off now, before you get a bunch of text spam. Check with your provider. Now with T-Mobile on board, all the major providers essentially let you shut off texting.
• For most people, even light users, it's worth signing up for at least a small text bundle. They are reasonably priced -- as little as $3 per month – and act like insurance for that one month you are stuck in a train tunnel and find yourself sending 15 or 20 text messages. It's odd for me to be recommending that you sign up for a service with a fee like that, but that's just the way cell phone math works right now.
• If you have teenagers, seriously consider plans with unlimited text messages. Youngsters are capable of sending incredible numbers of text messages, so you're best off insuring yourself against that.
• Even with an unlimited plan, you can still end up paying a lot for text messages – so-called "premium text messages" -- which can cost $1-$10 each. These are texts sent to or from special subscription services, like dating services. One consumer who wrote to Red Tape found himself on the long end of a $10,000 bill not long ago. Even if you use text messaging, you should consider calling your carrier and asking that premium texting be disabled.

Imagine standing in a retail store desperately looking for help from someone, anyone, and being directed to … a computer screen.

"No one here can help you," a clerk might say. "But someone 1,500 miles away probably can."

This just might be the future of customer service. Two companies, with products named Live Agent and Live Support, hope that consumers who today wander aimlessly through store aisles looking for help would be happy to use videoconference kiosks instead.

Already, shoppers in 34 Canadian Staples Business Depot stores all around the country have the option of getting video help from operators based in Toronto, according to Seattle-based Experticity, which makes the video kiosks for Staples.

Stores that are strapped for cash and have trouble hiring knowledgeable employees can offer better customer service through videoconference kiosks, says Chris Woods, chief technology officer of ClairVista, which makes Live Expert. Companies can also save money by leaning on a centralized staff, he said.

"Everybody who goes into a retail store today and walks away frustrated that they could not get their questions answered can get the help they need," Woods says.

Experticity's kiosk.

But won't customers lean on the exit doors after realizing the store has no plans to provide live human beings to help? DL Baron, CEO of Experticity, says just the opposite has occurred in trials at Staples.

"We found that consumers are lining up to talk to the person on the screen because they know the dopey kid behind the counter can't answer their question," he said. "When consumers start using it, it becomes their preferred mode of engagement."

Long-distance, video-based help has a number of obstacles to overcome, both companies concede. Chief among them is the impression consumers might get that the machines are there simply to replace humans and cut costs. If companies can't even bother to greet store shoppers with in-person smiles, why would consumers bother to go to the store?

Why help from afar might be better
But Baron counters that consumer help in many large retailers is already poor, and long-distance help will actually be an improvement.

"How many times have you walked out of the store because you knew more than the kid who was helping you?" he said. Floor clerks have an impossible task in trying to "keep up with and explain increasingly complex products." With a centralized set of agents, each one can specialize in a product area and provide better advice. Agents can also use interactive screens to show consumers how to complete challenging tasks such as electronics installations, and even print out instructions for consumers, Baron said. Buyers with Web cams can connect to customer service again from home for additional help.

That's assuming the video conference technology works, of course. Web cams are notoriously flaky, as anyone who's tried home video-conference tools can attest.

And of course, the advice will only be as good as the operators who are hired to give it. A home improvement store might convince fantastic kitchen remodeling experts to answer video questions 24 hours per day. But it's easy to imagine a firm hiring ill-equipped $8-an-hour operators to read off poorly written scripts instead.

Customer service expert Robert Spector, author of "The Nordstrom Way," said companies should tread carefully when making fundamental changes to the way they treat in-store shoppers.

"A lot of (companies) get enamored with the technology and lose sight of the consumer," he said. "Many companies don't think like their customers, they think in ways to make (the company's) life easier, rather than 'how do we make the consumer's life easier.' "

Replacing real customer service with discount gimmickry never works, he said. In one personal pet peeve, Spector said he's had several frustrating run-ins with live chat supports offered by Web sites.

"I always feel like I could do much better actually talking to someone than just comparing typing skills," he said. Live video help could work he said, but only if it's nothing like live chat help.

And there's always the bottom line
But even if the videoconference service tools aren't perfect, and the customer service benefits are dubious, remote assistance may be attractive to major retailers because of the potential cost savings.

Home improvement stores face a crush of ambitious project builders every Saturday morning, but by 2 p.m., the panic has died down and many highly skilled employees are stuck stocking shelves, Baron said. If stores could "load balance" customer support by funneling all questions through a central support team, they could keep top employees occupied with higher-skill tasks.

Woods argues that centralized video service would both cut costs and make customers happier. "If you could take the top 50 associates you have and take them off the sales floor and make them available chain wide, that's the ideal situation," Woods said.

In Baron's perfect world, there's a customer service video screen at the end of every store aisle, with a top-tier expert ready and willing to answer your question. What's the worst-case scenario? Think about toll-free hotlines. When was the last time you preferred waiting on hold and talking to someone half-way around the world to getting help in person?

With gas prices soaring and seemingly no end in site, drivers are going to great pains to save at the pump. But it seems something obvious has been overlooked: skipping the commute and working from home. Fewer than 10 percent of Americans work from home even one day per week.

Much of the resistance to telecommuting comes from companies and bosses who don't trust their employees. New York Times best-selling author Tim Ferriss, who wrote The 4 Hour Workweek, has some tips for getting around that obstacle. You can watch the video by clicking here. It was produced by NBC's Andrew Gross and Colleen Sanvido, and edited by David Bentley. The three-dimensional graphics come courtesy of NBC's Patrick Longstreth.

You can read about Tim Ferriss' telecommuting tips by clicking here.

The next time you find yourself on the phone with a pushy customer service representative trying to sell you something, remember this: There could be serious cash incentives motivating that hard sell you're getting. And I do mean serious.

One consultant I spoke to recently said that some call-center employees for a national internet service provider were making six-figure salaries, thanks to aggressive bonuses. While customers were infuriated after being deceived while trying to cancel their service, the phone reps were raking in the dough, sometimes doubling or tripling their salaries with incentives.

Benefits that encourage employees to lie for profit are called "perverse incentives." Call centers are awful places to work, so employers have developed elaborate incentive schemes to keep workers returning to the phone banks. In some cases, they are simple or silly -- pizza parties for the top selling groups or free game consoles. But in their most extreme, perverse incentives can encourage outright fraud.

For example, many cell phone reps get bonus points for persuading consumers to extend their contracts, so some will lie to callers, extend their contracts without their knowledge and collect the bonuses.

Many similarly poorly designed incentive programs also turn sour, said Matthew Katz, vice president of business consulting at Merced Systems, which helps firms set up productive incentive programs.

"If you pick the wrong behavior to motivate you can have a big negative impact," Katz said. "It can get ugly."
Companies keep their call center incentive programs close to the vest, and many call center consultants won't discuss them. But there are hints to be had on the Internet. One credit union which has its reps sell auto mechanical breakdown protection doles out $30 per sale, for example.

'Cancel the account...cancel the account...cancel the account'

Two years ago, an America Online customer who wanted to cancel his service revealed just how ugly it can get. He recorded a 5-minute segment of his customer service experience -- during which he says "cancel the account" two dozen times, but still can't close the deal -- and posted it online. The audio file was an Internet sensation, with thousands of customers piling on, leaving "me too" comments on the caller's Web site.

But AOL is far from the only firm that makes breaking up hard to do. Cable and satellite television companies also have well-earned reputations for not taking "no" for an answer. Katz said these companies almost certainly have a "perverse incentive" problem; the rep can earn big bucks by talking consumers into staying, so they sometimes use overly aggressive tactics. And sometimes, they just plain lie.

"We've heard ugly words or phrases like, 'courtesy disconnect,' and things like that," he said. In other words, phone reps sometimes intentionally hang up on callers. Other times, phones reps use their position of power (after all, they have your credit card number) to be domineering. During the AOL call, when the operator tries to read his sales pitch and the caller refuses to listen, the AOL rep plays the bully, saying, "If you want me to cancel your account, you're going to let me speak...you're going to listen to me."

The problem is not incentive programs, Katz said, but the metrics used to grant prizes and bonuses. It's easy to measure the number of customers who have been stopped from canceling their accounts; it's harder to measure true customer satisfaction.

Almost all call centers measure call quality now," he said. "But you have to have the right tools in place to track what people are doing."

Most calls recorded now

Some call centers look at call length, for example -- an agent that typically has very long calls or very short calls might be badgering consumers or simply hanging up on them, for example. That's often a signal to a manager that the agent's calls should be monitored directly. Meanwhile, software can be used to monitor the calls and listen for key phrases, like repetition of the words "cancel my account."

Other new software lets call centers literally recreate calls from the past. Thanks to the continually shrinking cost of storage space, and the rising costs of litigation, many call centers now save recordings of customer calls for up to a year. Software packages also allow companies to record the keystrokes a rep made while on the phone, giving them to ability to see and hear exactly what occurred during a call. And, to our point, that enables them to see if the phone rep defrauded a consumer in pursuit of a big bonus.

Scott M. Broetzmann, president and EO of Customer Care Measurement & Consulting in Alexandria, Va., says consumers should use the new technology to their advantage. He says that because many calls are recorded, especially calls involving financial transactions and contract-related calls, it's a good idea to repeat at the end of each call precisely what your understanding is, like this: "OK, I understand I have added a text message plan to my phone, but my contract end date has not changed, it remains May 2009. Is that right?"

If there is a dispute, a manager can in many cases access the call and listen to its contents. This avoids "he said, she said" arguments, which are rarely settled in the customer's favor.

When calling with a problem, consumers also can ask for a call to be replayed, although the company may not consent to that without a court order.

Still, Broetzmann said, the line between good, aggressive sales techniques and outright fraud can be fuzzy. For him, that line is crossed when a consumer is confused at the end of a call.

"Sometimes by the time you get to the end of the phone call a person doesn't really know what they've agreed to," he said. "Then you have to think about what's going on."

While some firms may tacitly endorse call center fraud, the majority actively fight it, Katz says. That's because customer representatives, who are often nomadic, are also defrauding their companies when they trick consumers. The rep gets a bonus, and the company gets a future customer service headache.
To solve its call center problems, America Online and many other firms now use "third party verification" firms to double-check its sales reps' work. Customers are transferred to a new agent after they agree to buy a new product or service. The record of third parties is spotty, however. Naturally, they get paid by the firm selling the product, so they have a perverse incentive, too.

Red Tape Wrestling Tips

How do you protect yourself from overly aggressive phone operators, who are fueled by big bonus programs?
1) We've already mentioned this one. Repeat your understanding of the conversation at the end of the call, knowing that the firm will likely keep the recording and it can be used during a dispute.
2) Be particularly wary at the end of the month, said Broetzmann, because many incentives are paid on a monthly basis. Sellers can become very aggressive during the last few days of an internal sales contest.
3) Make sure you are talking to the right person before launching into your story, said Katz. Many consumers explain their detailed version of events over and over again because they begin talking before they are connected to the right department. So always ask something like: Can you disconnect my account? Can you grant a refund?

Can companies grant themselves a "get out of jail free" card when you sign their contracts? A lawsuit filed in Seattle against AT&T/Cingular may settle that question.

The nonprofit public advocacy group Public Justice is asking a federal court to set aside a provision in old AT&T wireless contracts that prevents consumers from banding together and filing class action lawsuits against the company. The future of class-action lawsuits might be at stake.

The 22 million customers of AT&T Wireless were given a Hobson's choice in 2004 when the firm was acquired by Cingular, according to Public Justice. The advocacy group says consumers had three bad options after the merger:

Continue using their old phones and face a new $5 monthly fee and degraded service; switch to Cingular and pay an upgrade fee; or cancel their service and pay a $175 early-termination fee.

"There was no good option for these people," said Public Justice lawyer Leslie Bailey.

In 2006, Public Justice filed a lawsuit seeking refunds for AT&T Wireless customers and sought class-action status.
Cingular/AT&T, which has since adopted the name AT&T, immediately asked a federal judge to dismiss the lawsuit and force the plaintiffs into arbitration, as required by their cell phone contracts.

The contracts signed by AT&T Wireless customers, included this phrase: "You and (AT&T) agree that each may bring claims against the other only in your or its individual capacity, and not as a plaintiff or class member."

Clause portrayed as 'class-action ban'
Last month, Public Justice filed a motion asking U.S. District Judge Ricardo Martinez to set aside what it calls a "class-action ban." Because the damages for each individual victim are small -- ranging from $5 to $175 -- few would bother to file an individual case against the firm. Only by banding together in a class-action case could victims get fair compensation, said Bailey.

"These people are affected by what we allege is deception, but it's unlikely any of these individuals will take on this huge corporation by themselves," she said.

In legal terms, she said, the ban is an exculpatory clause, which effectively frees the firm from any responsibility for its actions. In common language, Bailey said, it amounts to a "get out of jail free card."

"It doesn't say you can't sue us no matter what we do to you, but this accomplishes the same thing," she said.

AT&T denied misleading its customers and rejects the idea that the binding arbitration clause is unfair. It said in an e-mail statement that consumers are better served by filing individual arbitration cases or small claims court cases.

"We continue to believe a consumer is better off pursuing a claim under our arbitration clause, rather than pursuing a class action. Arbitration is typically a fast, cost-effective and pro-consumer way to address disputes, and AT&T's arbitration agreement is among the most consumer-friendly in the nation," the firm said.

'Fair and in the best interest of our customers'
The statement noted that consumers who use a lawyer and win an arbitration case are entitled to two times their legal fees. "We are confident our approach is both fair and in the best interest of our customers," it concluded.

But Bailey said only a tiny fraction of impacted consumers -- there have been 10 cases arbitrated against AT&T/Cingular since October 2006 -- have taken advantage of arbitration provisions, and few ever will.

The Foundation for Taxpayer and Consumer Rights, which is helping bring the case against AT&T, says the judge's ruling could set an important precedent in consumer law and class-action law.

"If the court rules that AT&T and Cingular's customers cannot join together to sue these companies, then the companies will never be held accountable," said Harvey Rosenfield, a lawyer with the group.

While judges have previously set aside contract language that would effectively ban all class-action cases, Bailey said lawyers for U.S. corporations are continually revising contract language to create a class-action ban that will withstand scrutiny. AT&T, she said, has altered its phrasing four times since the lawsuit was filed.

Class-action cases haven't always served consumers' interests, admits Bailey. In notorious "coupon" settlements, millions of victims get near-worthless service credits or discounts, while lawyers who file the cases get millions in fees.

Despite the abuses -- which she says Public Justice opposes – class-action lawsuits are an essential tool in consumer protection, she said. Allowing companies to unilaterally excuse themselves from class-action litigation would spell disaster for consumer rights.

"(Companies) know that if a class-action case can't be brought against them, they will not have to change their ways," she said. "It's all the more important in the lax regulatory environment we have, where federal agencies that are supposed to regulate large companies are not doing their jobs."

RED TAPE WRESTLING TIPS
Consumers should look for the binding arbitration clauses that are included in most contracts they sign today, purely as a matter of public awareness. One might be inclined to take a pen and strike the clause, but that rarely works, according to Public Justice. Employees are trained to tell consumers that the contract can't be changed – it's offered on a take-it-or-leave-it basis. A few consumers have managed to sign a contract with such a clause removed, but that's against most firm's policies, Bailey said.

Consumers who are worried about binding arbitration should do business with firms that don't require it. That's not easy, however , as all four major cell phone carriers include arbitration clauses in their contracts, she said.

He calls Washington, D.C., "corporate occupied territory," and says we're living under "corporate fascism." Ralph Nader continues to pound away at the same themes he did in the 1960s when he first took on the automobile industry, alleging intentional neglect of safety measures. Today, though, he has broadened his targets to include banks, credit card companies, binding arbitration clauses and, of course, his rival presidential candidates.

While he's universally regarded, and even revered, as the father of the consumer movement, Nader's presidential campaigns are roundly criticized by liberals as counterproductive, and even destructive. As part of Red Tape Chronicles' look at the consumer protection proposals of the presidential candidates, Nader agreed to sit down with me this week in Washington, D.C.

I was told to pick up Nader, quite literally, on the side of the road. Despite his public persona, he's a very private man and he works hard to keep the location of his Washington, D.C., home a secret. So I met him on Connecticut Avenue, on the sidewalk in front of a French restaurant a few miles from the NBC bureau where we conducted our interview.

It seems paranoid until you consider that Nader was the victim of aggressive spying by General Motors in the 1960s (the firm eventually apologized),then it's not so hard to understand. Nader has enemies.

Nader seems most angry and obstinate when he talks about what he sees as government's failure to protect its citizens from abuses by corporate America. He laid out conditions for dropping out of the race and supporting Democratic Sens. Barack Obama, Hillary Clinton, or even Republican Sen. John McCain. But his furrowed brow suggested that he considers that eventuality highly unlikely, and his defiant tone indicated he's not ready to abandon his third-party campaign any time soon.

I didn't want to talk politics with him, however. I wanted to hear his views on the state of consumer protection. Given the thousands of rabid complaints received every month by the Red Tape Chronicles, and the helplessness many people express, had his movement failed? If so, what went wrong? He addresses those questions in the video atop this post.

Armed with pamphlets

He sat down in my car with an armful of pamphlets he'd produced on confusing credit card statements, computer-generated overcharges, mysterious "processing charges," indecipherable bills, and so on. In one series, called "Buyer's Market," he described finding an undisclosed 50 percent surcharge on his hotel bills and surprise bank fees for dipping below a minimum balance. The pamphlets, in which he calls for "truth in billing" legislation, were published in 1986 and 1987.

The issues raised every week in the Red Tape Chronicles, he lets me know, are hardly new. He also gently scolds me for not knowing about some consumer advocates who've been fighting for health care reform and other consumer protection issues for decades -- a bit the way a grandfather might scold a grandchild for not knowing about Joe DiMaggio or Mickey Mantle.

Scolding is among Nader's best skills; as the quadrennial third-party presidential candidate, Nader might be considered America's scolder-in-chief. But if he seems angry while talking politics, he softens considerably when the discussion turns to students and education.

"It's a lot of fun!" he says of teaching students about grocery store tricks like placing junk food at eye level in checkout stands. "Students as consumers, it relates their outside of school activity … (to) the classroom. It's really interesting."

But he laments that schools spend far too much time teaching basic computer skills, and far too little time explaining about credit card interest rates, credit scores, mortgages and providing students with skills that would prepare them to be smarter consumers.

"There is a huge imbalance between computer skills to get a job and zero consumer skills," he said.

Of course, you can't talk to Ralph Nader without talking politics and, in truth, that's largely why he consented to our conversation. Last month, he announced his candidacy on NBC's "Meet the Press." But getting other media coverage is a struggle.

His pet subject

Earlier this week, I summarized the consumer protection proposals from the three major presidential candidates. Only McCain's campaign made a campaign official available for an on-the-record interview. But Nader jumped at the chance to speak about his pet subject.

As a presidential candidate, Nader has become a thorn in the side of the Democratic Party. His third-party presidential efforts have drawn votes primarily from Democratic candidates, most significantly in the 2000 election. Many Democrats blame him for George W. Bush's victory. But Nader never gives an inch when asked about this subject, replying that he has constitutional right to run for president. When I asked if he had "bit off his nose to spite his face," as my mother would say -- effectively hurting his own cause through his stubbornness -- he answered that many important new ideas, such as abolition of slavery and women's suffrage, rose to public consciousness through third-party candidates.

During the 2004 campaign, Nader said he met with Democratic Sen. John Kerry and showed him a list of 20 consumer protection issues. If Kerry picked three to champion, Nader promised to support him. That never happened.

In our interview Nader said he would make the same offer to Clinton, Obama or McCain.

"There are two ways to succeed," he said. "One is to beat them by getting more votes. … The second is to have them take our issues and run with them," he said. But he didn't seem optimistic. And while he generally has more positive things to say about Obama than Clinton, he called both "corporate Democrats" and stated that neither was a champion of the consumer.

Both Clinton and Obama have published statements and proposals describing their plans for new consumer protections, which were discussed in Tuesday's column. On Thursday, Obama discussed financial reforms with CNBC, including expanded oversight of lending institutions.

What happened to the consumer movement?

Nader and I talked a bit more about the presidential campaign, as described in more depth on our political blog, First Read, by producer Andy Merten. But I was much more interested in Nader's take on consumer protection issues. Chiefly, I wanted to know why the consumer movement he helped start in the 1960s seems to have faded, or at least stalled.

In the main video atop this story, you'll see his answers – he blames the dismantling of consumer protection agencies, abandonment of consumer education in schools, and American idol to name a few.

But the conversation ranged far and wide. As a victim of spying, Nader has a unique -- and troubling -- perspective on the state of American privacy (see video). Private lawsuits, he said, are the only tool left to restore privacy.

He has fond memories of an appearance on "Sesame Street" as the "neighborhood consumer advocate." In every community in America, he said, there are mini-experts who act informally as advocates for friends and neighbors. They are "influencers," he said, who help keep their communities from getting ripped off, and he whimsically imagines getting them all together some day in Yankee Stadium. (see video)

Finally he sees community organizing as the critical element to reviving consumer rights. He discussed ways for consumers to "band together and become powerful entities" that would "revolutionize consumer protection." (see video)

If you'd like to see a bit more discussion on Nader's alleged role as "spoiler," click here to watch his sit-down interview with Newsweek's Howard Fineman.

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.

Credit cards

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.

Home loans

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."

Student loans

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.