Consumers vs. contributors

For a Democrat elected to work for the people, Governor Davis has allowed a surprising number of consumer protection bills to go unsigned. Usually, these failed reforms are opposed by financial institutions and other big businesses that make up the bulk of Davis’ contributions.

Unfortunately, consumers’ interests and contributors’ interests are often sharply incompatible. Whether that’s the reason why Davis has vetoed bills that would protect consumers from predatory lending practices and invasions of privacy, only he can know. But we offer details to throw some light on the situation.

In the case of Assembly Bill 1963, an illogical veto, combined with an even more illogical veto message, raises questions about what was wrong with a bill that could have saved the consumer millions of dollars. AB 1963 was the latest effort to try to educate a vulnerable public. It would have required creditors to specify how long it would take customers to pay off their debt if they make only the minimum payment every billing cycle.

Fortunately for credit issuers, they had paid for their interest. Bank of America gave $10,000; Imperial Bank gave $10,000; Citigroup gave $10,000; Credit Union League gave $10,000; and Providian Bancorp Services gave $60,000. Davis vetoed the bill, calling it too broad because it only related to the 70 percent of Americans that pay off their debt using minimum payments.

So the measure was reintroduced this year as Assembly Bill 865, with changes made per Davis’ requests. Instead of listing personalized information as to how long each individual will take to pay off their debt, several combinations of debt and payment levels will be listed—a less clear way of educating consumers. AB 865 is still awaiting legislative approval, as are two other bills that would protect consumers to the detriment of credit agencies.

Assembly Bill 521 would regulate the marketing of credit cards on college campuses. Currently, credit card companies have a whole arsenal of tricks to seduce college students with limited credit experience to sign up for their cards, typically with higher credit lines than their resources can afford. AB 521 would stop the distribution of gift incentives, limit the places companies could advertise and include debt education as a regular part of new student orientation. It’s similar to last year’s Senate Bill 796, which also required that student bookstores include debt education materials in their shopping bags, but Davis vetoed the measure.

Still-pending Senate Bill 168 would help protect consumer privacy and curb identity theft, but supporters believe its prospects are dim because of the money Davis has received from insurance and credit agencies. SB 168 would grant consumers the permission to “turn off” their credit reports, thereby restricting public access to their social security numbers, if they feel that their identity might be in jeopardy. Again, the opponents came out in force, and several of them have paid up: California Health Association, $30,000; California Association of Health Plans, $19, 256; Blue Cross, $30,000; Aetna, $15,000; Blue Shield $21,000.

The insurance companies claim that even a small percentage of the public taking their social security numbers out of circulation will result in the deterioration of a valuable system of identification. If the bill arrives on his desk, will Davis defy his contributors in favor of consumers? We’ll see.