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NAAGazette

Congress Extends Deadline for Negotiations as Discussions Continue on Consumer, Finance and Health Bills

Blair Tinkle, Legislative Director

Blair Tinkle, NAAG Legislative Director

Lawmakers on Capitol Hill are facing hectic schedules as they address a variety of issues before going home for the holidays, not to return until 2008, the final year of the 110th Congress and a presidential election year. As is usually the case, the appropriations process is deadlocked, but Congress bought a new deadline for negotiations by passing a Continuing Resolution until December 14, 2007. Congressional leaders have indicated that they intend to address a farm bill, an energy bill, an Alternative Minimum Tax, the Foreign Intelligence Surveillance Act and agreement on spending bills.

Even amidst an ambitious schedule, bills of interest to state Attorneys General are seeing action before year’s end. Legislators are addressing the shaky home mortgage market with several housing measures, attempting to confront the issue of lead-tainted toys before Christmas and the children’s health insurance package, funded by an increase in the federal cigarette tax.

On the foreclosure front, it is estimated that in the coming year, many homeowners will face mortgage resets that would increase monthly payments on their home loans, in some cases as much as a 50 percent jump. The FDIC estimates that as much as $300 billion in such loans will reset in the calendar year 2008. In 2007, nearly $150 billion in reset loans caused a crisis of foreclosures and the media attention and public awareness of continued market instability have clearly given congressional leaders the impetus to get something done.

Although it is not likely that Congress will be able to get a bill on the President’s desk this year, especially given the current backlog in the Senate, the House did pass a bill, by a 291-127 vote. The bill places standards on brokers, lenders and Wall Street firms. The bill also gives federal regulators greater authority to oversee the financial services industry.

The measure became a bipartisan effort when the bill’s manager, House Financial Services Committee Chairman Barney Frank (D-MA), reached agreement with House Financial Services Committee Ranking Member Spencer Bachus (R-AL). Among other concessions, the agreement included a preemption of state laws providing a limited liability for Wall Street firms that sell mortgage-backed securities.

An effort was made by a number of state Attorneys General to fend off greater preemption in the bill and attempts are still being made to narrow the current limited liability, or even have it removed from the bill altogether.

The bill now moves to the Senate where Senate Banking Committee Chairman Christopher Dodd (D-CT) is expected to introduce legislation soon.

Media attention and public awareness of several issues have Congress in action and state Attorneys General on call.

On the issue of lead-tainted toys sold in the United States, it appears again that media attention and public awareness are creating an atmosphere of urgency in Congress. Committees in both the House and Senate have held hearings and passed bills recently.

Within the last year, millions of children’s products, many of which were imports from China, have been recalled due to the presence of excessive amounts of toxic lead, hazardous magnets and other dangerous chemicals. This has prompted lawmakers in both chambers of Congress to act, primarily to give the Consumer Product Safety Commission (CPSC) more authority to oversee goods. There are also provisions in both the House and Senate bills that propose a cap on lead in consumer products and language that would allow state Attorneys General to enforce consumer product safety laws. The bill however, could see changes, perhaps regarding state Attorney General enforcement rights, as negotiations continue in the Senate.

On November 15, 2007, the House Subcommittee on Commerce, Trade, and Consumer Protection of the House Committee on Commerce and Energy reported legislation to the full committee addressing the issue. While expanding CPSC authority to regulate goods, particularly with an eye toward children’s products, the initiative also permits state Attorneys General a right of action to enforce a consumer product safety rule or order and the ability to obtain appropriate injunctive relief. The House bill moves to the full committee and action is expected soon.

The Senate Commerce Committee recently passed a similar initiative regarding product safety, sponsored by former Arkansas Attorney General, now U.S. Senator Mark Pryor (D-AR). The Senate bill includes state Attorney General enforcement authority, is specifically not preemptive of state consumer laws, contains whistleblower protections and offers whistleblowers a portion of civil penalties collected as a result of information that they have provided.

Some on Capitol Hill expect both the House and Senate bills to move before the end of this year and although that is clearly possible, a backlog of schedules makes it somewhat unlikely. A NAAG working group on this issue has held regular calls and a letter may be forthcoming.

Congress is again addressing the reauthorization and expansion of the State Children’s Health Insurance Program (SCHIP), created by the Balanced Budget Act of 1997 and scheduled to sunset this year. The SCHIP program was created to address the growing number of children in the United States without health insurance, primarily because they live in families who earn too much money to qualify for Medicaid, yet cannot afford to buy private insurance.

Largely funded by an increase in the federal tobacco excise tax, from 39 cents to a dollar, the reauthorization and expansion of SCHIP has already been sent to the President this year. The President vetoed the bill and Congress could not override that veto. Currently surviving on a Continuing Resolution until December 14, 2007, the issue will again be negotiated by lawmakers this year as they seek to find approximately 12 more members to sustain a veto-proof majority in the House.

Although President Bush and Health and Human Services Secretary Leavitt have stated opposition to raising the tobacco excise tax to fund the measure, lawmakers on both sides of the aisle continue to cite the tax as a revenue source to expand SCHIP. The issue will see action in December 2007, but similar to many other bills, it will likely move into the new year for resolution.

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