Erika Eichelberger

Erika Eichelberger

Reporter

Erika Eichelberger is a reporter in Mother Jones' Washington bureau. She has also written for The NationThe Brooklyn Rail, and TomDispatch. Email her at eeichelberger [at] motherjones [dot] com. 

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Industry Says Car Insurance Obviously Affordable for Poor Because They Buy Booze

| Thu Jun. 12, 2014 12:04 PM EDT

Poverty in America remains stuck at record levels. But people who are poor aren't that bad off—because they can afford booze, cigarettes, and TVs, the car insurance industry said Monday.

The odd rationale was included in a letter to the Federal Insurance Office, an insurance industry watchdog, in response to a request for comments on whether auto insurance is affordable for low-income Americans.

The National Association of Mutual Insurance Companies (NAMIC), which represents half of the nation's car insurance companies, asserts in its letter that households in the lowest two-fifths of the income spectrum spend nearly as much on alcohol and cigarettes as they do on car insurance, and even more on "audio and visual (A/V) equipment and services." Therefore, the industry group says, "it seems implausible to suggest that automobile insurance is not 'affordable' for these consumers."

The Consumer Federation of America (CFA), a consumer advocacy group, calls the trade group's comments not only "offensive," but "factually incorrect." Here's why: Only about 19 percent of all low-income households spend any money on cigarettes in a typical three-month period, and only 22 percent spend any money on alcohol. When you average all low-income household spending, you find that these households spend about $102 more a year on car insurance than on cigarettes and alcohol, according to the most recent numbers from the federal government’s Consumer Expenditure Survey.

"Many households spend nothing on these products and this abuse of statistics reveals the underlying disrespect that many auto insurers have for low-income drivers," CFA's director of insurance J. Robert Hunter said Tuesday.

Car insurance companies often charge higher rates to blue-collar workers and people with less education. Low-income and moderate-income drivers with insurance spend about $1,000 a year on coverage.

Elizabeth Warren to Obama: Fed Nominees Should Crack Down On Big Banks

| Thu May 29, 2014 10:07 AM EDT

Elizabeth Warren is at it again. On Wednesday, the senator from Massachusetts and her colleague Sen. Jeff Merkley (D-Ore.) called out the Federal Reserve—the US central bank charged with setting monetary policy and regulating big banks—for being too lax on financial reform, and urged the Obama administration to fill two open seats on the Fed's seven-member board with candidates committed to cracking down on Wall Street.

"As the events of 2008 showed, when the Federal Reserve and other financial regulators failed to engage in appropriate financial regulation, the results were the worst financial crisis in 80 years," the two senators wrote in a letter to President Barack Obama Wednesday. "Financial regulation and oversight obligations must be front and central to the Board's work."

The Fed's banking watchdog duties include imposing penalties on financial firms for violations such as inadequate money laundering protections and faulty foreclosure practices. Federal Reserve board members also vote on restrictions on CEO pay and rules governing how much emergency capital banks have to keep on their books.

This is not the first time that Warren has pushed the Fed to take its financial regulatory role more seriously. Earlier this year, she called on the heads of the central bank to stop delegating big decisions on bank oversight to staffers. Of the close to 1,000 formal enforcement actions taken by the Federal Reserve over the past decade, only 11 were voted on by the board itself. The rest were delegated to Fed staff, sometimes mid-level employees. In a letter to the Fed in February, Warren contended that the delegation of authority has resulted in bank penalties that are too lenient.

Last September, Warren and fellow Democrats on the Senate banking committee opposed Obama's plans to nominate former Treasury Secretary Larry Summers to run the Fed, citing Summers' work on behalf of the banking giant Citigroup and his past efforts to deregulate the financial industry. (Obama ended up withdrawing Summers' name from consideration.)

And at Fed chair Janet Yellen's Senate confirmation hearing in November, Warren told Yellen, "I’m concerned that [financial regulatory] responsibilities just aren’t a top priority for the board of governors."

In addition to the two Fed posts Warren and Merkley are concerned about, there are three other openings on the Fed board for which Obama has already nominated candidates. Those nominees are Lael Brainard, a former Treasury official; Jerome Powell, who has been a Fed board member since 2012 and is up for a second term; and Stanley Fischer, the former head of the Bank of Israel, whom the Senate just confirmed. There has been no real opposition by Senate Dems to any of these three nominees.

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