May 5, 2010

Consumers Need a Financial Consumers’ Association (FCA)

Filed under: Wall Street Watch — john @ 10:02 am

One of the most important measures we can advance to protect consumers and taxpayers is embodied in an amendment drafted by Senator Charles Schumer. Senator Schumer’s amendment (SA 3772) provides a facility to establish an independent non-governmental nonprofit Financial Consumers’ Association (FCA). FCA has broad support from leading consumer organizations.

Given the powerful influence of the financial industry over the legislative and regulatory processes, it is likely that consumers will continue to be short-changed unless Congress facilitates the creation of an independent, non-governmental organization to monitor the actions of financial corporations. A Financial Consumers’ Association would be voluntarily supported by membership dues. The members would elect a board of directors that could hire researchers, organizers, accountants and lawyers.

A Financial Consumers’ Associations could:

1. Represent consumer interests before regulatory agencies, legislative bodies, and the courts, and in negotiations with financial service providers;
2. Develop data that would provide consumers with the information they need to deal with financial institutions and provide a means of comparing the costs of financial services and products;
3. Address common consumer complaints regarding financial services;
4. Evaluate the performance of mortgage lenders;
5. Monitor the availability of financial services to less affluent and minority borrowers;
6. Advocate policies that will ensure reasonable access to credit for all consumers; and
7. Provide policymakers, consumers, workers, shareholders, taxpayers and the news media with timely information on the effects of financial industry and government initiatives.

It is time to give the millions of consumers and taxpayers who bear the brunt of Wall Street’s recklessness, avarice and crimes a chance to band together to watchdog the financial industry and the financial regulators.

Urge your Senator to support this important pro-consumer amendment.

Questions and Answers About The Financial Consumers’ Association (FCA)

Filed under: Wall Street Watch — john @ 9:51 am

The Financial Consumers’ Association

Over the last ten years the financial industry has spent, through lobbying expenditures and campaign contributions, over $5 billion pushing for and winning deregulation. This deregulation has come at a huge cost to taxpayers and consumers who currently have little voice in the regulatory debate. To protect consumers and to forestall future financial meltdowns, Congress should empower consumers to protect themselves by chartering an independent, nationwide, citizen-run Financial Consumers’ Association (FCA).

What is a Financial Consumers’ Association?
The FCA would be a federally chartered, nationwide, citizen-run, membership association of financial consumers. It would serve as an independent watchdog for the financial industry. In addition to keeping an eye on the financial industry, the FCA’s full-time staff would monitor legislative and regulatory activities, and lobby for pro-consumer reforms. It would also represent financial consumers before regulatory agencies, Congress, state legislatures and the courts. It would serve as an important countervailing force to the power and influence of the financial industry. The FCA would also educate and advise consumers on financial services.

Why do we need the FCA?
The power of the financial industry to push for legislation and regulations that serve its own interests far outweighs that of existing consumer groups. Financial consumers currently lack the resources necessary to advocate their interests before regulatory and legislative bodies. The FCA would serve as a mechanism by which consumers could pool their resources, and would bring about a balance of advocacy before legislative and regulatory bodies.

Don’t existing government regulatory bodies adequately protect consumer interests?
Government regulators do seek to protect consumers, however, these regulators do not have the interests of consumers as their only focus and are generally not always able to give priority to consumers’ interests. In fact, from 2004 to 2006 when predatory lending abuse was particularly widespread, the Office of Comptroller of the Currency, with authority over almost 1,800 banks, initiated only three consumer protection enforcement actions.

The FCA would have protecting financial consumers as its only purpose and, as a member-funded organization, would be immune to outside financial and political pressures. It would respond only to its members, who would have a direct voice in the FCA’s policies and leadership. The FCA would complement the work of government regulatory bodies by educating the public about financial products and the actions of the financial industry. The FCA would also help consumers effectively monitor the performance of the state and federal regulators and participate in policy debates regarding the financial industry.

Won’t the proposed Consumer Financial Protection Agency (CFPA), if created, have financial consumer protection as its main focus?
The CFPA would play an important role in terms of consumer protection, however, it would not be an entity independent from government and is therefore susceptible to the overwhelming financial and political pressures of the financial industry. The FCA would complement the work of the CFPA by monitoring both the financial industry and the government regulators. The FCA would enhance the work of the CFPA.

How would the FCA work?
Consumers would be notified of the existence of the FCA through inserts in the customer statements from financial institutions. These inserts would describe the purpose and democratic structure of the FCA, membership fees and eligibility requirements, and the independence of the FCA from government bodies and financial industry groups. Financial consumers could join the FCA by mailing their membership fee and application to the FCA.

Why do FCA inserts need to be included in the customer statements of financial institutions? Can’t the FCA recruit members through its own independent mailings?
The insert mechanism would, at no additional cost to the financial institutions and at minimal cost to the FCA, allow the FCA to solicit members and gather the critical mass of resources needed to hire economists, experts, organizers and attorneys. Therefore, the bulk of the money collected by the FCA could go to advocacy purposes, rather than to the FCA’s own fundraising and administrative costs. This would also foster low FCA membership fees.

Couldn’t the FCA use its mailing privilege to make untrue or inflammatory statements about the very financial institution in whose customer statement FCA material is enclosed?
No. The FCA legislation would prohibit the FCA from making false or misleading statements in FCA insert material. This legislation could also require the Federal Trade Commission (FTC) to review the wording of the FCA’s inserts.

Why should Congress mandate the establishment of a federally chartered FCA?
Don’t consumers currently have the ability to form their own advocacy organization?

In order to effectively monitor regulators and financial institutions, consumers must possess a high level of expertise about the financial industry. Without adequate resources, it is prohibitively expensive for consumers to develop this expertise, or to hire experts with the requisite sophistication. Currently, financial consumers have few efficient mechanisms for pooling resources. An FCA would be an effective way to foster this organization with minimal cost and maximum benefit because the Association would be allowed to piggyback onto the mailings that the financial institutions are sending out regularly. Without a mandate from Congress, however, no financial institution would voluntarily allow the FCA to include inserts in the mailings to customers.

Should the FCA represent only financial consumers and not the financial industry?
The FCA’s mandate would be to represent a particular point of view – that of the financial consumer. The interests of financial consumers and financial institutions are rarely the same. The financial industry has the resources and mechanisms to very effectively look after its own interests in regulatory proceedings. Financial consumers, however, are a diverse group without any means to effectively organize and pool their resources. The FCA would give them the means to band together and make their viewpoint known.

Isn’t it likely that the FCA would be taken over by narrow, special interest groups?
As a member-funded entity, the FCA would be required to maintain a steady flow of voluntary member contributions. This would require the FCA to maintain a broad base of support and serve the common interests of all financial consumers. If the organization were to become too narrow in focus, it would face losing its funding.

For More Information: FCA@WallStreetWatch.Org
FCA Project
P.O. Box 19405
Washington, DC 20036
202-387-8034

Consumer Groups Support Creation of Financial Consumers’ Association (FCA)

Filed under: Wall Street Watch — john @ 9:00 am

From the letter:

The nation’s financial industries have a significant effect on the daily lives of the nation’s consumers. Consumers need both a strong regulatory agency to oversee financial services products and also an independent consumer voice to monitor the actions of financial corporations. A Financial Consumers’ Association would be supported by membership dues. The members would elect a board of directors that could hire researchers, organizers, accountants and lawyers.

Some observers have asked if a Financial Consumers’ Association would be needed if Congress were to create a Consumer Financial Protection Agency (CFPA). We believe that a CFPA would play a fundamental and important governmental role in advancing protections for consumers of financial services. A Financial Consumers’ Association would enhance, not duplicate or replace, the work of the CFPA. A Financial Consumers’ Association would monitor government regulators, and provide an independent and complementary voice for consumers. The combined efforts of both the CFPA and a Financial Consumers’ Association will, in part, redress the imbalance of power between financial services corporations and consumers. (Letter supporting FCA)

The “Financial Consumers Association Act of 2010″

Filed under: Wall Street Watch — john @ 8:38 am

Senate Amendment 3772

At the end of title X, add the following:

Subtitle I–Financial Consumers Association

SEC. 1121. SHORT TITLE.

This subtitle may be cited as the “Financial Consumers Association Act of 2010”

SEC. 1122. FINDINGS AND PURPOSES.

(a) Findings.–Congress finds that–

(1) financial services consumers and depositors are an integral part of the financial system and are affected by the safety and soundness of the financial industry;

(2) deceptive, illegal, and speculative financial practices have harmed public confidence in the integrity and fairness of many United States financial institutions, and threaten the basic strengths of the United States economic system;

(3) contributing to the loss of public confidence are perceptions of inadequate oversight and insufficient independence between financial institutions and their regulators;

(4) major factors contributing to the recent financial crisis include regulatory failures to adequately police the financial services markets for crime, unfair or deceptive practices, fraud, lack of transparency, and mismanagement;

(5) the financial industry has enjoyed virtually unlimited access to represent its interest before Congress, the courts, and State and Federal regulators, while financial services consumers have had limited representation before Congress and financial regulatory entities;

(6) the resources available for organized representation of consumers in the financial industry need to be expanded so citizens can better monitor the performance of State and Federal agencies that regulate their financial institutions and participate in public policy debates regarding the oversight of these financial institutions;

(7) the creation of a public purpose, democratically controlled, self-funded, nationwide membership association of financial services consumers is an effective way to enhance the representation of consumers in the financial services industry and to meet the expanding information needs of consumers in the financial services market;

(8) the requirement that informational and statutory inserts be included in the paper mailings and email correspondence, digital or other electronic means, of covered persons is essential to the creation, maintenance, and funding of such an association;

(9) the Federal Government has a substantial interest in the creation of a public purpose, democratically controlled, self-funded, nationwide membership association of financial services consumers to enhance their representation and to effectively combat unsound financial practices;

(10) the creation of such an Association is not meant to substitute for, but augment, the activities of existing or future regulatory bodies whose sole or partial focus is the protection of financial services consumers; and

(11) consumers have more complex financial choices today than ever before, but not enough information with which to make those choices.

(b) Purposes.–The purposes of this subtitle are–

(1) to establish a public purpose, nonprofit, democratically controlled, membership association of financial services consumers;

(2) to give the Association a mandate to inform and represent financial services consumers, and to further the effective and vigorous oversight of covered persons;

(3) to establish democratic rules of governance for the Association; and

(4) to require any covered person to periodically include inserts concerning the Association within their statements and billing statements to financial services consumers.

SEC. 1123. DEFINITIONS.

For purposes of this subtitle, the following definitions shall apply:

(1) ASSOCIATION.–The term “Association” means the Financial Consumers Association established in accordance with this subtitle.

(2) ASSOCIATION DIRECTOR.–The terms “Association director” and “director” mean any person duly elected or appointed to the Association board of directors pursuant to this subtitle, except as the context otherwise requires.

(3) INSERT CARRIER.–The term “insert carrier” includes any email, digital, or other electronic notice or paper deposit account statement which–

(A) indicates the balance on a deposit account; or

(B) involves an outstanding deposit account contract or agreement between an insured depository institution and a customer of such institution.

(4) MEMBER.–The term “member” means any person who meets the requirements for membership in the Association, as set forth in this subtitle.

(5) REGULATORY AGENCY.–The term “regulatory agency” means any governmental office, agency, department, or commission of the Federal Government, that regulates, monitors, directs, or governs publicly traded corporations, financial services, or consumer transactions.

(6) REGULATORY PROCEEDING.–The term “regulatory proceeding” means any rulemaking, adjudication, or ancillary proceeding conducted by any governmental office, agency, department, or commission at the Federal, State, or local level, that affects any covered person.

(7) STATUTORY INSERT.–The term “statutory insert” means any digital or printed statement, card, or envelope and statement combination, or a statement, application, and pre-addressed business reply envelope used by the Association to solicit information and contributions or membership fees from consumers, financial services customers, and to explain the purpose, history, nature, activities, achievements, and membership criteria of the Association.

(8) APPROPRIATE COMMITTEES OF CONGRESS.–The term “appropriate committees of Congress” means the Committee on Banking, Housing, and Urban Affairs and the Subcommittee on Financial Services and General Government of the Committee on Appropriations of the Senate, and the Committee on Financial Services and the Subcommittee on Financial Services and General Government of the Committee on Appropriations of the House of Representatives, and any successor committees, as may be constituted.

(9) CAMPAIGN CONTRIBUTION.–The term “campaign contribution” means any money, good, service, credit, or other benefit provided or promised for the purpose of electing an Association Director.

(10) CAMPAIGN EXPENDITURE.–The term “campaign expenditure” means any payment, use, distribution, or gift of money or anything of value made or promised for the purpose of electing an Association Director.

(11) IMMEDIATE FAMILY.–The term “immediate family” means a person’s spouse and legal dependents.

SEC. 1124. ESTABLISHMENT OF THE ASSOCIATION.

(a) Charter.–There is authorized to be established a nonprofit corporation by the interim board of directors to be known as the “Financial Consumers Association”. The Association shall be subject to the provisions of this Act, and, to the extent consistent with this Act, to the District of Columbia Nonprofit Corporations Act. The main office of the Association shall be located in Washington, DC.

(b) Nongovernmental Status.–The Association shall be a private corporation and shall not, for any purpose, be considered to be a department, agency, or instrumentality of the United States Government. An officer or employee of the corporation shall not, for any purpose, be considered to be an officer or employee of the Federal Government.

(c) Regional and Local Offices.–The Association may establish regional offices as needed, in any of the several States.

(d) Bylaws.–Except as provided in this Act and in the District of Columbia Nonprofit Corporations Act, the affairs of the Association shall be regulated as determined in the bylaws of the Association.

(e) Nonprofit, Nonstock Status.–The Association chartered under this section–

(1) shall be a nonprofit corporation; and

(2) may not issue any shares of stock or other securities or pay any dividends.

(f) Membership.–The membership of the Association shall consist solely of individuals who–

(1) are 16 years of age or older; and

(2) have contributed the required annual membership fee to the Association.

(g) Membership Fee.–

(1) INITIAL FEE.–Until the end of the 180-day period beginning on the date of the first election of directors, the annual membership fee of the Association shall be $10.

(2) PERMANENT MEMBERSHIP FEES DETERMINED BY BOARD OF DIRECTORS.–After the end of the 180-day period referred to in this subsection, the Association may, by vote of the board of directors, alter the annual membership fee. The board of directors shall adopt a reduced fee structure, offering reduced-cost membership fees for low-income populations and senior citizens.

(h) Political Contributions Prohibited.–The Association shall not make any contributions to any political candidate or

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party, or to any national or State political committee, as defined in the Federal Election Campaign Act of 1971, or participate in or intervene in any political campaign on behalf of, or in opposition to, any candidate for public office.

SEC. 1125. AUTHORIZATION OF APPROPRIATIONS AND ALLOTMENTS OF GRANTS.

There is authorized to be appropriated to the Bureau, for the purpose of establishing the Association, $5,000,000 for the fiscal year ending 1 year after the date of enactment of this Act.

SEC. 1126. MISSION, DUTIES, AND POWERS OF THE ASSOCIATION.

(a) Mission.–The Association shall advance the rights and remedies available to consumers with respect to financial services, by developing initiatives to reduce the use of dangerous features in financial products and services, and to improve the flow of accurate information from covered persons to consumers.

(b) Duties.–The duties of the Association shall be–

(1) to inform, educate, and advise consumers about the actions of covered persons;

(2) to represent and promote the interests of consumers in financial services, collectively, and, when necessary, to negotiate on behalf of financial services consumers, individually, with respect to covered persons;

(3) to take affirmative measures to encourage membership by low- and moderate-income and minority consumers, and to disseminate information and advice to consumers;

(4) to inform, insofar as possible, consumers about the mission of the Association, including the procedures for obtaining membership in the Association;

(5) to provide consumers with information about how initiatives of covered person will affect consumers;

(6) to monitor the availability and quality of financial services to low- and moderate-income constituencies and the elderly; and

(7) to develop data to assist financial services consumers in making informed decisions in the marketplace.

(c) Powers.–In addition to the rights and powers provided by other provisions of this Act, the Association shall–

(1) represent the interests of consumers in general before Federal regulatory agencies, legislative bodies, the courts, and in other public forums;

(2) initiate, intervene as a party, or otherwise participate on behalf of consumers in any regulatory proceeding that the Association reasonably determines may affect the interests of consumers;

(3) conduct, support, and assist research, surveys, and investigations in financial services consumer matters;

(4) maintain up-to-date membership rolls, and to keep them in confidence to the extent required by the provisions of this Act;

(5) contract for services which cannot reasonably be performed by its employees; and

(6) solicit and accept gifts, loans, grants, or other aid in order to support activities concerning the interests of financial services consumers, except that the Association may not accept gifts, loans, or other aid from any financial services providers or from any director, employee, agent, or member of the immediate family of a director, employee, or agent of any covered person.

SEC. 1127. INSERT AND NOTICE PROVISIONS.

(a) Inclusion in Statements of Covered Persons.–

(1) IN GENERAL.–Each covered person shall include, or cause its agent to prominently include, a statutory insert or an Association insert in quarterly mailings to its customers each year.

(2) STATUTORY INSERT.–The Association shall have the right to have statutory inserts prominently included in the paper mailings to the customers of each covered person once each calendar quarter. The Association shall also have the right to have covered persons send the information contained in the statutory insert to financial services consumers once each calendar quarter via email, digital or other electronic means. The Association shall only pay the reasonable incremental costs of the email, digital, or electronic distribution of such information.

(3) ASSOCIATION INSERTS.–

(A) IN GENERAL.–In addition, the Association shall have the right to include in the mailings and via email, digital or other electronic means, referred to in paragraph (2) once each calendar quarter, an insert that it prepares and furnishes to any institution required to carry a statutory insert.

(B) LIMITATION.–An insert furnished by the Association shall be limited to–

(i) soliciting information and contributions or membership fees from financial services consumers; and

(ii) explaining–

(I) the purpose, history, nature, activities, and achievements of the Association;

(II) that the Association membership is open to any resident of the United States who is 16 years of age or older;

(III) that the Association is not connected to any covered person;

(IV) that the Association is a nonprofit association directed by its financial services consumer members;

(V) the procedure for contributing to or becoming a member of the Association; and

(VI) the yearly membership fee.

(b) Federal Trade Commission Oversight.–Any covered person may, if it believes that the contents of an insert are false or misleading, submit the insert to the Federal Trade Commission for review. The Federal Trade Commission shall review the insert and make a determination promptly, but in no event later than 21 calendar days after receipt of the insert. The Federal Trade Commission may disapprove the insert for mailing if it finds that the insert is false or misleading, or contains information not permitted by this section.

(c) Content of Statutory Inserts.–Each statutory insert required by this Act shall contain–

(1) a written statement of the following information:

“(A) The Financial Consumers Association is a financial services consumer membership organization established under Federal law to inform and represent financial services consumers.

“(B) The Association will work on behalf of financial services consumers to prevent corporate fraud, deceptive and criminal business practices, and to ensure the protection of retirement funds and investments.

“(C) The Association provides financial services consumers with information and advice on a range of consumer issues.

“(D) The Association also represents financial services consumers before regulatory agencies and legislative bodies.

“(E) The Association is a democratically controlled consumer membership organization.

“(F) Although the Association has been established under Federal law, as a consumer membership organization, the Association is primarily supported by membership fees, not public funds. Thus the Financial Consumers Association depends on its membership base for funding to undertake its information and representation activities.

“(G) Anyone who is 16 years of age or older may become a member of the Association by paying the annual membership fee. The amount of the annual membership fee shall be determined annually by the Association.

“(H) You may become a member simply by filling out the attached application and mailing it and the membership fee to the Financial Consumers Association in the attached pre-addressed envelope;”;

(2) an application for Association membership, which requests the name and address of the applicant, and indicates the annual membership fee; and

(3) a pre-addressed business reply envelope for mailing the application and membership fee to the Association.

(d) Other Requirements Applicable to Statutory Inserts.–With respect to a statutory insert required by this Act–

(1) the statement, application, and pre-addressed business reply envelope specified in this Act shall be presented to the customer as a single document (except that the document may be separable into different parts by tearing along perforated lines);

(2) the statement and application shall be printed in at least 10-point type; and

(3) the Association shall pay the cost of printing and placement of the statutory insert in all appropriate mailings, but shall not pay any postage costs if the insert weighs less than 0.35 ounces.

SEC. 1128. INTERIM BOARD.

(a) Establishment of Interim Board.–Members of the interim board of directors of the Association shall be appointed not later than 6 months after the date of enactment of this Act, as follows:

(1) 3 members shall be appointed by the President of the United States.

(2) 3 members shall be appointed by the Speaker of the House of Representatives.

(3) 3 members shall be appointed by the President Pro Tempore of the Senate.

(4) 1 member shall be appointed by the Minority Leader of the House of Representatives.

(5) 1 member shall be appointed by the Minority Leader of the Senate.

(b) Member Criteria.–Individuals considered for appointment to the interim board shall, to the extent possible, represent different regions of the United States, and represent categories of citizens’ organizations including–

(1) consumer groups;

(2) organizations representing low-income persons;

(3) labor unions;

(4) civil rights groups;

(5) neighborhood groups; and

(6) elderly groups.

(c) Eligibility.–To qualify for nomination or appointment as an interim director of the Association representing a designated category of citizens’ organizations, an individual shall be an active officer, employee, or member of a citizens’ organization within such category or previously have been an officer or employee of 1 or more such citizens’ organizations within such category for a cumulative period of at least 2 years.

(d) Duties of Interim Board.–The interim board of directors of the Association shall–

(1) not later than 60 days after the date of appointment of all members, incorporate the Association under the laws of the District of Columbia, subject to the provisions and limitations of this Act;

(2) manage the affairs of the Association until the first elected board of directors takes office;

(3) inform the public of the existence, nature, and purpose of the Association, and encourage such persons to join the Association, participate in its activities, and contribute to the Association;

(4) adopt procedures and standards, consistent with the requirements of this Act, for

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the nomination and election of the first elected board of directors of the Association;

(5) make all necessary preparations for the first election of the board of directors of the Association, oversee the election campaign, and tally the votes;

(6) conduct meetings of the interim board of directors at least once every 3 months;

(7) keep minutes, financial books, and records which shall reflect the acts and transactions of the interim board of directors; and

(8) employ such interim staff as the interim board of directors deem necessary to carry out their responsibilities under this Act.

(e) Applicability of Certain Other Provisions of This Act.–Members of the interim board of directors shall be subject to the requirements of the applicable provisions of this Act.

(f) Limitation on Authority to Appear Before Other Bodies.–The interim board of directors shall not engage in representation or intervention on behalf of financial services consumers, except to the extent necessary to maintain or exercise the powers granted and the duties imposed upon interim directors by this Act.

(g) Conduct First General Election.–

(1) IN GENERAL.–Once the membership of the Association reaches 50,000, or within 18 months of the date of the appointment of the last interim director, whichever occurs first, the interim board of directors shall set a date for the first general election of the board of directors, and shall promptly notify each member of the Association.

(2) TIMELY ELECTION REQUIREMENT.–The date set for the election shall be not more than 90 days after notification as provided in this Act.

(3) EXCEPTION.–Notwithstanding the provisions of this Act, no election shall be held in an election district unless there are at least 500 residents of any such district who are Association members.

SEC. 1129. DELEGATES.

(a) In General.–Members of the Association shall have duly elected representatives who shall be elected in accordance with the provisions of this Act.

(b) One Delegate To Be Elected From Each District.–1 delegate shall be elected by the Association members from each Association election district, except that an election shall not take place in an election district if there is no candidate who has satisfied the qualification requirements of this Act.

(c) Election Districts.–

(1) IN GENERAL.–Each State of the United States shall be considered an Association election district. The District of Columbia shall also be considered an Association election district.

SEC. 1130. ELECTIONS OF DELEGATES.

(a) Voting Standard.–Each member of the Association shall be entitled to cast 1 vote for a candidate for a delegate to represent such member’s district. Voting shall be by secret mail ballot.

(b) Eligibility Standards for Nomination as a Delegate.–To qualify for nomination as a candidate for election as a delegate of the Association, an individual shall–

(1) be a member of the Association and a resident of the election district that such individual seeks to represent;

(2) submit to the Association, not less than 60 days and not more than 120 days before the election, a nomination petition signed by at least 25 Association members from the election district that such individual seeks to represent;

(3) submit to the Association the statements required by this Act; and

(4) satisfy all other requirements of this Act and any applicable bylaws of the Association.

(c) Distribution of Election Material.–

(1) IN GENERAL.–The Association shall mail to each member the following documents concerning duly nominated candidates for election as a delegate:

(A) An official ballot listing all such candidates from the member’s election district.

(B) The candidate’s statement required by this Act for each such candidate from the member’s election district.

(2) SUMMARY AND COSTS.–The delegate summaries shall have a uniform format and shall provide information on the same characteristics for each candidate. The costs for all mailings described in this Act shall be borne by the Association.

(d) Limitation on Campaign Expenditures.–No candidate for election as a delegate or director shall incur campaign expenditures for any such election in an amount greater than the amount determined by multiplying the number of members in the candidate’s election district by 150 percent of the cost of postage for a 1-ounce 1st class mailing.

(e) Limitation on Use of Campaign Contributions.–No candidate for election as a delegate or to the board of directors may use any campaign contribution for any purpose other than campaign expenditures. Any unused contributions shall be donated to the Association not later than 60 days after the election.

(f) Limitation on Amount of Campaign Contributions.–No candidate for election as a delegate shall accept more than $250 in campaign contributions from any one contributor in any election.

(g) Prohibition on Acceptance of Certain Contributions.–A candidate for election as a delegate may not accept political action committee contributions or other campaign contributions the board of directors determines to be unacceptable.

(h) Duties and Powers of Delegates.–Each delegate shall have the following duties and powers:

(1) ANNUAL SURVEY.–To survey Association members in the delegate’s election district at least 1 time each year to ascertain members’ concerns using written surveys provided by the Association up to 50 percent of the survey questions in which may be provided by the delegate.

(2) LIAISON.–To act as a liaison between the board of directors and the members in the delegate’s election district, including transmitting any comments, writings, and suggestions concerning the Association from members in the delegate’s election district to the board of directors and informing such members of the board’s response to their statements.

(3) OFFICE PLANNING.–To develop plans for the organization of regional and local offices.

(4) VOTING ON CHANGES IN ARTICLES OF INCORPORATION, BYLAWS, AND MAJOR POLICIES.–To vote at the annual meeting of delegates and at special meetings of delegates called by the board of directors on amendments to the bylaws or the articles of incorporation or on matters involving changes in major policies or operations of the Association.

(5) APPROVAL OF RULES.–To approve rules proposed by the board of directors for the nomination and election of the directors.

(6) VOTING AT ANNUAL AND SPECIAL MEETINGS.–To vote on other items submitted to delegates by the board of directors at annual and special meetings.

(7) OTHER DUTIES AND POWERS.–To carry out all other duties and exercise all other powers accorded to delegates under this Act.

(i) Annual Meetings.–

(1) TIME AND PLACE.–An annual meeting of delegates shall be held in the month of July on a date and in a manner determined by the board of directors at least 6 months in advance of the meeting.

(2) PROCEDURES.–

(A) VOTING.–All delegates shall be eligible to attend, participate in, and vote in the annual meeting of delegates.

(B) QUORUM.–A majority of the delegates shall constitute a quorum.

(C) ONE PERSON; ONE VOTE.–Each delegate shall have 1 vote at such meetings.

(D) MAJORITY VOTE.–A majority vote of the delegates shall indicate approval by the delegates of any items submitted for the consideration of the delegates.

(E) ABSENTEE VOTING.–The first elected board of directors shall establish procedures for absentee voting.

(3) AGENDA.–Items may be placed on the meeting’s agenda by any of the following methods:

(A) By request of any director or delegate not less than 5 days and not more than 4 months in advance of the date of such meeting.

(B) By petition which–

(i) contains the valid signatures of at least 5 percent of the members in any delegate’s election district or at least 1 percent of the total membership; and

(ii) was filed with the board of directors not less than 5 days and not more than 4 months in advance of the date of such meeting.

(4) FORM OF MEETING.–The form of the annual meeting of delegates shall be as provided in the laws of the District of Columbia regarding nonprofit corporations.

(5) OPEN MEETINGS.–

(A) MEETINGS OPEN TO PUBLIC.–The annual meeting of delegates shall be open to the public.

(B) MEMBERS OPPORTUNITY TO BE HEARD.–Members shall be given a reasonable opportunity at any annual meeting to present any comment, criticism, or suggestion concerning the Association, but members may not vote at such meetings.

(6) MINUTES.–Complete minutes of each annual meeting shall be kept and shall be distributed to 1 Federal depository library in each election district.

(j) Terms and Conditions of Office.–

(1) IN GENERAL.–The term of office for any delegate shall be 3 years.

(2) MAXIMUM NUMBER OF TERMS.–No delegate shall serve more than 2 terms.

(3) SERVICE WITHOUT PAY OTHER THAN REIMBURSEMENT FOR EXPENSES.–Delegates of the Association shall serve without compensation, except that delegates may be reimbursed for actual expenses incurred by them in the performance of their duties.

(k) Vacancy.–

(1) IN GENERAL.–If a vacancy occurs in any position of delegate, the board of directors shall appoint, as the successor for the balance of the term, the person who–

(A) meets the requirements specified in this Act; and

(B) had the highest vote total in the most recent delegate election from the district in which such vacancy occurred of all candidates (who meet the requirements specified in this Act) other than the candidate whose failure to continue to serve as delegate created the vacancy.

(2) ALTERNATIVE METHOD OF APPOINTMENT.–If any vacancy referred to in paragraph (1) cannot be filled in the manner described in such paragraph, the board of directors, by vote of not less than 2/3 of all directors, shall appoint within 60 days of the occurrence of the vacancy a successor from the same election district for the remainder of the current term. The person appointed by

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the board of directors shall meet the qualifications for delegate.

(l) Recall.–Any delegate shall be removed from office by the board of directors if not less than 40 percent of the members from the delegate’s election district who voted in the last election have signed a petition for recall.

SEC. 1131. BOARD OF DIRECTORS.

(a) Management of Association.–The affairs of the Association shall be managed by a board of directors, which shall be elected by the delegates of the Association in accordance with the provisions of this Act. The board of directors shall consist of 17 members. Twelve directors shall constitute a quorum.

(b) One Person; One Vote.–Each director shall have one vote on the board of directors.

(c) Terms of Office.–The term of office for a director shall be 3 years, except as provided otherwise in this Act, and no director shall serve more than 2 consecutive terms.

(d) Powers and Duties of Board.–The board of directors, shall, in addition to its other responsibilities under this Act–

(1) conduct meetings of the board of directors at least once every 6 months, which shall be open to the public, unless the board of directors by a majority votes to adjourn into executive session;

(2) conduct an annual delegate meeting;

(3) limit matters discussed in executive session only to personnel actions, potential or pending civil or criminal proceedings involving the Association, and material which would result in an unwarranted invasion of personal privacy if discussed in open sessions;

(4) keep minutes, financial records, and other records which shall reflect the acts and transactions of the board of directors;

(5) cause the financial books of the Association to be audited by a qualified certified public accountant at least once each fiscal year;

(6) prepare quarterly statements and an annual report indicating the substantive activities and financial operations of the Association;

(7) approve the bylaws of the Association, consistent with the requirements of this Act;

(8) make available to the public and include on the Association’s web page, documents prepared by or filed with the Association within the preceding 5 years, including–

(A) minutes of the board of directors meeting;

(B) director’s or executive director’s financial statements;

(C) candidates’ financial statements; and

(D) candidates’ personal statements; and

(9) conduct 4 mailings each year to the membership of the Association, to inform the membership about the work of the Association and to conduct the business of the Association.

(e) Election of Officers.–At the first regular meeting of the board of directors at which a majority of its members are present, subsequent to the installation of new directors following each annual election, the board shall elect by majority vote of directors present and voting, and from among the directors, a president, a vice president, a secretary, and a treasurer. The board may also elect a comptroller and such other officers as it deems necessary.

(f) Executive Director of Association.–

(1) IN GENERAL.–The board of directors shall hire and supervise an executive director for the Association.

(2) DUTIES OF EXECUTIVE DIRECTOR.–The executive director shall implement the policies established by the board of directors, employ and discharge Association employees, and manage the offices, facilities, and employees of the Association.

(3) ELIGIBILITY STANDARDS.–Any applicant for the position of executive director, and each executive director, shall satisfy the requirements for director eligibility established by this Act.

(4) TERM LIMIT.–The executive director shall only be eligible to serve as an employee of the Association for 6 consecutive years. After such 6-year term, the executive director shall be prohibited from serving as an agent, consultant, attorney, accountant, or subcontractor for the Association, and shall be ineligible to receive any monetary compensation from the Association.

(g) No Compensation for Association Directors.–A member of the board of directors of the Association may not receive any compensation for his or her services as a director, but shall be reimbursed for wages actually lost in an amount not to exceed $160 per day, and for necessary expenses including travel expenses incurred in the discharge of Association duties.

(h) Bonding Requirement for Staff.–Any director or staff of the Association eligible to receive, handle, or disburse funds on behalf of the Association shall be bonded. The cost of such bonds shall be paid for by the Association.

(i) Annual Financial Statements of Directors.–Each director and the executive director of the Association shall file annually with the board of directors a director’s financial statement, which shall include the same information required by this Act for members seeking election as delegates or directors of the Association.

(j) Annual Meetings.–

(1) IN GENERAL.–An annual meeting of members of the Association shall be held in the month of July, on a date and at a place within the United States to be determined by the board of directors at least 6 months in advance of the meeting.

(2) AGENDA.–Items may be placed on the annual meeting agenda–

(A) by request of any director, not less than 10 days and not more than 4 months in advance of the date of such meeting; and

(B) by petition containing the valid signatures of at least 500 members of the Association, which petition shall be filed with the board of directors not less than 10 days and not more than 4 months in advance of the date of such meeting.

(3) NOTICE OF AGENDA.–The executive director shall present proposed agenda items to the membership through its regular mailings.

(4) PUBLIC MEETINGS.–The annual meeting of Association members shall be open to the public, except that seating preference shall be given to Association members. Association members shall be given a reasonable opportunity at such meetings to present comments, criticisms, and suggestions concerning the Association.

(5) MINUTES.–Complete minutes of the annual meetings shall be kept and distributed to all depository libraries in the United States and placed on the Association’s webpage.

(k) Vacancy.–In the event that a board member position becomes vacant, the board of directors shall install the person having the highest vote total in the last election who was not elected to the board. If this is impossible, the board of directors, by vote of not less than 2/3 of all directors, shall appoint a successor within 60 days for the remainder of the current term. The person appointed by the board of directors shall meet all qualifications for board members.

(l) Recall.–

(1) IN GENERAL.–Any director shall be removed from the board of directors by the board of directors if not fewer than 40 percent of the delegates or members of a director’s election district who voted in the last election have signed a petition for recall.

(2) LIMITATIONS.–No petition to recall a director under paragraph (1) may be filed within 6 months of his or her election. An election pursuant to the filing of a recall petition shall be conducted in accordance with the provisions of this Act. A director recalled may become a candidate in the election triggered by the filing of the recall petition. The director recalled shall continue to serve until the installment in office of his or her successor, or until his or her reelection. The election triggered by the filing of a recall petition shall be conducted via one of the Association’s quarterly mailings.

SEC. 1132. ELECTION OF DIRECTORS.

(a) Election of the Board of Directors.–

(1) REGULAR ELECTION PROCEDURES.–

(A) ONE DELEGATE; ONE VOTE.–Each delegate shall cast 1 vote for 1 candidate for the board of directors.

(B) TOP 17 CANDIDATES BECOME DIRECTORS.–The 17 candidates receiving the largest number of votes shall become the directors.

(2) RUNOFF ELECTION.–

(A) IN GENERAL.–In the event of a tie involving the 17th position on the board of directors, a runoff election shall be conducted.

(B) VOTING AND CANDIDATE ELIGIBILITY.–Any delegate may vote for 1 candidate in the runoff election, and only those nominees involved in the tie that included the 17th position shall be eligible for the runoff election.

(3) APPLICABILITY TO ALL BOARD ELECTIONS.–The requirements of this section shall apply to the first election of directors conducted by the interim board of directors pursuant to this Act, as well as to all subsequent elections.

SEC. 1133. QUALIFICATIONS.

(a) Candidate’

s Statement.–Any person seeking nomination as a candidate for election to the board of directors of the Association shall file a candidate statement with the Association, not less than 60 days and not more than 120 days prior to the election. The contents of a candidate statement may not contain false statements, and the Association may, by bylaw or interim board of directors’ procedure, impose a uniform limitation on the length of all candidate statements.

(b) Financial Statement.–Any person seeking nomination as a candidate for election to the board of directors shall file with the Association, not less than 60 days and not more than 120 days prior to the election. Each candidate’s financial statement shall include the following information for the candidate and the immediate family of the candidate:

(1) PRECEDING 5 YEARS’

BUSINESS AND FINANCIAL RELATIONSHIPS.–A detailed list of any business or financial relationships during the preceding 5 years with any covered person or organization of covered persons, including any attorney, legislative agent, officer, or director relationship.

(2) CURRENT AND PRECEDING 5 YEARS’

CORPORATE POSITIONS.–A list of all corporate and organizational directorships or other offices and all fiduciary relationships currently held or held at any time during the preceding 5 years.

(3) INVESTMENTS OF $1,000 OR MORE IN ANY FINANCIAL SERVICES CORPORATION.–A list of all financial services corporations in which the candidate holds securities worth $1,000 or more at current market value and the dollar value of each such holding.

(4) OTHER INFORMATION.–Such other information as the board of directors may require by bylaw.

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(c) Affirmation of Truth of Statements.–Each candidate for election as a delegate or director shall affirm in writing, that the information in such candidate’s financial statement is true and complete and that the candidate has complied with all the campaign contribution and campaign expenditure requirements of this Act and any such bylaws of the Association. Each candidate shall furnish the board of directors with such information regarding campaign contributions and expenditures as the board may request.

(d) Ineligibility of Interim Directors and Staff During First Election.–No interim director shall be eligible for election as a delegate or director during the first election. The executive director and other Association staff persons, including interim staff persons, shall not be eligible for election as a delegate or director while serving as executive director or staff person, or for 1 year after such service is terminated.

(e) Ineligibility of Delegates and Directors to Hold Other Public Office.–No delegate or director shall hold any elective Federal, State, or local office or be a candidate for such office, or be appointed to hold such office, unless such appointee receives no compensation other than reimbursement of expenses.

(f) Ineligibility of Officers, Directors, Employees, and Shareholders of Covered Persons.–Any director, officer, or employee of a covered person, any person who owns common stock or other securities of covered persons in an aggregate amount in excess of $10,000, any agent, consultant, attorney, or accountant for a covered person, and any member of the immediate family of any such person shall be ineligible to be a delegate or a director.

(g) Ineligibility of Officers and Employees of Federal or State Depository Institution Regulatory Agencies.–No officer or employee of any State or Federal agency that regulates depository institutions or any member of the immediate family of any such officer or employee shall be eligible to be a delegate or a director.

(h) Ineligibility of Officers and Employees of Agencies.–No officer or employee of any Federal, State, or local agency that regulates any covered person shall be eligible to be a director of the Association.

SEC. 1134. BALLOT ISSUES.

(a) Procedure for Obtaining Membership Vote on Issues.–Issues may be placed on a ballot for vote by the general membership if–

(1) a majority of the board of directors votes to place an issue before the membership for vote;

(2) a petition is received by the board of directors which–

(A) contains the valid signatures of at least 1,000 members in any district or at least 1 percent of the total membership; and

(B) requests that an issue be placed on a ballot is received by the board of directors; or

(3) a majority of the delegates vote to place an issue before the membership for a vote.

(b) Procedures for Conducting Vote on Issues.–

(1) TIME FOR ELECTION.–Upon certification of a vote of the directors or delegates which meets the requirements of paragraph (1) or (3) of subsection (a) or the receipt of a petition which meets the requirement of subsection (a)(2), the board of directors shall place the issue on a special ballot and schedule a date for a vote on the issue to be held within 2 months after receipt of the certification or petition.

(2) MAIL BALLOT.–The board of directors shall send or have sent by mail to each member, not later than 30 days after receipt of a petition or certification pursuant to this section, an official ballot containing the issue for membership vote.

(3) VOTE CAST BY RETURN MAIL.–Each member may cast a vote regarding the ballot issue by returning the ballot, properly marked, to the head office of the Association by the date and time fixed for the balloting pursuant to this subsection.

(4) SECRET BALLOT.–Voting shall be by secret ballot.

(5) VOTE TALLY.–The board of directors shall tally votes with all reasonable speed and inform the membership and delegates promptly of the outcome of the vote.

SEC. 1135. ACCESS TO MEMBER MAILINGS.

No person may use any list of members of the Association, or any part of such list, for purposes other than the conduct of the business of the Association, as prescribed in this Act. The board of directors shall, however, develop criteria for providing Association member access through Association mailings to the Association’s membership for Association purposes only. No person shall disclose any such list or part thereof to another person, unless there is substantial reason to believe that such list or part thereof is intended to be used for the lawful purposes described in this Act.

SEC. 1136. PROHIBITED ACTS.

(a) Covered Persons.–No covered person or officer, employee, or agent of any covered person may interfere or threaten to interfere with or cause any interference with the provision of financial services of, or penalize or threaten to penalize or cause to be penalized, any person who contributes to the Association or participates in any of its activities, in retribution for such contribution or participation.

(b) General Prohibition.–No person may act with intent to prevent, interfere with, or hinder the activities permitted under this subtitle.

SEC. 1137. PENALTIES.

A violation of any provision of this subtitle by a covered person or officer, employee, or agent thereof or of the Association shall be subject to a civil penalty of not more than $10,000 for each violation, to be levied by the Federal Trade Commission.

SEC. 1138. ADMINISTRATIVE ENFORCEMENT.

Compliance with the provisions of this subtitle shall be enforced by the Federal Trade Commission in the same manner and with the same power and authority as the Federal Trade Commission has under the Federal Trade Commission Act (15 U.S.C. 41 et seq.).

SEC. 1139. DISSOLUTION OF THE ASSOCIATION.

If, after the end of the 3-year period beginning on the date on which the Association is incorporated, the Association’s membership remains below 25,000 members during any 1-year period, the board of directors of the Association shall dissolve the Association. Upon the termination, dissolution, or winding up of the Association in any manner or for any reason, voluntary or involuntary, its assets, if any, remaining after the payment or provision for payment of all liabilities of the Association shall be distributed to, and only to, 1 or more charitable organizations. No part of the income or assets of the Association shall inure to any of its members, directors, or officers, or be distributed to any such person during the life of the Association or upon its dissolution, except in payment of a legal obligation owed to such person. At the time of dissolution, any unexpended funds appropriated by Congress for the establishment of the Association shall be returned to the United States Treasury.

SEC. 1140. REPORTS.

(a) Report to the President and Congress.–

(1) IN GENERAL.–The Association shall prepare and submit to the President and the appropriate committees of Congress, at the beginning of each regular session of Congress, a report on the Association’s activities for the preceding fiscal year.

(2) REPORT CONTENT.–The reports required by this subsection shall include–

(A) an appraisal of the performance of Federal financial regulatory agencies, including reports on the compliance of Federal financial regulatory agencies with their legal missions and mandates;

(B) the extent to which regulatory agencies should disseminate specified information to the research and consumer communities and consumer information to the public;

(C) an appraisal of significant actions of State and local governments relating to the protection of financial consumers;

(D) recommendations for financial consumer protection legislation; and

(E) an overview of covered persons’ compliance with the law.

SEC. 1141. RELATIONSHIP TO EXISTING LAW.

Nothing in this Act shall be construed to limit the right of any individual or group of individuals to initiate, intervene in, or otherwise participate in any proceeding before a regulatory agency or court, nor to relieve any regulatory agency, court, or other public body of any obligation, or affect its discretion to permit intervention or participation by a consumer or group or class of consumers or citizens in any proceeding or activity.

SEC. 1142. CONSTRUCTION.

The provisions of this Act shall be construed in such a manner as best to enable the Association to effectively represent and protect the interests of financial services consumers.

SEC. 1143. SEVERABILITY.

If any provision of this Act shall be declared invalid, the other provisions of this Act shall remain in effect.