Why we need regulations even if they cost:

As lead paint lawsuit drags on, children suffer
WORKMEN REMOVE lead paint at one of the historic beach cottages at Orange County’s Crystal Cove State Park in April 2004 as part of a renovation project. Lead paint was outlawed for residential use in the U.S. in 1978. (Mark Boster Los Angeles Times)
MICHAEL HILTZIK
No one is willing to swear that the lawsuit by 10 California cities and counties against three lead paint manufacturers is the longest-running litigation in the state courts.
They only know two things: that thousands of children are still being poisoned every year by deteriorating lead paint used in homes before 1980, and that the lawsuit to force the companies to pay for the cleanup has been in court for 17 years, with no end in sight.
That’s frustrating for public health officials, because lead poisoning is a major health threat to children. Even though lead paint was outlawed for residential use in the U.S. in 1978, the residue from its decades of use is today the primary source of child lead poisoning. That’s especially true in rental units in low-income neighborhoods where housing stock is poorly maintained, occupants don’t have the resources for upkeep, and children can ingest paint chips and breathe in lead-contaminated dust.
“Lead is common, the health problems it causes are severe, it affects children, and it’s preventable,” says Jeffrey Gunzenhauser, the interim health officer and medical director for Los Angeles County. “It’s at the top of our list of environmental threats.”
Although the rate of lead poisoning has come down sharply in recent years, more than 2,000 children still test positive for lead in their bloodstream each year in L.A. County. The actual number is almost certainly higher, because children aren’t routinely screened for lead unless they’re seen by a pediatrician. Nationwide, the Centers for Disease Control and Prevention estimates that more than 4 million American households have children exposed to high levels of lead.
The California lawsuit, which was originally filed in state court in Santa Clara in 2000, has become a symbol of the inability of the judicial system to meet an urgent social need. In January 2014, Judge James P. Kleinberg held three companies — ConAgra Grocery Products Co., NL Industries and Sherwin-Williams Co. — liable for the costs of inspecting more than 3.5 million California homes and apartments and removing or abating residual lead hazards. That means painting over deteriorating surfaces and removing lead chips and dust, especially in units housing children.
Kleinberg assessed the companies $1.15 billion. Most of the money, $632.5 million, was designated for Los Angeles County, where the vast majority of suspect units are located.
The companies promptly appealed and filed briefs by early 2015, but there the matter has rested. The San Jose court hearing the appeal hasn’t even set a date for oral arguments. In the meantime, not a dime has been paid.
The prospect of a billion-dollar fund to abate a known hazard beckoning just out of reach only heightens the frustration for medical authorities.
“From our point of view, prevention is a simple solution,” Gunzenhauser told me. Children who test positive for lead poisoning can be treated, he says, “but why should we wait till children are sick and their growth is at risk because of lead?” The funding ordered by Kleinberg would “allow us to stop worrying about the treatment part and remove the problem upfront.”
The delay in resolving the lawsuit is partially due to a state law requiring appeals judges to rule on a case within 90 days of oral arguments. The law gives judges an incentive to defer a hearing until they’re almost ready to issue a decision. But the cities and counties have based their lawsuit on an unusual legal argument, which the manufacturers are determined to fight to the bitter end.
Instead of suing the paint manufacturers on product liability grounds, the cities and counties argued that the companies created a “public nuisance.” That’s a centuries-old legal doctrine, but one almost never invoked in a case like this. Often it’s used by municipalities to combat ongoing activities, such as a homeowner operating a crack house or a factory with noxious emissions, “not to something that happened decades ago,” says Sean Hecht, an environmental law expert at the UCLA law school.
Public nuisance law provides recourse against anyone who “obstructs a public right,” Hecht says. “That language has never been construed in a case that looks just like this one. The question is whether it’s ‘obstruction of a public right’ to have put lead paint on all these buildings. Although [this case] is much wider in scope than most public nuisance cases, there’s an argument that it’s exactly the kind of thing that public nuisance law is meant to address.”
Public nuisance claims against lead paint manufacturers have failed in other states. Rhode Island won a trial in 2006 against three manufacturers, including NL and Sherwin-Williams, but the verdict was overturned by the state’s Supreme Csourt.
The basis of the California lawsuit is that the defendant companies’ predecessors understood the health hazard of lead paint but nevertheless energetically promoted its use as a key to improving the durability and water-resistance of house paint. The dangers of lead had been known “since antiquity,” Judge Kleinberg observed, and as early as the 19th century manufacturers were taking steps to warn their own workers against breathing lead dust on the factory floor.
Articles warning about children’s propensity to gnaw on painted surfaces and become poisoned with lead were common in medical journals by the 1920s: “A child lives in a lead world,” advised a 1924 paper. By the 1930s, parents were warned to avoid using lead-based decorative materials in children’s nurseries and bedrooms.
Yet the industry kept advertising residential lead paint — “Lead helps to guard your health,” declared a 1923 magazine ad for Dutch Boy lead paint placed by National Lead Co., the precursor to NL Industries. “Property owners … are using white-lead paint to prolong the lives of their houses.”
Even once they began to acknowledge the dangers, the industry showed “a disdain for the families,” says Nancy Fineman, an attorney for the cities and counties. In a 1956 letter introduced in court, Manfred Bowditch, the director of health and safety for the Lead Industries Assn., complained to an Interior Department official about a Parade Magazine article reporting on lead hazards in the home. While acknowledging that the article was “mainly factual,” he asserted that the problem was concentrated in “the slums.”
“ Aside from the kids that are poisoned,” Bowditch wrote, “it’s a serious problem from the viewpoint of adverse publicity. The basic solution is to get rid of our slums, but even Uncle Sam can’t seem to swing that one. Next in importance is to educate the parents, but most of the cases are in Negro and Puerto Rican families, and how does one tackle that job?”’
Evidence of the danger lead exposure poses for young children has become more alarming over the years. In 2012, the Centers for Disease Control and Prevention ceased setting minimum acceptable standards for children’s blood lead levels. That was based on scientific studies that couldn’t identify any concentration that didn’t have “deleterious effects” on children’s health. The only proper approach, the CDC said, is prevention “to ensure that no children in the U.S.” live in buildings with lead paint.
The defendants argue that such hazards weren’t known when residential lead paint was widely marketed. “This is litigation by hindsight,” says Antonio F. Dias, an attorney for Sherwin-Williams. “You’re applying today’s standards as if they existed in the early 1900s.”
He says that the risks to factory workers can’t be equated to those that developed decades later. ConAgra declined to comment on the case and a representative for NL Industries, now a holding company, could not be reached.
“Workers were literally working in clouds of dust,” Dias says. “There is absolutely zero evidence to suggest that anyone knew of the risks associated with old, deteriorating lead-based paint.” The paint industry learned of the dangers at the same time as the rest of the public in the 1940s, and then worked to develop alternatives, he says. “There is not a shred of evidence that these companies ever concealed anything concerning the medical or health risks associated with lead paint.”
Dias argues further that the problems presented by deteriorating lead paint is really one of housing code enforcement, which is a government responsibility. “There’s a question of whether the state and local governments were doing enough to enforce the housing code,” he says. The plaintiffs are going after the wrong targets, he says. “If there’s a public nuisance, shouldn’t the property owners be looked at?”
The scale of childhood lead poisoning remains dire, its victims facing lifetime consequences of stunted intellectual development as well as cardiovascular, immunological and endocrine problems. After 17 years, whether the public nuisance doctrine is adequate to meet their needs remains a question mark. But if not, what then?
Keep up to date with Michael Hiltzik. Follow @hiltzikm on Twitter, see facebook.com/hiltzik or email michael.hiltzik@latimes.com .

Mindless Consumerism-To Each His or Her Own:

Car sales boom, fears of bust grow
Longer terms, looser lending keep market rolling, but more loans are going south
HEATHER MILNE BARGER with her family’s new Subaru Outback at their La Mesa, Calif., home. The dealership took $2,300 off the list price and offered a no-interest loan. With her are her husband, Kelly, and children Tabitha and William. (Hayne Palmour IV San Diego Union-Tribune)
By James Rufus Koren
H eather Milne Barger and her husband knew it was about time to replace their 12-year-old Honda Civic hybrid this year — not only because it was showing its age, but because they knew there were bargains to be had.
“There were a lot of deals that dealerships were having, and cheap financing,” said Milne Barger, 44.
Sure enough, when the La Mesa, Calif., couple bought their new Subaru Outback in February, the dealership knocked $2,300 off the $29,400 list price — and offered them a no-interest loan.
Indeed, there’s rarely been a better time to buy a car or truck.
New-vehicle sales have set records in each of the last two years — juiced by continuing low interest rates, incentives and generous lending practices.
Now, America is awash in cars and trucks, and sales are on track to decline this year for the first time since the recession.
That means manufacturers and lenders will have to make sales and loan terms even more attractive than they have been if they want to maintain volume.
Carlos Badosa has sold cars at Toyota dealerships for almost 40 years, through boom times and lean years, but he’s never seen deals quite like he has lately.
Over the last few months, the Japanese carmaker has begun offering rebates of at least $2,000 on every model — and twice that amount for some slower selling sedans.
“That’s unheard of,” said Badosa, 62, finance director at Toyota of Downtown L.A., who expects the deals might get even sweeter.
“I think inventories are very, very high. They have a whole lot of cars,” he said. “They need to get somebody to buy them. ”
The Bargers have excellent credit, but car dealers and lenders have also been luring buyers with spottier credit records. And the results have been predictable.
A growing number of loans have been issued to subprime borrowers over the last few years and they’ve started to go bad at rates not seen since the Great Recession.
“It raises the question: How does this end?” said Moody’s rating analyst Jason Grohotolski. “I feel like we’re at an inflection point, and it’s hard to tell at the moment whether discipline will prevail or loosening will continue.”
At his downtown Toyota dealership, Badosa has noticed not only sweeter incentives but also plenty of easy credit offered by lenders, including Toyota’s in-house financing arm, as well as credit unions and specialty finance companies.
Lenders increasingly have been willing to make loans to customers who have limited credit histories. They’re also more willing to offer longer terms.
At the beginning of 2010, the average auto loan in the U.S. lasted 62 months. By the end of last year, the average had risen to 68, or more than 5½ years, according to Moody’s research.
And 32% of loans had terms of longer than six years — up from 29% just a year earlier. Longer terms allow buyers to lower monthly payments or to buy more expensive vehicles.
Badosa has even seen an uptick in seven-year loans that carry higher rates of interest.
“It’s still a small percentage, but it’s getting more common,” he said. “I don’t like it. It doesn’t do the customer any good, but when people want a car bad enough ... we’ll find a way to get it for you.”
The last several years have already seen a big increase in auto lending, including subprime lending.
At the end of last year, Americans owed about $1.2 trillion in auto loan debt, a record amount, and car loans now represent more of total household debt — 9.2% — than they have since the end of 2002.
Roughly a quarter of that debt is owed by borrowers with subprime credit scores, according to the Federal Reserve Bank of New York and credit bureau Equifax. Although that’s a smaller percentage of overall auto debt than during the run-up to the recession, it’s a record amount. And a growing number are falling behind on their loans.
Two percent of subprime auto loan borrowers were more than 90 days behind — considered seriously delinquent — in the third quarter, up from 1.4% at the end of 2012, according to the New York Fed.
As those borrowers drive up delinquency rates overall, some lenders, especially banks, have tightened their credit standards, requiring higher scores and larger down payments. But others, particularly finance companies that specialize in loans to subprime borrowers, are moving in the opposite direction.
Paul Kerwin, chief financial officer of Westlake Financial Services, a Mid-Wilshire auto lender that specializes in high-interest loans to customers with weak credit, said many of Westlake’s competitors have been too willing to offer risky loans.
Instead of Westlake’s typical loans for $10,000 or $12,000 that are paid off in four years or so, some lenders are offering much larger loans and longer terms.
“When lenders loosen, you get a $20,000 loan and a 72-month term, and now that’s just coming back to bite everyone,” Kerwin said. “A lot of it is putting a customer in too much car.”
In December, the average new car sold for a record $35,309, an increase of nearly $1,000 over the average paid in December 2014, according to auto information provider Kelley Blue Book. The firm cited a sudden shift toward trucks and sport utility vehicles as the key factor driving up prices.
That has given rise to a worrisome trend: Americans are trading in their cars for less than they still owe on their car loans.
Now they need loans to cover the cost of their new vehicle and the remainder of what they owed.
Ivan Drury, an analyst at Santa Monica car-buying site Edmunds.com, found that in the first two months of this year, about 33% of new-car buyers who made a trade-in were underwater, owing an average of $5,195 more than their old vehicle’s trade-in value. That’s the highest percentage and dollar figure on record.
“People who are trading in these cars, they’ll either have to pay off their last car loan on the spot, or they’re going to tack another $5,000 on to a $34,000 car loan,” said Drury, who suspects these customers are indulging desires rather than filling needs. ”You’re seeing some wild behavior.”
There’s an added wrinkle. All these years of new-car sales have dumped millions of vehicles into the used-car market, leading to a steep decline in used-car values.
According to data compiled by Edmunds.com, 3-year-old compact cars sold in early 2014 fetched an average of $12,194. In the first two months of this year, 3-year-old compacts were selling for an average of $11,173.
That’s part of what’s pushing carmakers to offer generous incentives on new cars, but it could be a problem for buyers hoping to trade in a car. It’s also problematic for lenders: When borrowers default and lenders repossess and resell their vehicles, lenders can expect to take bigger losses.
Despite all that, investors continue to pile in to bonds backed by auto loans, including subprime debt, ensuring a steady supply of capital for more new loans.
Steven Wald, an analyst at downtown L.A. investment firm DoubleLine Capital, said that while delinquencies have risen, bonds backed by auto loans remain attractive because of low yields on other investments.
“The market has taken the recent headlines in stride,” Wald said. “Recent deals have been oversubscribed. There’s no shortage of demand from an investor point of view.”
Wald said DoubleLine, which manages more than $100 billion in assets, has invested only in the most senior types of auto-loan-backed bonds — ones that are repaid first and are therefore less likely to be affected by defaults.
Still, the uptick in delinquencies on subprime auto loans has stoked fears of a bust akin to the subprime mortgage meltdown.
“What is happening in this space today reminds me of what happened in mortgage-backed securities in the run-up to the crisis,” Thomas Curry, the nation’s top bank regulator, said in an October 2015 speech. “Although delinquency and losses are currently low, it doesn’t require great foresight to see that this may not last.”
But some investors and analysts say it’s not a good comparison. Even with auto debt at a record high of $1.2 trillion, that still represents less than 10% of overall household debt. Americans owe more in student loans, and both of those types of debt are dwarfed by the $8.5 trillion that Americans owe on their houses.
What’s more, when Americans were taking out risky home loans before the recession, many were assuming that they’d be able to sell for a profit in a few years or refinance once their home gained value. That kind of speculative behavior doesn’t happen with cars and truck loans, which most buyers intend to pay off.
Cars also are necessities for many Americans.
A study by credit bureau TransUnion found that between 2004 and 2013, Americans who had a mortgage, a credit card and an auto loan paid their auto loans most often , with the other two types of debt fighting for second priority.
The lending industry has an oft-repeated and crass explanation for this: “You can sleep in your car, but you can’t drive your house to work.”
Some in the industry, including the National Auto Dealers Assn., expect auto sales to stay strong this year. The association estimates sales of 17.1 million new cars and trucks this year — down from 17.5 million last year, but still a historically high figure.
Others, though, say a more significant slowdown is almost inevitable. Mark Wakefield, an auto industry analyst at consulting firm Alix Partners, expects an annual sales decline of 15% to 20% from last year’s peak by 2019.
“This is a cyclical market. It’s always been a cyclical market,” Wakefield said. “The idea that we’re going to plateau, to us it doesn’t really hold water.”
Auto sales have more or less plateaued before, about a decade ago, but Wakefield said U.S. automakers were only able to make that happen by offering massive incentives that cut into profitability. He doesn’t expect them to accept dramatically lower profits this time around.
A decade ago, the automakers had more overhead, more workers, more pension obligations and factories that were less flexible, making it hard to accept lower sales, said Matthew Stover, an auto industry analyst at Susquehanna Financial Group. But after the federal bailouts, bankruptcies and corporate rejiggerings, the automakers aren’t as dependent on keeping up that volume.
“They don’t have these massive, unfunded liabilities that they just have to fund,” Stover said. “In 2004, Ford didn’t have a choice. They couldn’t say ‘ No mas .’ But they can in 2017.”
james.koren@latimes.com

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Trump scrambles for a win
As the 100-day milestone nears, his efforts may hit a wall.
By Laura King
WASHINGTON — The White House on Sunday urged lawmakers to make progress this week on a high-profile issue like healthcare or tax reform — or at least to avoid the disruption and embarrassment of a federal government shutdown on Friday, a day before President Trump marks his first 100 days in office.
But Trump’s hopes for a tangible win before Saturday’s symbolic milestone appear snagged in a brewing showdown over his efforts to get Congress to also provide up to $5 billion to start building a massive and hugely expensive wall on the Southwest border.
That fight could leave the White House with the unpalatable choice of allowing a government shutdown after money runs out on Friday, or publicly backing away from a confrontation with Democrats who have adamantly refused to add border-wall money into a stopgap spending bill.
Even some Republicans say that the wall can wait and that the political and economic costs of a government shutdown aren’t worth it.
But Trump also faces an uphill fight this week in seeking both to repeal and replace the Affordable Care Act, after his first attempt collapsed in Congress last month, and to set the agenda for a sweeping tax overhaul, as he has promised.
Ever since the 1930s, new presidents have sought to take advantage of their first 100 days in office, traditionally a honeymoon period of public goodwill, to try to notch landmark legislative achievements. Most, including Trump, laid out an ambitious agenda of what they planned to achieve in that period.
Trump, dogged by some of the lowest poll ratings at this point in a modern presidency and a failure so far to get any major bills through the GOP-led Congress, has belatedly ridiculed the 100-day mark as arbitrary and meaningless.
But he also has planned a campaign-style rally in Pennsylvania on Saturday to tout his initial accomplishments, returning to a political base whose loyalty he has largely retained despite some stinging early setbacks.
Making the Sunday talk-show rounds ahead of a consequential week, senior Trump aides played down the prospects of a government shutdown, while suggesting the president would hold fast to his demand to add money for border security — if not the wall itself — to the catchall measure meant to keep the government afloat until Sept. 30, the end of the fiscal year.
“I’m pretty confident we’re going to get something that is satisfactory to the president in regard to border security within current negotiations,” Trump’s chief of staff, Reince Priebus, said on NBC’s “Meet the Press.”
John F. Kelly, the secretary of Homeland Security, made a similar prediction on CNN’s “State of the Union” about Trump’s determination to build the wall.
“I would suspect he will be insistent on the funding,” Kelly said.
Trump’s budget director, Mick Mulvaney, expressed confidence that talks between Republican and Democratic leaders would lead to a solution that will keep the government solvent after Friday.
“I don’t think anybody foresees or expects or wants a shutdown,” he said on “Fox News Sunday.”
Throughout his campaign, Trump has insisted that Mexico would pay for the wall, which is likely to cost tens of billions of dollars. On Sunday, he took to Twitter to declare that was still the long-term plan.
“Eventually, but at a later date so we can get started early, Mexico will be paying, in some form, for the badly needed border wall,” he tweeted.
Mexican officials have repeatedly and angrily rejected Trump’s demand. President Enrique Peña Nieto abruptly canceled a planned visit to the White House over the dispute early in Trump’s term, and relations remain fraught.
Trump also has sought to pivot from last month’s stunning collapse of Republican efforts to bring a GOP-authored healthcare measure to the House floor to replace Obamacare. Republican infighting derailed the effort, and GOP leaders in the House pulled the bill before a vote to avoid a humiliating loss.
Although far-right and moderate Republicans apparently have not resolved their disputes over what a new health plan should contain, the president has said he wants a House vote in the coming week.
On Sunday, though, Priebus sought to de-emphasize the notion that a vote had to come before Saturday’s 100-day mark, saying that it did not matter it it came “Friday or Saturday or Monday.”
“It’s a marathon, not a sprint,” he said in the NBC interview.
The White House has not put forward its own healthcare plan, and Trump has given little guidance as to what he thinks should be in the House plan — or how he would then get it past the Senate, where the likely House bill would face strong opposition.
Trump sought on Sunday to put pressure on the Democrats by renewing a threat to withhold funding for insurance subsidies. The Affordable Care Act, he said on Twitter, is in “serious trouble. The Dems need big money to keep it going — otherwise it dies far sooner than anyone would have thought.”
Democrats, in turn, say they have zero interest in helping Trump eviscerate a healthcare bill that Democrats had sought for decades and has helped provide health insurance to more than 20 million Americans since it was passed in 2010.
With a further eye toward big-picture initiatives, the White House said Trump would outline a tax plan midweek. Individual and corporate tax cuts were centerpieces of the president’s campaign promises last year, and he has touted it as a top priority for his administration.
Aides, however, sought to dampen expectations as to how detailed that tax plan might be. Mulvaney said Trump would lay out “governing principles” and provide an indication of expected tax rates, but not necessarily at the granular level.
“I don’t think anybody expects us to roll out bill language on Wednesday,” he said on Fox.
The border wall, though, was shaping up as uncertain ground for a White House searching for an emblematic show of strength in the coming week. Democrats not only renewed their long-standing objections, but also pointed to support from across the aisle for their unyielding stance.
“Democrats do not support the wall,” House Minority Leader Nancy Pelosi of San Francisco said on NBC, adding pointedly, “Republicans on the border states do not support the wall.”
Sen. Marco Rubio (R-Fla.), a onetime aspirant for the GOP presidential nomination, said “a conversation and a debate” about the border wall were “worth having” for the midterm elections in 2018.
“But we cannot shut down the government right now,” he said on CBS’ “Face the Nation,” citing international tensions including North Korea and Syria.
He also noted uncertainty surrounding the French presidential election, whose field on Sunday narrowed to two contenders, including far-right standard-bearer Marine Le Pen.
“The last thing we can afford is to send a message to the world that the United States government, by the way, is only partially functioning,” Rubio said.
laura.king@latimes.com
Twitter: @laurakingLAT

Actually President Trump has done way more than 10 despite having the dems and the reps working against him. President Trump has over 4000 days left to complete where he is going to take our Country. If he slips we will be the first to call him out. This man and us are going to shove your anti-American ways down your throats. We are GOING TO MAKE AMERICA GREAT AGAIN despite you ugly americans. If you don't like what this Country represents, please leave. The way you are acting is going to get you killed. Mike