April 6 was an historic day for consumers. On that day, the Department of Labor (DOL) issued the so-called Fiduciary Rule. The Fiduciary Rule, which has been years in the making and has been vigorously opposed by industry, will require retirement investment advisors to act in the best interests of the consumers they are advising.
This week was the most active week in Springfield so far this year. Friday, April 8 is the deadline for bills to pass out of committee. For Woodstock and our legislative priorities, the week was mostly successful.
Leading up to and since the National Community Reinvestment Coalition (NCRC) conference in March, Woodstock Institute has been part of the surge in work on, and interest in, small business lending and Community Reinvestment Act (CRA) issues at local and national levels.
Illinois’s legislative session is in full swing, and Woodstock is monitoring many bills that fall within the scope of our mission: to create a just financial system in which lower-wealth persons and communities as well as people and communities of color can achieve economic security and prosperity. Here are some of the bills that we are supporting this session.
As I look at the current landscape in search of barriers to economic security and community prosperity and for opportunities to create effective solutions to those problems, I am excited about the year ahead and about using Woodstock Institute’s applied research, policy analysis, and coalition-building skills to reduce inequality and to increase equitable lending and investments in under served low- and moderate-income (LMI) areas and communities of color, help people and communities build and preserve wealth; and improve access to safe and affordable financial products, services, and systems.
Woodstock will continue to work at local, state, and national levels in 2016 in partnership with existing and new allies. While we will continue to provide extensive regional and Illinois data and technical assistance through our data portal and TA program, we will also use some of the lessons learned from our local data analysis and advocacy efforts to influence developments in other states and at the federal level. Here are some of the highlights of our 2016 policy agenda:
Several years ago, Woodstock joined with other consumer advocates to pass legislation to protect consumers from short-term predatory loans. The Payday Loan Reform Act became law in 2005, and reforms to the Consumer Installment Loan Act became law in 2011. Among other positive changes, those laws placed caps on the amount of interest that lenders can charge. But now, predatory lenders are creeping into the area of lending to small businesses. A report published by Woodstock in August 2014 entitled Discredited: Disparate Access to Credit for Businesses in the Chicago Six County Region reveals that lending by traditional banks is insufficient to meet the demand for small business loans, particularly for businesses in lower-income areas and for businesses in communities of color. Non-bank, “alternative” lenders, which are largely unregulated, are striving to meet this unmet demand. These alternative lenders, which provide high-cost loans with interest rates as high as 200 percent are not even required to disclose the Annual Percentage Rate (APR) on their loans, which makes it difficult for borrowers to know how much their loan costs, which, in turn, makes it difficult to engage in comparison shopping.
In 2015, the Illinois Secure Choice Savings Program Act became law. Under this law, employers with 25 or more employees are mandated to enroll their employees into a retirement savings account that is administered by the State. Employers who fall below the 25-employee threshold may voluntarily elect to participate in the program. Employees whose employers are participating in the program (whether by mandate or by volunteering) will have the option to opt out of the program. For those employees who don’t opt out, three percent of their pay will be deposited into the account unless the employee elects a different contribution amount. Employee enrollment in the program will begin in June 2017.
Millions of low-wage workers and small business employees in the United States are approaching retirement with inadequate savings to supplement Social Security benefits that will replace less than half of their pre-retirement income. Those workers face a bleak financial future in which their standard of living will be much lower than what they now enjoy as they try to subsist on near poverty-level incomes.
In June 2012, the Consumer financial Protection Bureau (CFPB) launched its Consumer Complaint Database, the nation’s largest public collection of consumer financial complaints. The CFPB’s Office of Consumer Response hears directly from consumers about the challenges they face in the marketplace, brings their concerns to the attention of companies, and assists in addressing their complaints. The information collected from those complaints has allowed the CFPB to take actions against financial institutions and put money back in consumers’ pockets. It’s vital that consumers continue to share complaints and stories as we work with the CFPB to create a just financial system for all.
2015 was a big year for Woodstock Institute and allies working to expand opportunities for workers to save for retirement and to receive unbiased investment advice. Please take action on two retirement issues described below.
Over the past year, Woodstock has expanded the work it has done to promote greater access to safe and affordable credit for small businesses, building on our 2014 report, Discredited: Disparate Access to Credit for Businesses in the Chicago Six County Region. That report examined lending by large banks to businesses in lower-income neighborhoods and communities of color, specifically small loans that are most likely to go to locally-owned, neighborhood businesses that provide jobs to local residents. The analysis of lending patterns showed that businesses in those neighborhoods were much less likely to have received loans from large banks than businesses in more affluent, predominantly white neighborhoods.
This morning it was my honor to join United States Secretary of Labor Thomas Perez, Illinois Treasurer Michael Frerichs, Senator Daniel Biss, John Rogers of Ariel Investments, and others for a roundtable and press conference to announce the much anticipated proposed rule on retirement savings that will positively impact over a million Illinois private-sector workers. The proposed rule is open for public comments for 60 days.
Some career education programs promise students a bright future, but many graduates of such schools find that they don’t have the right credentials for their careers—and a shockingly high percentage never graduate at all.
Municipalities across the Chicago region are struggling to come up with effective ways of making vacant homes productive again. Some communities are hitting a wall: how can you design a response when you don’t fully understand the problem?
While some headlines claim that the housing market is recovering, we know that too many homeowners have not.
A bill that removes the asset limit for Temporary Assistance for Needy Families (TANF) recipients in Illinois, making it easier for them to build savings, has passed both chambers of the General Assembly and is on its way to the Governor’s desk.