A growing number of financial products and services are becoming available online. From mortgages to student loans to small business loans, consumers and business owners are able to borrow with a few strokes of the keyboard. While the increased accessibility of products and services may have some benefits for consumers, a number of unregulated financial products may actually do more harm than good. In order to further assess the situation, the United States Department of the Treasury has sent out a request for information about online lending, specifically focusing on small business lending and consumer lending. The data that the Treasury Department receives will help it determine what kind of regulation may be needed to protect borrowers in the online marketplace.
The U.S. House Financial Services Committee (HFSC) passed HR 1731, “Reforming CFPB Indirect Auto Financing Guidance Act,” last week. This bill sets limits to the Consumer Financial Protection Bureau’s (CFPB) jurisdiction over auto financing products. Both Illinois congressmen on the HFSC, Representative Randy Hultgren (R-IL) and Representative Bill Foster (D-IL), voted in favor of the bill. Now the bill goes to the full House of Representatives. Woodstock Institute is disappointed that our elected officials on the HFSC voted in favor of HR 1731.We strongly urge Congress to vote against this bill to keep consumers safe from exploitive car finance products.
Last week marked the 25th anniversary of the American with Disabilities Act (ADA). This act made discrimination against people with disabilities illegal and ensured that the proper accommodations are made for people with disabilities in employment, government services, public and commercial facilities, and transportation. People with disabilities make up about 20 percent of the United States population, according to 2012 census data. The ADA has made it easier for people with disabilities to live their lives and be self-sufficient, but the battle for full economic inclusion is ongoing.
President Obama endorses initiatives to make retirement savings available to workers: “To me, the answer is clear. We need to uphold the basic tenet that says, in America, a lifetime of hard work should be rewarded with a retirement that is secure and dignified,” he wrote. Woodstock Institute agrees with the President, who stated: “This is about more than bank accounts or bottom lines. It’s about the values that make America great — honesty, fair play, dignity. And it’s about our commitment to each other and respecting everyone’s value, no matter how young or old you are.” The President recently called for the Department of Labor to develop rules that will help states set up automatic retirement savings programs for private-sector workers. Woodstock Institute supports this development and calls on the Department to issue the rules quickly.
Illinois has spent almost a month without an operating budget, forcing providers to cut vital services to Illinois’ children, families, and communities, and eliminate essential jobs. The budget standoff leaves the state’s most vulnerable populations at risk. The Responsible Budget Coalition (RBC) is urging lawmakers to enact a budget that includes adequate revenue and does not leave social services in the dust.
It was very fitting that the Obama Administration and Department of Defense (DoD) released the final Military Lending Act (MLA) rules on the fifth anniversary of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act of 2010 (Dodd-Frank) and the fourth anniversary of the launch of the new Consumer Financial Protection Bureau (CFPB) on July 21, 2015. The final MLA rules are a great example of how to conduct evidence-based policymaking to protect consumers from unfair and abusive financial products and practices.
Americans are living longer, and so the money they set aside for retirement has to stretch further. Also, more seniors are experiencing financial insecurity in the aftermath of the housing market crash. To deal with living costs, many seniors turn to reverse mortgages, which allow them to receive loan payments based on the equity in their homes. However, reverse mortgages are complicated, and most consumers do not really understand their potential risks and pitfalls. Seniors in Illinois may soon have less to worry about because the state legislature approved a bill that would add consumer protections to reverse mortgages.
The Consumer Financial Protection Bureau recently asked the public what it can do to improve student loan servicing through a request for information (RFI). Response to the RFI, which closed on Monday, was overwhelming: over 30,000 people and organizations submitted comments. We submitted our own comment letter as well as joined with over 100 organizations from across the country urging the CFPB to improve student loan servicing. Many student loan borrowers told stories about their difficulties repaying their loans, like these borrowers who we profiled in our comment letter about Sallie Mae earlier this month:
The Consumer Financial Protection Bureau (CFPB) is collecting consumer comments about student loan servicing until July 13. This process lets the CFPB know about potential consumer protection risks and could be the first step towards regulating the massive student loan servicing industry, so we urge you to tell the CFPB about your experiences repaying your student loans and whether you have encountered trouble seeking an affordable repayment plan, getting your payments applied correctly, communicating with your servicer, or other issues.
Woodstock Institute and the National Community Reinvestment Coalition, along with 13 partner organizations, submitted a comment letter to the Federal Deposit Insurance Corporation (FDIC) today raising concerns about Sallie Mae Bank’s banking and lending practices. Sallie Mae Bank is falling short on its Community Reinvestment Act (CRA) obligations. This is largely due problems with its “non-traditional” private student loans, which are loans to college students with low credit scores, particularly those who attend for-profit colleges. In 2008, Sallie Mae Bank announced that it would discontinue making these type of loans, but they owned and serviced non-traditional loans during its CRA examination period.
We had a vibrant discussion in Chicago recently on barriers facing women trying to access mortgage and small business credit and ways to support women’s efforts to build wealth. Woodstock Institute and JPMorgan Chase hosted a forum for about one hundred participants from the nonprofit, banking, and government sectors on June 19. Melissa Bean, Midwest Chair for Chase, and I welcomed the group and kicked off the event.
Woodstock Institute strongly urges Senator Mark Kirk and Senator Richard Durbin to vote against budget revisions under consideration in the Senate Appropriations Committee today that would negatively affect the disparate impact doctrine, which is crucial to the enforcement of the Fair Housing Act (FHA). President Obama’s Administration requested $45.6 million for the Fair Housing Initiative Program (FHIP) in 2016, which provides funds to fair housing organizations and non-profits that detect housing discrimination and assist victims of discrimination. However, the House of Representatives has proposed cuts to this budget, which would reduce or eliminate funding for organizations that conduct fair housing testing.
Woodstock Institute has called for the Department of Education to provide debt relief for students of Corinthian Colleges, which recently went out of business after the Department of Education took action against the chain for misrepresenting its programs and failing to comply with federal aid regulations. The Department of Education announced Monday that it would make changes to the program to enable more students who attended Corinthian Colleges to cancel their student loan debts.
Woodstock Institute’s 2015 Community Investment Awards honored community leaders and explored the growing problem of student debt. Guests networked during the reception before gathering to recognize the honorees. Heartland Alliance, Rohit Chopra of the Consumer Financial Protection Bureau (CFPB), and The Resurrection Project (TRP) received awards for their outstanding work and leadership in the areas of retirement security advocacy, consumer empowerment and protection, and community development. A large audience of community advocates, bankers, and other colleagues appreciated the words of acceptance and inspiration offered by Amy Rynell of Heartland, Raul Raymundo of TRP, and Mr. Chopra.
It’s a vicious cycle: because some people in the low- and moderate-income community either lack traditional credit histories or rely on financing from non-mainstream credit providers that aggressively market to those lower-income communities, these consumers often have no other choice but to turn to payday and other predatory lenders where interest rates are extremely high, leading them to fall behind on their payments. This, in turn, negatively impacts their credit scores…and the cycle continues.