The Chicago six county region had an 11.2 percent decline in foreclosure filings, and Chicago a 9.6 percent decline, between 2014 and 2015. Chicago Community Areas with the greatest declines from 2014 to 2015 include Armour Square (60 percent), Forest Glen and Oakland (43 percent), and Irving Park (39 percent). Despite the overall decrease, nearly a quarter of the 77 Chicago Community Areas recorded increases in the number of foreclosure filings between 2014 and 2015. Most notably, the Austin neighborhood had 408 foreclosure filings in 2015, a 10 percent increase from last year and the highest number of filings within a neighborhood in Chicago. I encourage you to play and interact with the data.
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.
Years ago, as a young married person contemplating starting a family and saving for my children’s college education, I engaged for the first time with a financial planning firm. I learned the hard way the difference between an advisor who earns commissions based on sales of insurance and investment products, and an advisor who works for fees only on a fiduciary basis and does not sell products or earn commissions (such as a fee-only Certified Financial Planner). My initial planner recommended that I invest in a particular 529 college savings plan, without telling me that the recommend plan paid the highest commissions, rather than in a 529 plan with lower costs and better opportunities to grow savings. While I eventually switched my college investments to a lower-cost 529 plan, many people remain stuck in less advantageous college investments because they received advice from advisors who are not acting under a fiduciary standard, which requires that the advisor put the investor’s interests first, not the interests of lining the advisor’s own pockets. Fiduciary standards are needed to protect consumers and help families save more for college.
Illinois has been operating without a budget for two months. The impact has been immediate and felt across the state. No budget means no money for vital services for children and families. Woodstock Institute worked with the Responsible Budget Coalition (RBC) earlier this summer to urge lawmakers to pass a budget that focuses on generating revenue over simply cutting more services. Now is the time for lawmakers to take the lead and produce a budget that puts these services back in order.
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.