The Consumer Financial Protection Agency (H.R. 3126), the new financial watchdog proposed by the Obama administration and currently being debated in Congress, would have the authority to protect small businesses from risky, unregulated financial products.
Illinois Attorney General Lisa Madigan and 23 other attorneys general sent a joint letter in support of H.R. 3126, which would create a new federal Consumer Financial Protection Agency, to Congressional leaders on the House and Senate banking committees on August 18.
American Casino, an expose of the mortgage foreclosure crisis, features revealing interviews with Wall Street power brokers and other major players, detailing how a vast fortune was built largely on the trust of lower-wealth and minority first-time home buyers whose lives and neighborhoods are now devastated.
I am troubled by the recent comment from JPMorgan Chase CEO Jamie Dimon that creation of the proposed Consumer Financial Protection Agency would “hurt short-term profits,” but I am not surprised. It is likely that the loss of short-term profits that Mr. Dimon projects are due to changes required by recent credit card reforms, which were signed into law with bipartisan support in May 2009.
New laws giving homeowners more time and resources to get help on their mortgage payments may be slowing the rate of foreclosure filings in the Chicago area, according to the latest Woodstock Institute analysis of Chicago region foreclosure filings.
Under new regulations implementing certain provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009 that take effect August 20, credit card lenders must mail or deliver periodic statements at least 21 days before the payment is due and must give 45-days notice of increases in the Annual Percentage Rate (APR) or other significant changes in terms, including a notice of the right to cancel the account.
The Department of the Treasury recently released its first report card on how mortgage lenders are doing modifying loans for eligible homeowners under the government’s Making Home Affordable program. Thirteen lenders, as well as 2,300 participants with Fannie Mae- and Freddie Mac-insured loans, started modifications for less than the national average of 9% of eligible loans, while only seven lenders modified more than 9% of their eligible loans.
The banking industry, led in part by the American Bankers Association (ABA), has been launching an assault on the proposed Consumer Financial Protection Agency (CFPA). In testimony before Congress and letters to bank CEOs, the trade group has been spreading myths about the CFPA, which would promote fairness, transparency, and real disclosure for financial products.
Woodstock takes on these myths one by one.
A key part of the Obama administration’s Financial Stability Plan is the Making Home Affordable program, which encourages banks to renegotiate mortgages for the millions of homeowners facing the threat of foreclosure by giving subsidies to lenders.
Last week, in testimony to the House Committee on Financial Services, Federal Reserve Chairman Ben Bernanke argued that his agency is best equipped to protect consumers from abusive or deceptive financial products—a role assigned to the Consumer Financial Protection Agency (CFPA) proposed by the Obama administration.
GAO-09-837, TROUBLED ASSET RELIEF PROGRAM: Treasury Actions Needed to Make the Home Affordable Modification Program More Transparent and Accountable
The Consumer Financial Protection Agency, the new
consumer watchdog agency proposed by the Obama administration, must be endowed
with broad authority protect consumers and communities from the financial
industry's worst practices.
Today the New York Times released a story investigating
the troubling trend of out-of-work subprime mortgage lenders repackaging
themselves as loan modification specialists who promise to lower their clients’
monthly payments and avoid foreclosure—for an up-front fee, of course.
Oftentimes, these loan “specialists” disappear after taking the initial fee of
several thousand dollars, sinking their clients even further into the hole. In
a cruel twist, the people running these loan modification schemes issued the same
kinds of high-cost loans that brought their clients to the point of foreclosure
in the first place.
"Mud people.” That’s how Wells Fargo loan officers described
minority borrowers in Baltimore, according to an affidavit signed by a former
employee. Wells Fargo is now facing a lawsuit
from the City of Baltimore accusing the bank of systematically steering
minority borrowers toward high-cost subprime loans—or, as some employees
allegedly dubbed them, “ghetto loans.
Encouraging simple, low-cost financial products through the Obama administration’s proposed financial watchdog agency would increase consumer choice and product innovation, not restrict it.
Woodstock Institute supports the Consumer Financial Protection Agency (CFPA), the new consumer watchdog agency proposed by the Obama administration. But this new agency must be endowed with broad authority protect consumers and communities from the financial industry’s worst practices. Regrettably, this crucial power was omitted in H.R.3126 now being considered by the House. The authority to implement and modernize CRA should fall to the CFPA and we call on Chairman Frank and members of the House Committee on Financial Services to reinstate this important provision.