The Financial Choice Act of 2017 Is the Wrong Choice for American Families

By Renato Rocha, Policy Analyst, Wealth-Building Project, NCLR

The reckless behavior of financial institutions including banks, credit card companies, and mortgage lenders caused the 2008 financial crisis that cost Americans millions of jobs, billions in taxpayer-funded bailouts, and trillions of lost retirement savings. A lack of consumer protections and oversight of the financial marketplace allowed unscrupulous lenders to target communities of color with unfair and abusive financial products. The Latino community was disproportionately impacted by the economic crisis and is still struggling to recover.

The devastating and widespread effects of the crisis led to the creation of the Consumer Financial Protection Bureau (CFPB), which we view to be the crown jewel of Wall Street reform. In less than six years, the CFPB has already curbed several deceptive practices in the financial marketplace: bringing transparency to the remittance industry, prohibiting credit companies from adding on products that consumers never agreed to, and requiring mortgage lenders to ensure that applicants can afford the home loans they’re seeking. The CFPB is also working on putting protections in place that would rein in predatory payday loans and debt collection practices. Each one of these actions have helped put all Americans on a path to greater financial security.

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D.C. Circuit Court Attempts to Thwart Consumer Protections

 By Renato R. Rocha, Policy Analyst, Economic Policy Project, NCLR

CFPB_LogoLast week, the U.S. Court of Appeals for the DC circuit decided against the Consumer Financial Protection Bureau (CFPB), making it easier to remove the director, who serves as head of the Bureau. If the decision stands, it will undermine what the CFPB was created to do in the aftermath of the Great Recession—protect consumers—since the director could be removed by the president without cause.

A challenge to the director’s authority is a challenge to CFPB itself. Since the CFPB opened its doors five years ago, it has become clear that the Bureau is exactly what consumers needed, and consumers overwhelming support its work. The CFPB now has authority to regulate a range of industries that previously lacked transparency, including remittance transfers, credit cards, student loan servicing, and payday loans. In order for the Bureau to continue its essential work on behalf of families, the CFPB needs to remain autonomous.

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Don’t Be Fooled: Payday Lenders Do Target Communities of Color

By Marisabel Torres, Senior Policy Analyst, Wealth-Building Policy Project, NCLR

In response to Javier Palomarez’s article “Alternative Lenders Offer Opportunity for Consumers and Businesses Alike,” he is correct that lower-income American households need access to small-dollar lending. However, I disagree with his support for payday lenders.

What Palomarez’s article fails to mention is that payday lenders specifically target communities of color, and their business model creates a vicious cycle of debt that is difficult for most borrowers to escape. In fact, the typical payday loan carries an exorbitant 391 percent APR, is given to borrowers without consideration of their ability to pay it back, and with direct access to their bank account.

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The Consumer Financial Protection Bureau Turns Five!

By Renato R. Rocha, Policy Analyst, Economic Policy Project, NCLR

CFPB_LogoLow- and moderate-income families suffered disproportionate losses of wealth during the Great Recession. Under the conditions that existed before the passage of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, Latinos and other communities of color were not adequately protected from unfair and deceptive financial practices. The lack of oversight allowed for conditions that were ripe for consumer exploitation. NCLR and other civil rights and consumer advocates pushed for an agency that would put families first. The creation of the Consumer Financial Protection Bureau (CFPB) was one of the hallmark achievements of Dodd-Frank.

Today we celebrate the fifth anniversary of the CFPB’s establishment—and what a productive five years it has been. Despite being an infant by federal agency standards, the CFPB has made considerable strides toward making financial markets work for both consumers and providers. Since the inception of the Bureau, the CFPB’s enforcement actions have brought $11.7 billion in relief to more than 27 million consumers.

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