The Wall Street Reform and Consumer Protection Act of 2010
Benefits Young Americans
Too many responsible young people have paid the price for an outdated regulatory system that left our financial system vulnerable to collapse and left families without adequate protections. In the summer of 2009, the Obama Administration put forward a legislative proposal crafted to rein in excessive risk on Wall Street and preserve economic opportunity on Main Street. A year later, the President signed into law a bill aligned to a remarkable degree with that original proposal. This comprehensive financial reform, which put in place the strongest consumer financial protections in history, included the creation of a new, dedicated Consumer Financial Protection Bureau (the Bureau). The Bureau, an independent entity within the Federal Reserve, will have one mission: to protect consumers by promoting transparency and consumer choice and preventing abusive and deceptive practices. It will have broad authority to write and enforce new consumer financial protection rules. The Bureau will use these authorities to promote financial stability and protect consumers – including young people – from the unfair practices that contributed to the financial crisis.
Young Americans Deserve Clear Rules and Strong Enforcement
Debt impacts important decisions that young people make. According to a 2006 USA Today/National Endowment for Financial Education poll of young people aged 22 to 29 years old, survey respondents with debt indicated that having debt had influenced important decisions, including causing them to delay or not pursue education (29%), to take a job they would not otherwise have taken (22%), or to move in with parents or other relatives (19%). [USA Today/National Endowment for Financial Education, Young Adults’ Finances Poll (2006)]
Student Loans
- Growth in tuition and fees outpaced both inflation and median family income from the early 1990s to the mid-2000s. [Department of Education, National Center for Education Statistics, “Total and Net Access Price of Attending a Postsecondary Institution,” Contexts of Postsecondary Education (2007), citing The College Board (2004)]
- 53% of younger households have education loans, up from 43% in 2004. [Federal Reserve, “Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances” (February 2009) (“SCF”)]
- The median debt of students graduating with loans rose from $16,990 in 2003 to 2004 to $17,700 in 2007 to 2008 (2008 dollars), an increase of about 5% above inflation. [Patricia Steele and Sandy Baum, “How Much Are College Students Borrowing?” College Board Policy Brief, (August 2009)]
Credit Cards
- Roughly half (49%) of younger households (households with heads 34 years old or younger) carry a credit card balance, with a median balance of approximately $1,800. [SCF]
Bank Accounts
- 13% of younger households do not have bank accounts. [SCF]
- Individuals without bank accounts are often forced to turn to costly alternative financial services, such as check cashing, which, until now, have lacked a federal supervisor to enforce fair rules of the road for consumers.
- In a survey conducted by the Federal Reserve, a significant fraction of households without bank accounts said that they did not have a checking account because they did not like dealing with banks (25%) or because the service charges were too high (12%). [ SCF]
- Many consumers have been automatically enrolled in expensive overdraft programs by their bank that can hit consumers with costly fees for even the smallest purchases. For example, the FDIC found that the average overdraft charge for a single purchased item—like a $2 cup of coffee—is $30 at banks with assets of more than $1 billion. [FDIC, “FDIC Study of Bank Overdraft Programs” (November 2008) at Table IV-3]
Mortgages
- 37% of younger households have mortgages and other debt secured by their homes, such as home equity lines of credit. The median amount owed is approximately $135,000. [SCF]
- The piles of forms needed for a regular mortgage can be overwhelming, and many brokers have taken advantage of that confusion to give borrowers loans they didn’t need or couldn’t afford.
Saving and Investments
- Younger households invest in the financial markets, including beginning to build up retirement assets. 42% of younger households have retirement accounts such as IRAs or 401(k)s. [SCF]
The Wall Street Reform and Consumer Protection Act of 2010 is Beneficial for Young Americans
- For young people who need to take out private loans to cover the costs of higher education: The Bureau will be able to supervise private student lenders, fight unfair lending practices, and require lenders to follow fair rules of the road and give students the information they need to make smart choices.
- For young people with credit cards: The Bureau will prevent evasion of the Credit CARD Act of 2009, which bans arbitrary rate hikes on existing balances and other unfair practices, cleans up credit card practices for young people at universities, and provides young people clarity on the interest rates they are charged. The Bureau will also enforce new protections for college students and young adults, including a requirement that card issuers and universities disclose agreements with respect to the marketing or distribution of credit cards to students.
- For young people caught by unexpected overdraft fees: The Bureau will prevent evasion of new rules that give consumers a real choice as to whether to join expensive overdraft programs so that they are not unknowingly charged unnecessary fees.
- For young people without bank accounts: The Bureau will be able to rein in practices that may drive some young people away from banks—including by stopping banks from enrolling customers in expensive overdraft programs without their consent.
- For young people using alternative financial services: The Wall Street Reform and Consumer Protection Act establishes, for the first time, robust federal supervision and oversight over larger alternative financial service companies, such as check cashers and payday lenders. The Bureau will combat abusive practices that harm consumers, helping young people avoid hidden fees and keep more money in their wallets.
- For young people who want to buy a home: The Bureau will take steps to consolidate and simplify with plain language two overlapping and sometimes inconsistent federal mortgage forms. The Bureau will, for the first time, provide ongoing federal oversight of both nonbank companies and banks in the mortgage market and protect borrowers from unfair, deceptive or other illegal mortgage lending practices.
- Empowering young people to make smart financial choices by promoting financial education and financial literacy: The Bureau will promote consumer financial education and financial literacy, with a dedicated office focused on ensuring that the Bureau’s expertise and research are used to help raise awareness, and educate and empower consumers to avoid unfair practices and make smart financial choices.
- Safeguarding young people’s retirement security, savings and investments: The Wall Street Reform and Consumer Protection Act strengthens investor protection by empowering the Securities and Exchange Commission (SEC) to:
- Raise the standards for brokers and investment professionals when giving advice so that they have a fiduciary duty and are required to act in the interests of investors, rather than their own; and
- Require brokers to disclose costs and risk factors to investors prior to selling a product, instead of after it is purchased.
###
Download these facts here.
The Wall Street Reform and Consumer Protection Act of 2010
Benefits Asian Americans and Pacific Islanders
Too many responsible Asian Americans and Pacific Islanders have paid the price for an outdated regulatory system that left our financial system vulnerable to collapse and left families without adequate protections. In the summer of 2009, the Obama Administration put forward a legislative proposal crafted to rein in excessive risk on Wall Street and preserve economic opportunity on Main Street. A year later, the President signed into law a bill aligned to a remarkable degree with that original proposal. This comprehensive financial reform, which put in place the strongest consumer financial protections in history, included the creation of a new, dedicated Consumer Financial Protection Bureau (the Bureau). The Bureau, an independent entity within the Federal Reserve, will have one mission: to protect consumers by promoting transparency and consumer choice and preventing abusive and deceptive practices. It will have broad authority to write and enforce new consumer financial protection rules. The Bureau will use these authorities to promote financial stability and protect consumers – including Asian Americans and Pacific Islanders – from the unfair practices that contributed to the financial crisis.
Asian Americans and Pacific Islanders Deserve Clear Rules and Strong Enforcement
Asian American and Pacific Islander communities are diverse
- Poverty rates are one example of how economic characteristics differ across these communities. According to the U.S. Census, in 2008, the poverty rate for Asian families was 8.0% , lower than the poverty rate for the total population (9.7%), while the poverty rate for Native Hawaiian and other Pacific Islander families was higher (13.1%). Some Asian and Pacific Islander families had even higher poverty rates, such as Hmong (23.1%), Cambodian (19.2%), Micronesian (16.0%), and Pakistani (14.1%) families.
- Households with different economic characteristics have distinct consumer financial protection needs—for example, families that want to buy a home need clear rules of the road for mortgage lenders, while families that use check cashing services and take out payday loans need strong enforcement of rules in the alternative financial services industry. [U.S. Census, American Community Survey, 2008 American Community Survey 1-Year Estimates]
Remittances
- Families and individuals in the United States send billions in remittances to Asian and Pacific countries. An estimated $27 billion in remittances was sent to East Asian and Pacific countries and $14 billion was sent to South Asian countries from the United States by families and individuals in 2008. [World Bank, “Outlook for Remittance Flows 2008‐2010” (November 11, 2008)]
Mortgages
- In 2005 and 2006, the height of the subprime lending boom, more than 34% of loans made to Native Hawaiians and other Pacific Islanders to purchase their homes and more than 28% of refinancing loans made to this group were higher priced loans. In the same period, more than 16% of loans made to Asian borrowers to purchase homes and more than 15% of refinancing loans made to Asians were higher priced loans. [Federal Reserve, “Higher Priced Lending and the 2005 HMDA Data” (September 2006); Federal Reserve, “The 2006 HMDA Data” (December 2007)]
- Native Hawaiian or other Pacific Islander borrowers were more likely to receive subprime loans than non-Hispanic white borrowers in 2005 and 2006. While Asians were less likely to receive higher priced loans for purchase or refinance than non-Hispanic whites, Native Hawaiian or other Pacific Islander borrowers were 50% more likely to receive higher priced loans to purchase homes and 30% more likely to receive higher priced refinancing loans than non-Hispanic whites. [Federal Reserve, “Higher Priced Lending and the 2005 HMDA Data” (September 2006); Federal Reserve, “The 2006 HMDA Data” (December 2007)]
- Borrowers who have subprime loans, including Asian and Pacific Islander borrowers, have come under severe stress during the recent financial crisis and are at high risk of foreclosure. 48.5% of outstanding subprime loans made to borrowers in 2005 and 57.2% of such loans made to borrowers in 2006 are in foreclosure or no payment has been received for 60 days or more. [McDash Online Core Database data (February 2010); Treasury analysis.]
- The piles of forms needed for a regular mortgage can be overwhelming, and many brokers have taken advantage of that confusion to give borrowers loans they didn’t need or couldn’t afford.
Bank Accounts
- Some households do not have bank accounts. In a survey conducted by the Federal Reserve, a significant fraction of households without bank accounts said that they did not have a checking account because they did not like dealing with banks (25%) or because the service charges were too high (12%). [Federal Reserve, “Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances,” (February 2009)]
- Many households have been automatically enrolled in expensive overdraft programs that can hit consumers with costly overdraft fees for even the smallest purchases. For example, the FDIC found that the average overdraft charge for a single purchased item—like a $2 cup of coffee—is $30 at banks with assets over $1 billion. [FDIC, “FDIC Study of Bank Overdraft Programs” (November 2008) at Table IV-3]
The Wall Street Reform and Consumer Protection Act of 2010 is Beneficial for Asian Americans and Pacific Islanders
- For Asian Americans and Pacific Islanders who send remittances to their families: The Bureau will be able to provide, for the first time, federal oversight over the larger companies that provide remittance transfer services to consumers, and it will enforce protections, including requirements to provide consumers easy-to-understand, pre-transactional pricing disclosures and receipts.
- Fair markets for Asian Americans and Pacific Islanders: One pillar of the Bureau’s mission will be to ensure that markets for consumer financial products and services operate transparently and efficiently to facilitate access for all families, including Asian American and Pacific Islander families. The Bureau will enforce fair lending laws that protect Asian Americans and Pacific Islanders from discriminatory lending practices. The Bureau will also be empowered to focus on improving disclosures and cracking down on abusive practices to make it easier for families to identify and avoid high cost, high risk products that don’t meet their needs.
- For Asian Americans and Pacific Islanders who want to buy a home: The Bureau will consolidate and simplify with plain language two overlapping and sometimes inconsistent federal mortgage forms. The Bureau will for the first time, provide ongoing federal oversight of both nonbank companies and banks in the mortgage market and protect borrowers from unfair, deceptive or other illegal mortgage lending practices.
- For Asian American and Pacific Islander families using alternative financial services: The Wall Street Reform and Consumer Protection Act establishes, for the first time, robust federal supervision and oversight over larger alternative financial service companies such as check cashers and payday lenders. The Bureau will be able to combat abusive practices that harm consumers, helping families avoid hidden fees and keep more money in their wallets.
- For Asian Americans and Pacific Islanders without bank accounts: The Bureau will be able to rein in practices that may drive some households away from banks—including by stopping banks from enrolling customers in expensive overdraft programs without their consent.
- For Asian Americans and Pacific Islanders with credit cards: The Bureau will prevent evasion of the Credit CARD Act of 2009, which bans arbitrary rate hikes on existing balances and other unfair practices. For Asian Americans and Pacific Islanders who have used credit cards to get by when times are tight, the law will give them clarity on the interest rates they are charged.
- For Asian Americans and Pacific Islanders caught by unexpected overdraft fees: The Bureau will enforce and prevent evasion of new rules that give consumers a real choice as to whether to join expensive overdraft programs so that they are not unknowingly charged unnecessary fees.
- For Asian Americans and Pacific Islanders who must take out private loans to cover the costs of higher education: The Bureau will be able supervise private student lenders, fight unfair practices, and require lenders to follow fair rules of the road and give students the information they need to make smart choices.
- Empowering Asian Americans and Pacific Islanders to make smart financial choices by promoting financial education and financial literacy: The Bureau will promote consumer financial education and financial literacy, with a dedicated office focused on ensuring that the Bureau’s expertise and research are used to help raise awareness, and educate and empower consumers to avoid unfair practices and make smart financial choices.
- Safeguarding Asian Americans and Pacific Islanders’ retirement security, savings and investments: The Wall Street Reform and Consumer Protection Act strengthens investor protection by empowering the Securities and Exchange Commission (SEC) to:
- Raise the standards for brokers and investment professionals when giving advice so that they have a fiduciary duty and are required to act in the interests of investors, rather than their own; and
- Require brokers to disclose costs and risk factors to investors prior to selling a product, instead of after it is purchased.
###
All U.S. Census poverty statistics quoted are the poverty rates for families and people for whom poverty status is determined for “all families” and represent the rate for those reporting only one racial or ethnic group.
Download these facts here.
The Wall Street Reform and Consumer Protection Act of 2010
Benefits African Americans
Too many responsible African Americans have paid the price for an outdated regulatory system that left our financial system vulnerable to collapse and left families without adequate protections. In the summer of 2009, the Obama Administration put forward a legislative proposal crafted to rein in excessive risk on Wall Street and preserve economic opportunity on Main Street. A year later, the President signed into law a bill aligned to a remarkable degree with that original proposal. This comprehensive financial reform, which put in place the strongest consumer financial protections in history, included the creation of a new, dedicated Consumer Financial Protection Bureau (the Bureau). The Bureau, an independent entity within the Federal Reserve, will have one mission: to protect consumers by promoting transparency and consumer choice and preventing abusive and deceptive practices. It will have broad authority to write and enforce new consumer financial protection rules. The Bureau will use these authorities to promote financial stability and protect consumers – including African Americans – from the unfair practices that contributed to the financial crisis.
African American Families and the Financial Crisis
- In 2005 and 2006, the height of the subprime lending boom, more than 53% of loans made to African American borrowers to purchase homes and more than 49% of refinancings by African Americans were higher priced loans. [Federal Reserve, “Higher Priced Lending and the 2005 HMDA Data” (September 2006); Federal Reserve, “The 2006 HMDA Data” (December 2007)]
- African-American borrowers were over 3 times more likely to receive higher priced loans to purchase homes and over 2 times more likely to receive higher priced refinancing loans than non-Hispanic whites in 2005 and 2006. [Federal Reserve, “Higher Priced Lending and the 2005 HMDA Data” (September 2006); Federal Reserve, “The 2006 HMDA Data” (December 2007)]
- Borrowers who have subprime loans, including African Americans, have come under severe stress during the recent financial crisis and are at high risk of foreclosure. 48.5% of outstanding subprime loans made in 2005 and 57.2% of such loans made in 2006 are in foreclosure or no payment has been received for 60 days or more. [McDash Online Core Database data (February 2010); Treasury analysis.]
- Growth in African American homeownership is reported to have reversed. Based on an analysis of Census data, the Pew Hispanic Center reported that “[b]lack householders raised their homeownership rate from 41.9% in 1995 to 49.4% in 2004. By 2008, the black homeownership rate had decreased to 47.5%”— still significantly short of the 74.9% homeownership rate for whites in 2008. [Pew Hispanic Center, “Through Boom and Bust: Minorities, Immigrants and Homeownership,” (May 12, 2009)]
African American Families Deserve Clear Rules and Strong Enforcement
Credit Cards
Mortgages
- 40% of African American and other minority households have mortgages and other debt secured by residential property, such as home equity lines of credit. The median amount owed is approximately $113,000. [SCF]
- The piles of forms needed for a regular mortgage can be overwhelming, and many brokers have taken advantage of that confusion to give borrowers loans they didn’t need or couldn’t afford.
Student Loans
- 36% of African Americans have student and other education loans. [SCF]
Retirement Investments
- African American and other minority households invest in the financial markets, including for retirement. 39% of African American and other minority households have retirement accounts with a median amount of approximately $25,000. [SCF]
Bank Accounts
- 16% of African American and other minority households do not have bank accounts, compared with only 4% of non-Hispanic white households. In a survey conducted by the Federal Reserve, a significant fraction of households without bank accounts said that they did not have a checking account because they did not like dealing with banks (25%) or because the service charges were too high (12%). Families without bank accounts are often forced to turn to costly alternative financial services, such as check cashing, which, until now, have lacked a federal supervisor to enforce fair rules of the road for consumers. [SCF]
- Many households have been automatically enrolled in expensive overdraft programs that can hit consumers with costly overdraft fees for even the smallest purchases. For example, the FDIC found that the average overdraft charge for a single purchased item—like a $2 cup of coffee—is $30 at banks with assets over $1 billion. [FDIC, “FDIC Study of Bank Overdraft Programs” (November 2008) at Table IV-3]
Payday Loans
- African Americans, among other minorities, are more likely to use payday lending services. Based on analysis of the 2007 Survey of Consumer Finances, the Center for American Progress reported that “[t]hirty-eight percent of families who had borrowed a payday loan within the last year were nonwhite while just 22 percent of families who did not take out such a loan were nonwhite.” [Center for American Progress, “Who Borrows from Payday Lenders,” (March 2009)]
The Wall Street Reform and Consumer Protection Act of 2010 Is Beneficial for African Americans
- Fair markets for African Americans: One pillar of the Bureau’s mission will be to ensure that markets for consumer financial products and services operate transparently and efficiently to facilitate access for all families, including African American families. The Bureau will enforce fair lending laws that protect African Americans from discriminatory lending practices. The Bureau will also be empowered to focus on improving disclosures and cracking down on abusive practices to make it easier for families to identify and avoid high cost, high risk products that don’t meet their needs.
- For African Americans who want to buy a home: The Bureau will take steps to consolidate and simplify with plain language two overlapping and sometimes inconsistent federal mortgage forms. The Bureau will, for the first time, provide ongoing federal oversight of both nonbank companies and banks in the mortgage market, and protect borrowers from unfair, deceptive or other illegal mortgage lending practices.
- For African American families using alternative financial services: The Wall Street Reform and Consumer Protection Act establishes, for the first time, robust federal supervision and oversight over larger alternative financial service companies, such as check cashers and payday lenders. The Bureau will combat abusive practices that harm consumers, helping families avoid hidden fees and keep more money in their wallets.
- For African Americans without bank accounts: The Bureau will be able to rein in practices that may drive some African Americans away from banks—including by stopping banks from enrolling customers in expensive overdraft programs without their consent.
- For African Americans with credit cards: The Bureau will prevent evasion of the Credit CARD Act of 2009, which bans arbitrary rate hikes on existing balances and other unfair practices. For African Americans who have used credit cards to get by when times are tight, the law will give them clarity on the interest rates they are charged.
- For African Americans caught by unexpected overdraft fees: The Bureau will prevent evasion of new rules that give consumers a real choice as to whether to join expensive overdraft programs so that they are not unknowingly charged unnecessary fees.
- For African Americans who need to take out loans to cover the costs of higher education: The Bureau will be able to supervise private student lenders, fight unfair lending practices, and require lenders to follow fair rules of the road and give students the information they need to make smart choices.
- Empowering African Americans to make smart financial choices by promoting financial education and financial literacy: The Bureau will promote consumer financial education and financial literacy, with a dedicated office focused on ensuring that the Bureau’s expertise and research are used to help raise awareness, and educate and empower consumers to avoid unfair practices and make smart financial choices.
- Safeguarding African Americans’ retirement security, savings and investments: The Wall Street Reform and Consumer Protection Act strengthens investor protection by empowering the Securities and Exchange Commission (SEC) to:
- Raise the standards for brokers and investment professionals when giving advice so that brokers and investment professionals have a fiduciary duty and are required to act in the interests of investors, rather than their own; and
- Require brokers to disclose costs and risk factors to investors prior to selling a product, instead of after it is purchased.
###
Download these facts here.
The Wall Street Reform and Consumer Protection Act of 2010
Benefits Native Americans
Too many responsible Native Americans have paid the price for an outdated regulatory system that left our financial system vulnerable to collapse and left families without adequate protections. In the summer of 2009, the Obama Administration put forward a legislative proposal crafted to rein in excessive risk on Wall Street and preserve economic opportunity on Main Street. A year later, the President signed into law a bill aligned to a remarkable degree with that original proposal. This comprehensive financial reform, which put in place the strongest consumer financial protections in history, included the creation of a new, dedicated Consumer Financial Protection Bureau (the Bureau). The Bureau, an independent entity within the Federal Reserve, will have one mission: to protect consumers by promoting transparency and consumer choice and preventing abusive and deceptive practices. It will have broad authority to write and enforce new consumer financial protection rules. The Bureau will use these authorities to promote financial stability and protect consumers – including Native Americans – from the unfair practices that contributed to the financial crisis.
Native Americans and the Financial Crisis
- Native American borrowers were more likely to receive subprime mortgages than non-Hispanic white borrowers in 2005 and 2006. Native Americans were roughly twice as likely non-Hispanic whites to be holding high-priced mortgages, and also more likely to hold higher home refinance loans. Even after controlling for differences in household incomes, locations, loan type, and the source of the loan – Native Americans were at least 1.5 times more likely to hold higher-priced mortgages. [Federal Reserve, “The 2006 HMDA Data” (December 2007)]
- Native American homeownership lags significantly. Over the period 2003-2009, the homeownership rate of Native Americans averaged 57%, compared with 75% for non-Hispanic whites – a 19 percentage point difference. [U.S. Census Bureau, “Housing Vacancies and Homeownership Annual Statistics: 2009” (2010), Table 22]
- Borrowers who have subprime loans, including Native Americans, have come under severe stress during the recent financial crisis and are at high risk of foreclosure. 48.5% of outstanding subprime loans made to borrowers in 2005 and 57.2% of such loans made to borrowers in 2006 are in foreclosure or no payment has been received for 60 days or more. [McDash Online Core Database data (February 2010); Treasury analysis.]
- Mortgage loans present problems for Native American communities. Well before the housing bubble exploded, a 2007 survey at a National American Indian Housing Council meeting found that 54% of respondents believed that mortgage loans were either “a big problem” (21%) or “somewhat of a problem” (33%) in their communities. [First Nations Development Institute, “Borrowing Trouble,” (2008) (“FNDI”)]
Native Americans Deserve Clear Rules and Strong Enforcement
Alternative Financial Services
- Native Americans, among other minorities, are more likely to use alternative financial services. Based on analysis of the 2007 Survey of Consumer Finances, the Center for American Progress reported that “[t]hirty-eight percent of families who had borrowed a payday loan within the last year were nonwhite while just 22 percent of families who did not take out such a loan were nonwhite.” [Center for American Progress, “Who Borrows from Payday Lenders,” (March 2009)]
- Alternative financial services present problems in Native American communities. A survey of attendees at a National American Indian Housing Council meeting found that at least half of respondents believed that the following alternative financial services were a problem in their communities: loans against tax refunds (68%), payday loans (67%), pawn shops (58%), and car title loans (50%). [FNDI]
Credit Cards
Mortgages
- 40% of Native American and other minority households have mortgages and other debt secured by residential property, such as home equity lines of credit. The median amount owed is approximately $113,000. [SCF]
- The piles of forms needed for a regular mortgage can be overwhelming, and many brokers have taken advantage of that confusion to give borrowers loans they didn’t need or couldn’t afford.
Installment Loans
- 49% of Native American and other minority households have installment loans, such as student loans. The median total balance on such loans is approximately $12,000. 36% have student and other education loans. [SCF]
Bank Accounts
- 16% of Native Americans and other minority households do not have bank accounts, compared with only 4% of non-Hispanic white households. Families without bank accounts are often forced to turn to costly alternative financial services, such as check cashing, which, until now, have lacked a federal supervisor to enforce fair rules of the road for consumers. In a survey conducted by the Federal Reserve, a significant fraction of households without bank accounts said that they did not have a checking account because they did not like dealing with banks (25%) or because the service charges were too high (12%). [SCF]
- Many households have been automatically enrolled in expensive overdraft programs that can hit consumers with costly overdraft fees for even the smallest purchases. For example, the FDIC found that the average overdraft charge for a single purchased item—like a $2 cup of coffee—is $30 at banks with assets over $1 billion. [FDIC, “FDIC Study of Bank Overdraft Programs” (November 2008), Table IV-3]
Tax Refund Anticipation Loans
- In 2006, tax filers in counties heavily populated with Native Americans were much more likely to take out expensive tax refund anticipation loans (“RALs”) than were filers elsewhere in the country. The four counties in the United States with the largest proportions of people taking RALs (62% to 49%) all had populations that were at least 80% Native American. This is far out of proportion with the population as a whole: only about 6% of American tax filers took out a RAL in 2008. [FNDI; Individual Income Tax Returns, Preliminary Data: Selected Income and Tax Items, Tax Years 2007 and 2008; National Consumer Law Center and Consumer Federation of America, “Major Changes in the Quick Tax Refund Loan Industry” (February 2010)]
Retirement Investments
- Native American and other minority households invest in the financial markets, including for retirement. 39% of minority households have retirement accounts with a median amount of approximately $25,000. [SCF]
The Wall Street Reform and Consumer Protection Act of 2010 is Beneficial for Native Americans
- Fair markets for Native Americans: One pillar of the Bureau’s mission will be to ensure that markets for consumer financial products and services operate transparently and efficiently to facilitate access for all families, including Native American families. The Bureau will enforce fair lending laws that protect Native Americans from discriminatory lending practices. The Bureau will also be empowered to focus on improving disclosures and cracking down on abusive practices to make it easier for families to identify and avoid high cost, high risk products that don’t meet their needs.
- For Native Americans who want to buy a home: The Bureau will take steps to consolidate and simplify with plain language two overlapping and sometimes inconsistent federal mortgage forms. The Bureau will for the first time, provide ongoing federal oversight of both nonbank companies and banks in the mortgage market, and protect borrowers from unfair, deceptive or other illegal mortgage lending practices.
- For Native Americans with credit cards: The Bureau will prevent evasion of the Credit CARD Act of 2009, which bans arbitrary rate hikes on existing balances and other unfair practices. For Native Americans who have used credit cards to get by when times are tight, the law will give them clarity on the interest rates they are charged.
- For Native Americans caught by unexpected overdraft fees: The Bureau will prevent evasion of new rules that give consumers a real choice as to whether to join expensive overdraft programs so that they are not unknowingly charged unnecessary fees.
- For Native American families due for a tax refund: The Bureau will provide robust federal supervision, for the first time, over the larger providers of RALs. The Bureau will combat abusive practices such as hidden fees and give Native American families the information they need to make smart choices about RALs.
- For Native American families using alternative financial services: The Wall Street Reform and Consumer Protection Act establishes, for the first time, robust federal supervision and oversight over larger alternative financial service companies such as check cashers and payday lenders, including on reservations. The Bureau will be able to combat abusive practices that harm consumers, helping families avoid hidden fees and keep more money in their pocketbooks.
- For American Indians and Alaskan Natives without bank accounts: The Bureau will be able to reign in practices that may drive some Native Americans away from banks—including by stopping banks from enrolling customers in expensive overdraft programs without their consent.
- For Native Americans who need to take out private loans to cover the costs of higher education: The Bureau will be able to supervise private student lenders, fight unfair practices, and require lenders to follow fair rules of the road and give students the information they need to make smart choices.
- Empowering Native Americans to make smart financial choices by promoting financial education and financial literacy: The Bureau will promote consumer financial education and financial literacy, with a dedicated office focused on ensuring that the Bureau’s expertise and research are used to help raise awareness, and educate and empower consumers to avoid unfair practices and make smart financial choices.
- Empowering tribal governments to enforce the laws on reservations: Tribal governments will be permitted to enforce the Bureau’s rules in areas under their jurisdiction, the same way that states will be permitted to enforce those rules. In addition, tribal consumer financial protection codes will be protected, so that tribal governments can set standards that are tougher than the federal standards to afford greater protections for their citizens under those codes.
- Protecting Native American’s retirement security, savings and investments: The Wall Street Reform and Consumer Protection Act of 2010 strengthens investor protection by empowering the Securities and Exchange Commission (SEC) to:
- Raise the standards for brokers and investment professionals when giving advice so that they have a fiduciary duty and are required to act in the interests of investors, rather than their own; and
- Require brokers to disclose costs and risk factors to investors prior to selling a product, instead of after it is purchased.
### Download these facts here.
The Wall Street Reform and Consumer Protection Act of 2010
Benefits Children and Families
Too many responsible families have paid the price for an outdated regulatory system that left our financial system vulnerable to collapse and left them without adequate protections. In the summer of 2009, the Obama Administration put forward a legislative proposal crafted to rein in excessive risk on Wall Street and preserve economic opportunity on Main Street. A year later, the President signed into law a bill aligned to a remarkable degree with that original proposal. This comprehensive financial reform, which put in place the strongest consumer financial protections in history, included the creation of a new, dedicated Consumer Financial Protection Bureau (the Bureau). The Bureau, an independent entity within the Federal Reserve, will have one mission: to protect consumers by promoting transparency and consumer choice and preventing abusive and deceptive practices. It will have broad authority to write and enforce new consumer financial protection rules. The Bureau will use these authorities to promote financial stability and protect families from the unfair practices that contributed to the financial crisis. "
Families and the Financial Crisis
- During 2005 and 2006, the height of the subprime lending boom, approximately one in four borrowers, including many families with children, received subprime loans. [Federal Reserve, “Higher Priced Lending and the 2005 HMDA Data” (September 2006); Federal Reserve, “The 2006 HMDA Data” (December 2007)]
- Borrowers who have subprime loans have come under severe stress during the recent financial crisis and are at high risk of foreclosure. 48.5% of outstanding subprime loans made in 2005 and 57.2% of such loans made in 2006 are in foreclosure or no payment has been received for 60 days or more. [McDash Online Core Database data (February 2010); Treasury analysis.]
Families Deserve Clear Rules and Strong Enforcement
Retirement Investments
- Families invest in the financial markets, including for retirement and to pay for their children’s college education. 63% of couples with children have retirement accounts with a median value of approximately $52,000. Such households also hold other financial products, including stocks (20%) and mutual funds and other pooled investment funds (14%). [Federal Reserve, “Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances,” (February 2009) (“SCF”)]
Mortgages
- 67% of couples with children have mortgages and other debt secured by residential property, such as home equity lines of credit. The median amount owed is approximately $119,000. [SCF]
Credit Cards
- 56% of couples with children carry a credit card balance, with a median balance of approximately $4,000. [SCF]
Installment Loans
- 64% of couples with children have installment loans, such as student loans. The median total balance on such loans is approximately $13,000. [SCF]
Bank Accounts
- Some families do not have bank accounts. In a survey conducted by the Federal Reserve, a significant fraction of households without bank accounts said that they did not have a checking account because they did not like dealing with banks (25%) or because the service charges were too high (12%). [Federal Reserve, “Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances,” (February 2009)]
- Many households have been automatically enrolled in expensive overdraft programs that can hit consumers with costly overdraft fees for even the smallest purchases. For example, the FDIC found that the average overdraft charge for a single purchased item—like a $2 cup of coffee—is $30 at banks with assets over $1 billion. [FDIC, “FDIC Study of Bank Overdraft Programs” (November 2008) at Table IV-3]
The Wall Street Reform and Consumer Protection Act of 2010 is Beneficial for Children and Families
- For families who want to buy a home: The Bureau will take steps to consolidate and simplify with plain language two overlapping and sometimes inconsistent federal mortgage forms. The Bureau will, for the first time, provide ongoing federal oversight of both nonbank companies and banks in the mortgage market and protect borrowers from unfair, deceptive or other illegal mortgage lending practices.
- For families using alternative financial services: The Bureau will be able to establish, for the first time, robust federal supervision and oversight over larger alternative financial service companies such as check cashers and payday lenders. The Bureau will be able to combat abusive practices that harm consumers, helping families avoid hidden fees and keep more money in their wallets.
- For families without bank accounts: The Bureau will be able to rein in practices that may drive some households away from banks—including stopping banks from enrolling customers in expensive overdraft programs without their consent.
- For families with credit cards: The Bureau will prevent evasion of the Credit CARD Act of 2009, which bans arbitrary rate hikes on existing balances and other unfair practices. For families who have used credit cards to get by when times are tight, the law will give them clarity on the interest rates they are charged.
- For families caught by unexpected overdraft fees: The Bureau will prevent evasion of new rules that give consumers a real choice as to whether to join expensive overdraft programs so that they are not unknowingly charged unnecessary fees.
- For families who must take out private loans to cover the costs of higher education: The Bureau will be able to supervise private student lenders, fight unfair lending practices, and require lenders to follow fair rules of the road and give students the information they need to make smart choices.
- Empowering families to make smart financial choices by promoting financial education and financial literacy: The Bureau will promote consumer financial education and financial literacy, with a dedicated office focused on ensuring that the Bureau’s expertise and research are used to help raise awareness, and educate and empower consumers to avoid unfair practices and make smart financial choices.
- Safeguarding families’ retirement security, savings and investments: The Wall Street Reform and Consumer Protection Act strengthens investor protection by empowering the Securities and Exchange Commission (SEC) to:
- Raise the standards for brokers and investment professionals when giving advice so that brokers and investment professionals have a fiduciary duty and are required to act in the interests of investors, rather than their own; and
- Require brokers to disclose costs and risk factors to investors prior to selling a product, instead of after it is purchased.
### Download these facts here.
The Wall Street Reform and Consumer Protection Act of 2010 Benefits Latinos
Too many responsible Latinos have paid the price for an outdated regulatory system that left our financial system vulnerable to collapse and left families without adequate protections. In the summer of 2009, the Obama Administration put forward a legislative proposal crafted to rein in excessive risk on Wall Street and preserve economic opportunity on Main Street. A year later, the President signed into law a bill aligned to a remarkable degree with that original proposal. This comprehensive financial reform, which put in place the strongest consumer financial protections in history, included the creation of a new, dedicated Consumer Financial Protection Bureau (the Bureau). The Bureau, an independent entity within the Federal Reserve, will have one mission: to protect consumers by promoting transparency and consumer choice and preventing abusive and deceptive practices. It will have broad authority to write and enforce new consumer financial protection rules. The Bureau will use these authorities to promote financial stability and protect consumers – including Latinos – from the unfair practices that contributed to the financial crisis.
Latinos and the Financial Crisis
- In 2005 and 2006, the height of the subprime lending boom, more than 46% of loans made to Hispanic borrowers to purchase homes and more than 34% of refinancing loans made to Latinos were higher priced loans. [Federal Reserve, “Higher Priced Lending and the 2005 HMDA Data” (September 2006); Federal Reserve, “The 2006 HMDA Data” (December 2007)]
- Latino borrowers were more likely to receive subprime loans than non-Hispanic white borrowers in 2005 and 2006. Latino borrowers were over 2.5 times more likely to receive higher priced loans to purchase homes and at least 1.5 times more likely to receive higher priced refinancing loans than non-Hispanic whites. [Federal Reserve, “Higher Priced Lending and the 2005 HMDA Data” (September 2006); Federal Reserve, “The 2006 HMDA Data” (December 2007)]
- Borrowers who have subprime loans, including Latinos, have come under severe stress during the recent financial crisis and are at high risk of foreclosure. 48.5% of outstanding subprime loans made to borrowers in 2005 and 57.2% of such loans made to borrowers in 2006 are in foreclosure or no payment has been received for 60 days or more. [McDash Online Core Database data (February 2010); Treasury analysis.]
- Growth in Latino homeownership is reported to have reversed. Based on an analysis of Census data, the Pew Hispanic Center reported that “[t]he Latino homeownership rate peaked at 49.8% in 2006, compared with 42.1% in 1995. It was unchanged in 2007 and fell to 48.9% in 2008”—still significantly short of the 74.9% homeownership rate for whites in 2008. [Pew Hispanic Center, “Through Boom and Bust: Minorities, Immigrants and Homeownership,” (May 12, 2009)]
Latinos Deserve Clear Rules and Strong Enforcement
Remittances
Credit Cards
Mortgages
- 40% of Latino and nonwhite households have mortgages and other debt secured by residential property, such as home equity lines of credit. The median amount owed is approximately $113,000. [SCF]
- The piles of forms needed for a regular mortgage can be overwhelming, and many brokers have taken advantage of that confusion to give borrowers loans they didn’t need or couldn’t afford.
Installment Loans
- 49% of Latino and nonwhite households have installment loans, such as student loans. The median total balance on such loans is approximately $12,000. 36% have student and other education loans. [SCF]
Retirement Investments
- Latino and nonwhite households invest in the financial markets, including for retirement. 39% of Latino and nonwhite households have retirement accounts with a median amount of approximately $25,000. [SCF]
Bank Accounts
- 16% of Latino and nonwhite households do not have bank accounts, compared with only 4% of non-Hispanic white households. Families without bank accounts are often forced to turn to costly alternative financial services, such as check cashing, which, until now, have lacked a federal supervisor to enforce fair rules of the road for consumers. In a survey conducted by the Federal Reserve, a significant fraction of households without bank accounts said that they did not have a checking account because they did not like dealing with banks (25%) or because the service charges were too high (12%). [SCF]
- Many households have been automatically enrolled in expensive overdraft programs that can hit consumers with costly overdraft fees for even the smallest purchases. For example, the FDIC found that the average overdraft charge for a single purchased item—like a $2 cup of coffee—is $30 at banks with assets over $1 billion. [FDIC, “FDIC Study of Bank Overdraft Programs” (November 2008) at Table IV-3]
The Wall Street Reform and Consumer Protection Act of 2010 is Beneficial for Latinos
- For Latinos who send remittances to their families: The Bureau will be able to provide, for the first time, federal oversight over the larger companies that provide remittance transfer services to consumers, and it will enforce new protections, including requirements to provide consumers easy-to-understand, pre-transactional pricing disclosures and receipts.
- Fair markets for Latinos: One pillar of the Bureau’s mission will be to ensure that markets for consumer financial products and services operate transparently and efficiently to facilitate access for all families, including Latino families. The Bureau will enforce fair lending laws that protect Latinos from discriminatory lending practices. The Bureau will also be empowered to focus on improving disclosures and cracking down on abusive practices to make it easier for families to identify and avoid high cost, high risk products that don’t meet their needs.
- For Latinos who want to buy a home: The Bureau will take steps to consolidate and simplify with plain language two overlapping and sometimes inconsistent federal mortgage forms. The Bureau will, for the first time, provide ongoing federal oversight of both nonbank companies and banks in the mortgage market, and protect borrowers from unfair, deceptive or other illegal mortgage lending practices.
- For Latino families using alternative financial services: The Bureau will be able to establish, for the first time, robust federal supervision and oversight over larger alternative financial service companies, such as check cashers and payday lenders. The Bureau will be able to combat abusive practices that harm consumers, helping families avoid hidden fees and keep more money in their wallets.
- For Latinos without bank accounts: The Bureau will be able to reign in practices that may drive some Latinos away from banks—including by stopping banks from enrolling customers in expensive overdraft programs without their consent.
- For Latinos with credit cards: The Bureau will prevent evasion of the Credit CARD Act of 2009, which bans arbitrary rate hikes on existing balances and other unfair practices. For Latinos who have used credit cards to get by when times are tight, the law will give them clarity on the interest rates they are charged.
- For Latinos caught by unexpected overdraft fees: The Bureau will prevent evasion of new rules that give consumers a real choice as to whether to join expensive overdraft programs so that they are not unknowingly charged unnecessary fees.
- For Latinos who must take out private student loans to cover the cost of higher education: The Bureau will be able to supervise private student lenders, fight unfair lending practices, and require lenders to follow fair rules of the road and give students the information they need to make smart choices.
- Empowering Latinos to make smart financial choices by promoting financial education and financial literacy: The Bureau will promote consumer financial education and financial literacy, with a dedicated office focused on ensuring that the Bureau’s expertise and research are used to help raise awareness, and educate and empower consumers to avoid unfair practices and make smart financial choices.
- Safeguarding Latino’s retirement security, savings and investments: The Wall Street Reform and Consumer Protection Act strengthens investor protection by empowering the Securities and Exchange Commission (SEC) to:
- Raise the standards for brokers and investment professionals when giving advice so that they have a fiduciary duty and are required to act in the interests of investors, rather than their own; and
- Require brokers to disclose costs and risk factors to investors prior to selling a product, instead of after it is purchased.
###
Download these facts here. En espñol
The Wall Street Reform and Consumer Protection Act of 2010
Benefits Rural Americans
Too many responsible rural Americans have paid the price for an outdated regulatory system that left our financial system vulnerable to collapse and left families without adequate protections. In the summer of 2009, the Obama Administration put forward a legislative proposal crafted to rein in excessive risk on Wall Street and preserve economic opportunity on Main Street. A year later, the President signed into law a bill aligned to a remarkable degree with that original proposal. This comprehensive financial reform, which put in place the strongest consumer financial protections in history, included the creation of a new, dedicated Consumer Financial Protection Bureau (the Bureau). The Bureau, an independent entity within the Federal Reserve, will have one mission: to protect consumers by promoting transparency and consumer choice and preventing abusive and deceptive practices. It will have broad authority to write and enforce new consumer financial protection rules. The Bureau will use these authorities to promote financial stability and protect consumers – including rural Americans – from the unfair practices that contributed to the financial crisis.
Rural Families and the Financial Crisis
- During 2005 and 2006, the height of the subprime lending boom, at least 9% of mortgages made to rural borrowers (those living outside a Metropolitan Statistical Area ) were subprime loans. Even in 2007, as subprime lending declined, 6.5% of loans made to rural borrowers were subprime loans. [McDash Online Core Database data (September 2009); Treasury analysis.]
- Borrowers who have subprime loans, including rural families, have come under severe stress during the recent financial crisis and are at high risk of foreclosure. 48.5% of outstanding subprime loans made in 2005 and 57.2% of such loans made in 2006 are in foreclosure or no payment has been received for 60 days or more. [McDash Online Core Database data (February 2010); Treasury analysis.]
- The rural homeownership rate declined from 74% in 2004 to 71% in 2007. [Federal Reserve, “Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances,” (February 2009) (“SCF”)]
Rural Families Deserve Clear Rules and Strong Enforcement
Household Debt
- The debt ratio (the ratio of total debt to total assets) for rural households increased from 13% to 17% from 2001 to 2007. [SCF]
Credit Cards
- 45% of rural households carry a credit card balance, with a median balance of approximately $2,000. [SCF]
Mortgages
- 44% of rural households have mortgages and other debt secured by residential property, such as home equity lines of credit. The median amount owed is approximately $61,000. [SCF]
- The piles of forms needed for a regular mortgage can be overwhelming, and many brokers have taken advantage of that confusion to give borrowers loans they didn’t need or couldn’t afford.
Installment Loans
- 51% of rural households have installment loans, such as student loans.
Retirement Investments
- Rural households invest in the financial markets, including for retirement. 42% of rural households have retirement accounts with a median value of approximately $31,000. [SCF]
Bank Accounts
- 11% of rural households do not have bank accounts. Families without bank accounts are often forced to turn to costly alternative financial services, such as check cashing, which, until now, have lacked a federal supervisor to enforce fair rules of the road for consumers. In a survey conducted by the Federal Reserve, a significant fraction of households without bank accounts said that they did not have a checking account because they did not like dealing with banks (25%) or because the service charges were too high (12%). [SCF]
- Many households have been automatically enrolled in expensive overdraft programs that can hit consumers with costly overdraft fees for even the smallest purchases. For example, the FDIC found that the average overdraft charge for a single purchased item—like a $2 cup of coffee—is $30 at banks with assets over $1 billion. [FDIC, “FDIC Study of Bank Overdraft Programs” (November 2008) at Table IV-3]
The Wall Street Reform and Consumer Protection Act of 2010 Is Beneficial for Rural Americans
- For rural Americans who want to buy a home: The Bureau will take steps to consolidate and simplify with plain language two overlapping and sometimes inconsistent federal mortgage forms. The Bureau will, for the first time, provide ongoing federal oversight of both nonbank companies and banks in the mortgage market and protect borrowers from unfair, deceptive or other illegal mortgage lending practices.
- For rural Americans using alternative financial services: The Wall Street Reform and Consumer Protection Act establishes, for the first time, robust federal supervision and oversight over larger alternative financial service companies such as check cashers and payday lenders. The Bureau will be able to combat abusive practices that harm consumers, helping families avoid hidden fees and keep more money in their wallets.
- For rural Americans without bank accounts: The Bureau will be able to rein in practices that may drive some rural Americans away from banks—including by stopping banks from enrolling customers in expensive overdraft programs without their consent.
- For rural Americans with credit cards: The Bureau will prevent evasion of the Credit CARD Act of 2009, which bans arbitrary rate hikes on existing balances and other unfair practices. For rural Americans who have used credit cards to get by when times are tight, the law will give them clarity on the interest rates they are charged.
- For rural Americans caught by unexpected overdraft fees: The Bureau will prevent evasion of new rules that give consumers a real choice as to whether to join expensive overdraft programs so that they are not unknowingly charged unnecessary fees.
- For rural Americans who must take out loans to cover the costs of higher education: The Bureau will be able to supervise private student lenders, fight unfair lending practices, and require lenders to follow fair rules of the road and give students the information they need to make smart choices.
- Empowering rural Americans to make smart financial choices by promoting financial education and financial literacy: The Bureau will promote consumer financial education and financial literacy, with a dedicated office focused on ensuring that the Bureau’s expertise and research are used to help raise awareness, and educate and empower consumers to avoid unfair practices and make smart financial choices.
- Safeguarding rural Americans’ retirement security, savings and investments: The Wall Street Reform and Consumer Protection Act strengthens investor protection by empowering the Securities and Exchange Commission (SEC) to:
- Raise the standards for brokers and investment professionals when giving advice so that they have a fiduciary duty and are required to act in the interests of investors, rather than their own; and
- Require brokers to disclose costs and risk factors to investors prior to selling a product, instead of after it is purchased.
###
Download these facts here.
The Wall Street Reform and Consumer Protection Act of 2010
Benefits Older Americans
Too many responsible older Americans have paid the price for an outdated regulatory system that left our financial system vulnerable to collapse and left families without adequate protections. In the summer of 2009, the Obama Administration put forward a legislative proposal crafted to rein in excessive risk on Wall Street and preserve economic opportunity on Main Street. A year later, the President signed into law a bill aligned to a remarkable degree with that original proposal. This comprehensive financial reform, which put in place the strongest consumer financial protections in history, included the creation of a new, dedicated Consumer Financial Protection Bureau (the Bureau). The Bureau, an independent entity within the Federal Reserve, will have one mission: to protect consumers by promoting transparency and consumer choice and preventing abusive and deceptive practices. It will have broad authority to write and enforce new consumer financial protection rules. The Bureau will use these authorities to promote financial stability and protect consumers – including older Americans – from the unfair practices that contributed to the financial crisis.
Seniors Have Struggled Through the Recent Economic Downturn
- The Financial Crisis Sharply Reduced the Value of Many Seniors’ Primary Asset—Their Home. The housing market collapse has sharply reduced the value of many seniors’ primary assets—their homes. The median home equity of families with mortgages, which had risen to $91,000 in 2004, is estimated to have fallen over 20 percent nationwide to $71,600 from 2004 through October 2008, below its value at the beginning of the decade. [Federal Reserve, “Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances,” (February 2009) (“SCF”)]
- Seniors Have Been Caught in the Foreclosure Crisis. Americans aged 50 and older accounted for approximately 28% of all delinquencies and foreclosures in the second half of 2007. [AARP Public Policy Institute, “The Impact of the Financial Crisis on Older Americans” (December 2008)]
- Older Americans Have Gone Deeper into Debt. From 2004 to 2007, median balances of credit card debt of pre-retirement seniors aged 55-64 increased by 50%. Over the same time period, there has been faster growth in the share of seniors 55 and over with debt in excess of 40% of income than for any other group. [SCF]
Seniors Deserve Clear Rules and Strong Enforcement
- Financial Fraud Reported to Be a Growing Form of Elder Abuse with an Annual Net Loss of at Least $2.6 Billion. As the Boston Globe reported, “Law enforcement and securities officials say the recession is pushing more people to steal from well-off seniors. ‘Elder financial abuse is becoming the crime of the 21st century,’ said Fred Joseph, president of the North American Securities Administrators Association. The annual loss is estimated to be at least $2.6 billion, according to the report. The typical victim of elder abuse is a woman over 75 who lives alone.” [Boston Globe “As Recession Grinds on, Financial Abuse of Elders Takes a Growing Toll” (July 16, 2009)]
- Seniors Are Reported to Pay Consistently Higher Interest Rates and Fees in Multiple Financial Markets. Studies have found that older adults consistently borrow at higher rates and pay more fees in multiple financial markets, including home equity loans, auto loans, credit card interest rates and fees, mortgages, and small business credit cards. One report found that younger adults and older adults borrow at higher interest rates and pay more fees than middle-aged adults, controlling for all observable characteristics, including measures of risk. [Agarwal, Driscoll, Gabaix, Laibson, “The Age of Reason: Financial Decisions Over the Lifecycle” NBER Working Paper 13191, (June 2007)]
- Fine Print is Unfair to Seniors—Seniors Are Reported to Be Less Likely to Know the Details of Their Mortgages. Reports have shown that 60% of borrowers 65 and older do not know the details of the terms of their adjustable rate mortgages, such as their per-period caps, compared with around 30 percent of younger borrowers. [Bucks and Pence, “Do Borrowers Know Their Mortgage Terms?” Journal of Urban Economics (2008)]
- Many households have been automatically enrolled in expensive overdraft programs that can hit consumers with costly overdraft fees for even the smallest purchases. For example, the FDIC found that the average overdraft charge for a single purchased item—like a $2 cup of coffee—is $30 at banks with assets over $1 billion. [FDIC, “FDIC Study of Bank Overdraft Programs” (November 2008) at Table IV-3]
The Wall Street Reform and Consumer Protection Act of 2010 Is Beneficial for Older Americans
- For seniors who want to buy a home: The Bureau will take steps to consolidate and simplify with plain language two overlapping and sometimes inconsistent federal mortgage forms. The Bureau will, for the first time, provide ongoing federal oversight of both nonbank companies and banks in the mortgage market and protect borrowers from unfair, deceptive or other illegal mortgage lending practices.
- Protecting seniors’ retirement security, savings and investments: The Wall Street Reform and Consumer Protection Act strengthens investor protection by empowering the Securities and Exchange Commission (SEC) to:
- Raise the standards for brokers and investment professionals when giving advice so that they have a fiduciary duty and are required to act in the interests of investors, rather than their own; and
- Require brokers to disclose costs and risk factors to investors prior to selling a product, instead of after it is purchased.
- For seniors with credit cards: The Bureau will prevent evasion of the Credit CARD Act of 2009, which bans arbitrary rate hikes on existing balances and other unfair practices. For seniors who have used credit cards to get by when times are tight, the law will give them clarity on the interest rates they are charged.
- For seniors caught by unexpected overdraft fees: The Bureau will prevent evasion of new rules that give consumers a real choice as to whether to join expensive overdraft programs so that they are not unknowingly charged unnecessary fees.
- For seniors without bank accounts: The Bureau will be able to rein in practices that may drive some seniors away from banks—including by stopping banks from enrolling customers in expensive overdraft programs without their consent.
- For seniors using alternative financial services: The Wall Street Reform and Consumer Protection Act establishes, for the first time, robust federal supervision and oversight over larger alternative financial service companies such as check cashers and payday lenders. The Bureau will be able to combat abusive practices that harm consumers, helping families avoid hidden fees and keep more money in their wallets.
- Empowering seniors to make smart financial choices by promoting financial education and financial literacy: The Bureau will promote consumer financial education and financial literacy, with a dedicated office focused on ensuring that the Bureau’s expertise and research are used to help raise awareness, and educate and empower consumers to avoid unfair practices and make smart financial choices.
###
Download these facts here.
The Wall Street Reform and Consumer Protection Act of 2010 Benefits Women
Too many responsible women have paid the price for an outdated regulatory system that left our financial system vulnerable to collapse and left families without adequate protections. In the summer of 2009, the Obama Administration put forward a legislative proposal crafted to rein in excessive risk on Wall Street and preserve economic opportunity on Main Street. A year later, the President signed into law a bill aligned to a remarkable degree with that original proposal. This comprehensive financial reform, which put in place the strongest consumer financial protections in history, included the creation of a new, dedicated Consumer Financial Protection Bureau (the Bureau). The Bureau, an independent entity within the Federal Reserve, will have one mission: to protect consumers by promoting transparency and consumer choice and preventing abusive and deceptive practices. It will have broad authority to write and enforce new consumer financial protection rules. The Bureau will use these authorities to promote financial stability and protect consumers – including women – from the unfair practices that contributed to the financial crisis. "Women and the Financial Crisis
- Women made up 30% of borrowers for mortgages of all types in 2005 and 38.8% of borrowers with subprime loans. [Consumer Federation of America, “Women are Prime Targets for Subprime Lending” (December 2006) (“CFA”)]
- Women were 32% more likely to have received subprime mortgages of all types than men, regardless of income. About a third (32.0%) of all women received subprime (3 percentage points above the Treasury threshold) mortgage loans of all types compared to about a quarter (24.2%) of men. [CFA]
- Women were 41% more likely to have received high-cost subprime loans, regardless of income. 10.9% of women received high-cost subprime (5 percentage points over the Treasury threshold) mortgages compared to 7.7% of men. [CFA]
- Women disproportionately turn to payday loans, tax refund anticipation loans, and title loans. [AARP,”The Alternative Financial Services Industry” Issue Brief (August 2001)] Based on analysis of the 2007 Survey of Consumer Finances, the Center for American Progress reported that “payday loans are disproportionately taken out by families headed by single women, followed closely by married couples.” Of families who borrowed from a payday lender, 41% were headed by single women, just 19% were headed by single men, and the remainder were headed by a married couple. By contrast, 59% of families who did not take out a payday loan were headed by married couples while only 27% were headed by single women and the remainder were headed by single men. [Center for American Progress, “Who Borrows from Payday Lenders,” (March 2009)]
Women and Long-Term Financial Security
- Women are at a higher risk for retirement insecurity. According to research from the National Institute on Retirement Security, “Women remain at a higher risk for retirement insecurity as compared to men.” [National Institute on Retirement Security, “Shattering the Retirement Glass Ceiling” (May 7, 2009) (“NIRS”)]
- Women need to accumulate more retirement assets than men because they are likely to live longer. According to research from the National Institute on Retirement Security, women tend to live longer than men and therefore need to accumulate more retirement assets. [NIRS]
- Research has shown that on average women had nearly $47,000 less in their 401(k) plans than the average balance for men. [Hewitt Worldwide, “Hewitt Research Shows Women Much Less Prepared To Retire Than Men” (July 9, 2009]
The Wall Street Reform and Consumer Protection Act of 2010 Is Beneficial for Women
- Fair markets for women: One pillar of the Bureau’s mission will be to ensure that markets for consumer financial products and services operate transparently and efficiently to facilitate access for all Americans, including women. The Bureau will enforce fair lending laws that protect women from discriminatory lending practices. The Bureau will also be empowered to focus on improving disclosures and cracking down on abusive practices to make it easier for families to identify and avoid high cost, high risk products that don’t meet their needs.
- For women who want to buy a home: The Bureau will consolidate and simplify with plain language two overlapping and sometimes inconsistent federal mortgage. The Bureau will, for the first time, provide ongoing federal oversight of both nonbank companies and banks in the mortgage market and protect borrowers from unfair, deceptive or other illegal mortgage lending practices.
- For women using alternative financial services: The Bureau will establish for the first time robust federal supervision and oversight over larger alternative financial service companies such as check cashers and payday lenders. The Bureau will be able to combat abusive practices that harm consumers, helping families avoid hidden fees and keep more money in their pocketbooks.
- For women without bank accounts: The Bureau will be able to rein in practices that may drive some women away from banks—including by stopping banks from enrolling customers in expensive overdraft programs without their consent.
- For women with credit cards: The Bureau will prevent evasion of the Credit CARD Act of 2009, which bans arbitrary rate hikes on existing balances and other unfair practices. For women who have used credit cards to get by when times are tight, the law will give them clarity on the interest rates they are charged.
- For women caught by unexpected overdraft fees: The Bureau will prevent evasion of new rules that give consumers a real choice as to whether to join expensive overdraft programs so that they are not unknowingly charged unnecessary fees.
- For women who must take out loans to cover the costs of higher education: The Bureau will be able to supervise private student lenders, fight unfair lending practices, and require lenders to follow fair rules of the road and give students the information they need to make smart choices.
- Empowering women to make smart financial choices by promoting financial education and financial literacy: The Bureau will promote consumer financial education and financial literacy, with a dedicated office focused on ensuring that the Bureau’s expertise and research are used to help raise awareness, and educate and empower consumers to avoid unfair practices and make smart financial choices.
- Protecting women’s retirement security, savings and investments: The Wall Street Reform and Consumer Protection Act strengthens investor protection by empowering the Securities and Exchange Commission (SEC) to:
- Raise the standards for brokers and investment professionals when giving advice so that they have a fiduciary duty and are required to act in the interests of investors, rather than their own; and
- Require brokers to disclose costs and risk factors to investors prior to selling a product, instead of after it is purchased.
###
Download these facts here.
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