By Charlene Crowell
Every once in a while a congressional committee hearing can almost seem like a time to grab your popcorn and a seat to hear the exchanges and varying opinions. On April 5, a U.S. Senate Banking, Housing and Urban Affairs Committee hearing on consumer finance regulations became one such occasion. The session was convened to publicly “assess the effects of consumer finance regulations.”
In plain English, it was a time to publicly debate whether the Consumer Financial Protection Bureau (CFPB) had been good or bad for the country, since opening operations in July 2011. The forum also hearkened back to many of the former supporters and opponents of proposals to reform Wall Street in the aftermath of the worst economic crisis since that of the 1930s.
Alabama’s Sen. Richard Shelby, chair of Senate Banking has consistently opposed the idea of creating an independent bureau with a director instead of a commission and a budget that would not be subject to the annual budgetary appropriations process.
“Because of the Bureau’s structure and the means by which it is financed, it remains one of the least accountable agencies in the federal government,” said Sen. Shelby in his opening remarks.
Conversely, Ohio’s Sen. Sherrod Brown, the committee’s Ranking Member, has just as vociferously supported financial reforms to shield consumers from further harms.
“The CFPB has been a success,” stated Sen. Brown. “The agency has taken strong actions in a number of consumer finance markets that previously had no federal oversight, including credit reporting, debt collection, payday loans, student loan servicing, and auto finance. The benefits of the CFPB are clear: its actions have resulted in $11.2 billion being returned to over 25 million consumers.”
The only hearing witness that spoke in support of all that CFPB has accomplished was Reverend Dr. Willie Gable, Jr., pastor of New Orleans’ Progressive Baptist Church and chair of the Housing and Economic Development Commission of the National Baptist Convention, USA. He brought to the forum a bit of Baptist cadence and truth-telling to the Capitol Hill committee, underscoring the damage that predatory lending continues to inflict. His perspective was also a significant one representing the National Baptist Convention USA with its 7,500,000 Baptist congregants. It is the oldest and largest religious convention in the nation.
“Twelve million families lost their homes as a result of the financial crisis,” stated Rev. Gable’s written testimony. “Twelve million. Lives turned upside down. Life savings washed away. $2.2 trillion in lost property value, over half from communities of color.”
In its comments submitted to the committee record, the Center for Responsible Lending (CRL) agreed with Rev. Gable’s assessment.
“Abusive loan terms and lender practices bear responsibility for the foreclosure tsunami that disproportionately stripped wealth from communities of color,” noted Mike Calhoun, CRL President. ‘Risky borrowers’ had neither the power nor the authority to cause a housing market meltdown.”
As this column has earlier reported, the families who lost their homes to foreclosure since 2004 were not the only victims of the crisis. Untold millions who lived nearby foreclosed homes may have kept theirs, but became upside down on their mortgages, owing more than the devalued homes are now worth. The rippling effects of foreclosures nationwide led to multiple losses – jobs, businesses, incomes, and even local property taxes that support vital services like police, fire and emergency medical assistance.
“But other abuses continue to run rampant,” continued Rev. Gable. “Some may be more obscure than mortgage lending, but they are ever powerful, ever destructive…Payday lending is an abomination in plain sight. A debt trap by design.”
In his allotted five minutes, Rev. Gable cited a litany of other lending ills: bank overdraft fees, discriminatory auto lending, law-breaking debt collectors, student debt and those who prey upon the elderly.
“Please allow me to be clear: The notion that struggling Americans need access to products like those the Bureau has been working so hard to address is an insult to the basic dignity of every vulnerable person,” concluded Rev. Gable. “The predatory practices CFPB is addressing siphon off what little resources targeted persons have and leave them worse off. . . Uncontrolled predatory lending practices will relegate some communities to a state of perpetual poverty.”
“Now, when more than a million families remain seriously behind on their mortgage payments and just under half a million more are in some stage of foreclosure, it is not a time to move backwards into the same failed and reckless lending practices,” continued Calhoun. “Instead, we must continue to move forward to a more sustained housing recovery that benefits consumers, lenders and investors alike.”
Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at [email protected]