Prepared Remarks of Richard Cordray
Director of the Consumer Financial Protection Bureau
February 15, 2012
Thank you so much for having me here today. It is an honor to be invited to speak to you during your National Legislative Conference. From educating immigrant children to promoting economic empowerment to fighting for the rights of farm workers, LULAC has helped improve the lives of this country’s Latinos for generations.
When I served in state and local office in Ohio, I always found it deeply inspiring and profoundly moving to speak at naturalization ceremonies. To me, these occasions are the very embodiment of what Walt Whitman called a “Nation of nations.” People from all over the world gather to become citizens of the United States. Usually I observed that before us today are people who have come to our country from every continent except Antarctica.
These ceremonies are not just about legal forms; they are the pinnacle of a long-time commitment, often a difficult journey, to turn one’s entire world upside-down and have the tremendous courage to try again at something entirely new. What a compliment to America! People who battle infinite obstacles to make a new home among us, despite knowing that they often will encounter prejudice and misunderstanding long after they arrive. At these events, I hear personal stories from Latino families and others who came to this country with open hands and open hearts, unafraid to seek a better future in this famous land of freedom and opportunity. As our House Minority Leader beautifully noted, “every immigrant makes America more American.”
At the Consumer Financial Protection Bureau, we earnestly believe in the fundamental principles of openness and fairness. We know that financial products and services represent much more than mere transactions – they can define the ways and means of our lives. We want Latino consumers – on the same footing with every other consumer – to have the information they need to make good choices, choices that enhance their lives and empower them to succeed. Information that keeps them from falling into the tricks and traps that may lead to financial hardship or financial ruin. We see financial literacy and financial capability as basic components of citizenship. It is important not only to learn how to participate in our democracy, but also to learn how to stand on your own two feet in our open market economy.
Many families were hard hit by the recession, but the median wealth of Hispanic households, in particular, fell by 66 percent from 2005 to 2009. A large part of that drop was because of the housing crisis. Too often, the poorest and most vulnerable among us – and very often, the newest among us – are exploited the most in our financial system. We want to work with you to reverse these trends. We want to strengthen consumer protections for Latinos, just as we aim to do for all consumers in America. We want to make people more aware of their rights as consumers, and to enable them to make decisions they can sustain over the long arc of life for themselves and their families.
For many, the American Dream offers an opportunity to work hard – not only to support themselves and their immediate families, but also to help support the loved ones they left behind and may never see again. Remittances from the United States to Latin America are estimated by researchers to total in the billions or tens of billions of dollars every year. LULAC has been working for a very long time, along with strong allies on Capitol Hill such as Senator Daniel Akaka and Congressman Luis Gutiérrez, to ensure that people are treated fairly when they engage in these transactions. You have championed greater transparency and basic consumer protections to safeguard those who send money around the world.
This is only fair. As I said recently in testimony before the Senate Banking Committee, everyone in that hearing room expects and receives basic consumer protections every time they write a check, make a bank transfer, or use a credit card. The same should be true of people who are sending remittance transfers. Many have long felt that they cannot trust this part of the financial marketplace. When they send money back, they either take the huge risk of sending it through the mail or they bear the expense and delay of finding someone they hope they can trust to carry the money back with them on a visit to the old country.
It is a point of pride for us that the first substantive rule the new Consumer Bureau issued a few weeks ago was a rule on remittances. Up to this point, few protections existed for those sending international money transfers. Hidden fees and fluctuating exchange rates meant that consumers did not know how much money would be received on the other end. Consumers sending $200 from here to El Salvador might find, for example, that they might pay anywhere from $8 to $33, depending on how the transaction is conducted and who conducts it. With our rule, we hope to increase competition. In general, all fees, taxes, and exchange rates will be disclosed to the customer ahead of payment. People will know how much is to be received, and they can shop for the best deal. This is a win for Latinos and for all consumers.
These consumer protections are long overdue, and like all consumer protections, they will also benefit the financial industry if the result is greater trust in the marketplace. People should not have to resort to mailing cash in an envelope or delivering money in person simply because they cannot depend on the system. If we can succeed in making these transactions more transparent, we will attract more customers who can compare options and achieve lower costs and reduced risk. Just as federal deposit insurance provided safeguards that attracted people back to deposit products after the frightening bank failures of the Great Depression, our remittance rule should facilitate confidence in international money transfers by making them work better and with more certainty.
Another way the remittance rule aims to reduce risk is by holding providers accountable for errors. Under the rule, if a consumer reports a problem with a transaction within 180 days, transfer providers will be required to investigate and to correct errors. Transfer providers may be held responsible for some of the mistakes made by their business partners. This new regime creates incentives for companies to use more dependable partners both here and abroad. In short, remittance transfers will become more predictable and reliable.
Our remittance rule will apply to most electronic money transfers over $15 and to most companies that offer such transfers, including banks, thrifts, credit unions, and others. Further, consumers will generally have the ability to cancel the transaction for 30 minutes after payment is made. These protections become fully effective in about a year, and we plan to work with you to conduct an effective public awareness campaign to inform people broadly about their new rights. In fact, months ago, while we were still in the process of standing up the new Consumer Bureau, we posted videos on our website, in English and Spanish, where we explained our role in implementing the new disclosure requirements for remittances. In fact, the two speakers for the videos (we call them movie stars Zixta Martinez and Flavio Cumpiano) are here with me today.
We recognize that people who send money back to loved ones in another country are engaged in an act of deep devotion. Many of these consumers do not make much money themselves and so have very little to spare. Dividing your resources into two parts and sending some back to your family elsewhere is a selfless and even a heroic act, and people deserve to know where every hard-earned penny is going.
The lyrics of the famous Irish ballad Danny Boy are all about a son who must leave home to find opportunity across the sea, even though it breaks his mother’s heart to bid him farewell. We can readily imagine him steadfastly sending money back to ease her cares whenever he could manage to do so. The sons and mothers of our day likewise deserve an improved marketplace that is reliable and transparent and hence worthy of their affection for one another. This, again, is the inescapably human aspect of remittance transfers. We are talking not just about financial transactions, but about the essential fabric of people’s lives. This is true for Latinos and it is true for all immigrant communities who grace our nation by making the difficult decision to add their talents and their courage to the ranks of our fellow Americans.
As the first Director of the Consumer Financial Protection Bureau, I am honored to work alongside a team of talented people who are constantly seeking solutions to financial problems that have a tangible, positive impact on American life. We agree with the legendary baseball player and humanitarian Roberto Clemente, who once said: “Any time you have an opportunity to make a difference in this world and you don’t, then you are wasting your time on Earth.”
Here and elsewhere, we are intent upon seizing our opportunities to make our financial markets work better for the people they serve. Some of us are first-generation Americans, some are second-generation, others have been here longer. But we are all the same when it comes to expecting a fair shake. We are all the same in deserving finally to have someone who stands on our side, protects us against fraud, and sees to it that we are treated fairly in the financial marketplace. That is why you pushed for a Consumer Financial Protection Bureau, and that is the work we are determined to do for this country.
Thank you for everything you stand for, and thank you again for having me here today.