Director of the Consumer Financial Protection Bureau
The National Baptist Convention, USA, Inc.
September 5, 2013
Thank you, Rev. Dr. Freeman for your kind words. I also want to express my appreciation to President Scruggs, Chairman West, and Rev. Dr. Gable. For their invaluable support of our work at the Consumer Financial Protection Bureau, and for their deep commitment to those who struggle with their finances, we are most grateful.
Faith leaders often respond first to families in financial crisis. Like Aaron and Hur, who stood on each side of Moses and held up his hands when he grew weary in the battle, faith leaders use their own strength to steady others and enable them to carry on the fight. So you try your best to offer guidance. You try your best to offer help.
Now you have someone to lean on when people come to you with their financial troubles. Just two years ago, this federal agency was established by Congress at President Obama’s urging. We were given the great responsibility to protect all Americans from financial predators. We are here to make sure that the problems of the past, which hurt so many consumers, do not happen again. We are here to foresee and prevent the problems of the future. We aim to help people better understand the big financial decisions they may make in their lives – borrowing to buy a car, to pay for college, to own a home.
Before I tell you more about what we are doing, let us first be reminded of the story of Jacob’s Ladder. When Jacob left Beersheba and went toward Haran, he dreamed there was a ladder set up on earth and the top of it reached toward heaven. Then Jacob awoke from his sleep and said, “Surely the Lord is in this place; and I did not know it.”
We spend much of our lives with a sense that we want to be on this ladder, climbing toward our own place in the sun. It is an economic metaphor that has reached far and wide in our culture. It is about success, security, and stability. In today’s world, this ladder can look very different for different people. Some people start out near the top. Some start out near the bottom. Some have an easy climb. For others, it can be extremely hard.
In this country, we all know that African Americans have been climbing this ladder for a very long time. They have found that it has many rungs. There was the rung for freedom, and many different rungs for equality – for access to education, to public accommodations, to the ballot box. So many things had to be fought for. But millions of brave Americans took on that fight, and much has been achieved. We just celebrated the 50th anniversary of the March on Washington for Jobs and Freedom. All across America, people saw the courage and discipline of those who gathered on the National Mall in 1963. A half-century later, we can now see that by their actions and by their words, they transformed our society in a lasting way.
In the years since the Civil Rights Act, many more African Americans bought their own homes. Many more African Americans went to college. Many more African Americans attained leadership roles within the community and in America’s boardrooms. They knocked down the walls of segregation and broke many barriers that had no place in America.
But five years ago this month, Lehman Brothers declared bankruptcy. What followed was a credit freeze that spurred a much broader collapse of the economy. Many people who were entirely innocent got hit the hardest. They lost their jobs; many lost their homes; almost everyone lost much of their retirement savings. Considerable time has passed, but you know best that African American families are still reeling from the crisis. Unemployment remains high; net worth has sunk; inequality has widened. For these families, the Great Recession is far from over.
At the Consumer Bureau, we are working to understand these challenges. We know that consumers have to climb the ladder themselves – we cannot step into their shoes and do it for them. But what we can do, and must do, is hold the ladder steady. We can help empower Americans to make sound financial decisions they can live with for the rest of their lives. And we can make sure they are not forced down the ladder by what we call the “Four Ds”: deceptive marketing, debt traps, dead ends, and discrimination. Let me describe each of these problems more carefully.
The first problem is deception. Consumers cannot make sound financial choices if they are given false or inaccurate information. Yet this happened far too often in the lead-up to the financial crisis. Some lenders withheld important information. Others deceived consumers. One result was that too many homebuyers ended up with complicated mortgage products they did not understand and that were doomed to failure – products that if they had known better they would have avoided. We now hear these stories from consumers all the time – stories filled with personal tragedy and lasting regret.
So one of our signature projects at the Consumer Bureau has been our “Know Before You Owe” effort to make information more understandable. But cleaning up deception in the marketplace also requires tough action, so we have taken on credit card companies that misled consumers with deceptive sales pitches. So far, we have put more than $400 million back in the pockets of consumers. We also have gone after companies that claim to provide mortgage relief and debt-settlement services, but really just take people’s money and leave them worse off. We have secured court orders. We have frozen assets. We have shut down fraudulent operations. And we are taking bad actors out of the industry. This work is essential to protect consumers against financial predators.
A second major problem, that I know you see all the time, is debt traps that cause people to get stuck in a downward spiral that deeply undermines their personal finances.
Products marketed as short-term solutions to immediate needs can be risky for consumers. People in a tough situation with nowhere else to turn may think their only option is to use such products. Not everyone is lucky enough to have an uncle or a sister or a friend who can lend them money in a pinch. But after they get the loan with a huge interest rate, the fees alone can eat up all the money they can afford to repay. As a result, they often end up borrowing again and again.
Thanks to Rev. Dr. Scruggs and many other leaders here today who have been vigilant and outspoken on this subject, expressing their concerns, in particular, about payday loans. They have told us about the suffering of members of their congregations; about the shame people feel when they get stuck in a cycle of debt that is overwhelming.
We thank you for that, and we are paying close attention. For the first time at the federal level, we are supervising payday lenders. We have dedicated teams looking at their books, reviewing their marketing practices, and seeing how they treat consumers. We want to make sure that those who can afford to borrow are able to get the credit they need without ruining their lives. Debt traps should not be part of their financial futures.
Another “D” we are addressing refers to markets that create frustrating and damaging “dead ends” for consumers. When consumers have limited clout because they do not choose the businesses they must deal with, they lack the ultimate control of being able to sever their ties. This is true even though what goes on in those markets can have a profound influence on their lives.
Take, for example, debt collection. While there are many legitimate debt collectors, we all have heard horror stories about constant phone calls; relatives tracked down; false claims of facing arrest if the debt is not paid. These tactics are indefensible. People deserve to be treated with dignity, even if they do owe a debt. And we are insisting on it.
In other markets where consumers cannot vote with their feet, they experience similar problems. In mortgage servicing, millions of people have faced unwelcome surprises and constant runarounds, leading to improper fees and the needless loss of their homes. People also find they have little or no say in decisions made about their credit reports and it seems that nobody will bother to listen to them if they do complain. For consumers with errors in their reports, the damage done to their lives can be severe and lasting.
At the Consumer Bureau, we recognize that careful rules and effective oversight are needed to help protect consumers in these dead-end markets. We accept this task with firm determination.
The fourth “D” that is a clear focus for us is combatting the continuing evil of discrimination.
The African American community in the United States has been fighting for justice for hundreds of years. As you know best, this must include economic justice, the right to equal treatment in the financial marketplace, and freedom from predatory lending.
When consumers sit down at the table to discuss their prospects for a loan, they are often unaware of the options available to them. In many instances, hidden incentives for brokers or loan officers to negotiate higher rates have resulted in African American and Hispanic borrowers paying more than they should have for mortgages and auto loans.
At the Consumer Bureau, we have an Office of Fair Lending dedicated to these issues. This passionate and talented team focuses on ensuring all consumers have fair, equitable, and nondiscriminatory access to credit. So now none of us has to stand alone in the fight against financial discrimination; we are standing on your side to make sure you are treated fairly.
Let me close on an important note. In all of these financial matters, nobody cares as much about you as you care about yourself. Nobody understands your needs and wants, your hopes and dreams, as well as you understand them yourself. So everyone must recognize that I am my own first line of consumer protection.
Tell me whether you agree with me: it is a scandal and a stain on this country that we do so little to prepare our young people to deal with these issues before we send them out into the world. Year after year, we give them no real preparation to make the most basic and important financial choices. They will repeat the same mistakes others have made because we do not educate them to do better. When they fail, how can we be surprised, when we have not helped them succeed?
In our schools, in our workplaces, and yes in our churches too, I beseech you to push for more to be done for our young people and for all of us. We all need to know more. We owe that duty to ourselves, to clear a lasting path forward in our lives. If we do that, we will make ourselves stronger, our families stronger, and our country stronger.
A good place to start is with two new resources created by the Consumer Bureau. First, consumers can file a complaint with us and we will work to get it resolved. Already we have handled over 200,000 complaints about mortgages, credit cards, student loans, auto loans, bank accounts, payday loans, debt collection, credit reporting, and more. In many cases we are able to get people some relief – either money back or things like correcting their credit report or stopping harassing phone calls by debt collectors. We also have a growing amount of information available to help people understand financial issues better – we call this resource “Ask CFPB.” It consists of answers to hundreds of questions we hear directly from consumers.
You can find us online at consumerfinance.gov or by calling us toll-free at 855-411-CFPB. When someone in your congregation comes to you with a concern, feel free to refer them directly to us.
I firmly believe that the Consumer Bureau’s work will add greatly to the moral and spiritual security of our nation. We are dedicated to making sure each consumer is treated fairly and can get equal justice in the financial marketplace so we may all thrive. As Dr. Martin Luther King said, “An individual has not started living until he can rise above the narrow confines of his individualistic concerns to the broader concerns of all humanity.” People can only do that if we help make it possible for them to lead safer and sounder financial lives.
But to reach more than 300 million consumers, we need your help. Please spread the word about us. We are the Consumer Financial Protection Bureau, the C-F-P-B, and we have put both hands on the ladder to hold it steady for American consumers. Together we can see to it that more people can climb that ladder to security and prosperity.
The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.