Prepared Remarks of CFPB Director Richard Cordray at the National Association of State Treasurers
Thank you Treasurer Schmidt, and thank you all for having me here today. Working as a local and state treasurer in Ohio taught me the importance of consumer finance in the everyday lives of Americans. When I was the Franklin County Treasurer, my primary job was to run a financial office and safeguard public funds. But there was also another, very significant dimension of this work. I set out to collect millions in unpaid property taxes from those evading their obligations, and in doing so to protect all the law-abiding taxpayers and businesses that take pains to meet their obligations.
I soon found, however, that many delinquent taxpayers did not intend to be in trouble. They wanted to pay their share. But times were tough, and through no fault of their own, some were not able to pay. Sometimes it was because of the loss of a job. Other times it was because of a death or serious illness in their family or because of a divorce that heaped on the added expense of running two households instead of just one.
I quickly learned that there is no such thing as a one-size-fits-all solution as we seek to aid those who want to do the right thing and, when necessary, to thwart those who seek to take advantage of others. We experimented with new approaches, and we sought partnerships with a wide array of stakeholders.
So when we came face to face with the foreclosure crisis, we were able to create a “Save Our Homes” task force to bring together businesses and banks, nonprofits and government, to work together in assisting people desperate not to lose their homes. And we successfully pushed for a new law requiring high school students to receive personal finance education before they could graduate.
I have carried the lessons of those days with me throughout my career. I have now served as the Director of the Consumer Financial Protection Bureau for over two years. In that time, we have helped solve tens of thousands of individual consumer problems. We are returning over three billion dollars to consumers so far, and we have gone after those who try to take advantage of them. And we have put in place new rules that bring historic changes in the multi-trillion-dollar mortgage market so that it works better for consumers and responsible providers. These changes will help see to it that the terrible collapse we went through just over five years ago will never happen again.
Building a consumer financial marketplace that is more effective and more sustainable is our central priority. We recognize that we can only be successful if we work in close partnership with federal, state, and local officials. That is why I am here today. Together, we must make the consumer financial markets work again – not just for Wall Street investors but for everyday Americans. State officials across the nation work intensively to help their people. As a former state treasurer myself, I appreciate hearing from you about the consumer financial problems you are seeing on the ground. And for those consumer problems that run across state lines, you and your constituents now have a partner in the Consumer Bureau to address those concerns.
We have been helping Americans across the country through our Consumer Response function. Let me take a few minutes to describe this for you, because it is a tool that can benefit every one of you and all of your constituents.
When the President and the Congress created our new agency, they gave us a crucial means of helping individual consumers. We take complaints about a wide range of products and services that people use every day, and where too often they find themselves being mistreated. The list is long, so bear with me – we take complaints about mortgages, credit cards, bank accounts, student loans, auto loans, credit reporting, debt collection, consumer loans, money transfers, and payday loans. Each perceived grievance is a chance for us to get a better handle on a problem and see if it can be addressed successfully. That may mean getting some or all of the consumer’s money back. It may mean fixing or clearing up a mistake or some other kind of problem.
I know you hear many complaints about these kinds of issues. When I was Ohio Treasurer, we ran a “Speak Out!” campaign to gather stories from people about unfair and deceptive credit card practices. In the end, my office collected tens of thousands of comments, which we then submitted to the federal agencies that were developing the new rules for credit card lenders.
Now, when you receive complaints, there is a brand-new answer when you try to figure out what to do with them: send them to us. Give us a chance to use our authority and know-how to help the people you serve. We will not always be able to get an individual solution for each consumer, but we will work hard to get them a response from the company and we will help to address a good number of them. This is a good strategy for you. We want to be a key resource for you on consumer finance issues. Feel free to make use of our special expertise.
We have grasped the importance of making it easy for consumers to submit complaints. Even in more intricate matters, it takes less than thirty minutes on our website at ConsumerFinance.gov. Or people can call 1-855-411-CFPB, where we have trained operators who can provide services in dozens of languages. No longer should the people you serve have to feel helpless because they stand alone against a large and powerful financial company. At the new Consumer Bureau, we are now standing on their side to see that they are treated fairly. That is exactly what every consumer deserves.
We are working to make it just as routine to submit a complaint on a consumer finance issue as it is to call a city’s 311 line to get a pothole fixed. In fact, the Bureau is partnering with a growing number of cities to link their 311 hotlines directly with our Consumer Response team.
Thus far, we have received more than 300,000 complaints from individual consumers and helped to address many of them. For example, we have helped people like Krystal from New Jersey, who submitted a mortgage complaint to us on Saturday afternoon and had it resolved by Thursday. Then there was Ezra from Arizona, who was having a hard time getting the free credit report to which he was entitled. He said he was going around and around with the company but after contacting us, he was told he would receive his report very shortly, which he did.
And there was Joanna from Texas, who had $400 in credit card fees returned to her after she contacted us. She wrote to us afterward to say: “My credit card company’s treatment of me before and after being contacted by the CFPB was like night and day.”
Complaints are not only opportunities for us to help specific people; they also make a difference by informing our work and helping us identify and prioritize problems. We know that if we hear about a particular problem from fifty consumers, it likely looms larger than if we hear about it from two. We know that if we begin to see a disturbing trend, we should consider allocating some of our limited resources to investigate that particular problem. And we will also share that information with our state and local partners to highlight issues affecting their constituents.
Each consumer’s voice counts, and the chorus of many voices can change practices at these companies. We can send our examiner teams inside the companies to fix systemic problems, and we can use our enforcement teams to investigate, clean up, and deter violations of the laws.
One particular person comes to mind here. Harry from Massachusetts contacted us through “Tell Your Story” to describe how his son Ari, a 21-year-old infantry soldier, was hurt by a subprime auto loan. Harry had already done whatever else he could to call attention to the company’s deceptive marketing, and he felt like he had gotten nowhere. But Harry deserves all the credit in the world. After hearing from him, we opened an examination that resulted in an order returning $6.5 million to thousands of servicemembers across the country. When Harry just took a little bit of time to tell us what had happened to his son, he ended up helping an awful lot of people.
Margaret Mead once said, “The solution to adult problems tomorrow depends in large measure upon how our children grow up today.” To that end, we must make sure that our young people are getting the financial education they need. It is critically important that we provide financial education in every school. Last year, we released our policy recommendations for youth financial education – starting in kindergarten and continuing through the end of high school.
Every school district should make this part of the basics that we teach our children, with no exceptions and no excuses. Your advocacy can help make that happen. It is a shame and a scandal that we have done such a poor job in this area over the years, sending our young people out into the world practically defenseless against the predators that are eager to take advantage of their ignorance and inexperience. We can and must do better, at long last.
Let us work together with you. At the Bureau, we are developing a great set of financial education tools. We firmly believe that the best and most immediate form of consumer protection is self-protection: being able to avoid problems in the first place, and to know what to do about them if they do occur. So you can find important resources for consumers on our website. “Ask CFPB” is a database of over 1,000 frequently asked consumer questions and our best expert answers.
Our “Paying for College” set of tools walks families through the key issues involved in figuring out how to navigate their choices to finance higher education, including a tool that allows students and families to compare college financial aid offers and shop for the best deal. Just go to ConsumerFinance.gov, check out what we have to offer, and share these resources with your constituents. The information is unbiased and easy to understand. Your constituents can use the information to help them better understand their choices and make sound financial decisions that improve their lives over the long run.
We are also undertaking an initiative called “Your Money, Your Goals.” This program helps those who work with low-income and economically vulnerable consumers. It is designed to be used by social services staff to help their clients manage their financial affairs more effectively. It trains them to assist their clients in identifying financial challenges and goals, creating savings plans, managing debt, choosing financial products, and accessing consumer protections. We also offer housing counseling tools and trainings for counselors on what our new mortgage rules may mean for their clients. Treasurers can play a key role in working with us to provide these tools to your social service agencies. If you want to organize such trainings for people in your state, just let us know and we will work with you to accomplish that.
Lastly, we have information for you about an incredibly valuable program that deserves your attention. We all know that young people are having a harder and harder time managing the growing burdens imposed by student loan debt. For this generation, student loans have become an obstacle that inhibits people from participating fully in the economy, buying a home, starting a family, or making a go at trying to build a business. When you are recruiting these recent college graduates, you may be finding that their student loan debt causes them to steer away from careers in teaching, health care, law enforcement, and other public service fields – such as working for you. They want very much to do it, but fear they may end up unable to dig out from under a mountain of student loans.
The Consumer Bureau recently launched a workplace financial education initiative to empower public service organizations – including state governments – to help their employees manage their student debt. The initiative is built around a federal law that allows employees in the public and nonprofit sectors to have their federal student loan debt forgiven if they meet certain requirements for building a career in public service. This covers many members of your own workforce as well as many young people who are employed by nonprofit organizations in your communities.
We have asked cities, school districts, and nonprofits to take a pledge to help their employees understand their options that can put them on the path to building healthy financial habits, save them thousands of dollars and keep them doing work that they love. If you take our pledge, we will happily provide training, materials, and the support you need to get this initiative up and running. And if you want to spread this program around your state, both to other public officials and agencies and to nonprofit organizations, we will work to support you in those efforts.
Let me conclude by discussing two specific consumer finance issues you may be facing in your state. First, the housing market. We are making great strides towards reforming the single largest consumer finance market in the world. In January, our comprehensive new mortgage rules took effect. Our common-sense rules provide appropriate market standards and empower the American consumer with two basic principles: no debt traps and no runarounds. Lenders must give consumers only mortgages they can actually afford to pay back. And mortgage servicers must be responsive and work with struggling borrowers to access the available alternatives to foreclosure. The concepts are simple, but their impact is great. These rules should help prevent needless foreclosures, which is best for borrowers, lenders, and our entire economy.
The second issue is prepaid cards. I know that many states offer certain kinds of payments or even wages through prepaid cards. This can be useful for consumers without a checking account. But federal law requires employees to have a choice of how to receive their wages, and it is critical for consumers to have a choice of how to receive government payments as well. When considering how to design a prepaid card program for distribution of child support payments or state tax refunds, we think that states should mandate that consumers have the option of direct deposit into a bank account and, if they do choose a prepaid card, it should include the option to easily switch to direct deposit at any time.
In addition, we believe state and local governments achieve the best results for their constituents when they take into consideration how potential card partners intend to treat consumers, rather than settling for a deal that is more attractive only because its terms are more costly for the card users. Additional considerations could include the type and amount of fees, broad access to a robust set of in-network ATMs, and terms that make it easier for card users to access information about their accounts without cost. We would be happy to work with you and your colleagues in state and local government who want to consult with us about how to look out for the consumers who use these cards.
As you can see, we are striving to fashion a consumer financial marketplace that works better for both consumers and responsible businesses. We are pleased to stand with you on the side of American consumers and work with you to improve their daily lives. We encourage you to make these initiatives part of your own daily work – and we will be glad to partner with you to ensure that more Americans are able to make good choices to secure their economic futures. Thank you.
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.