Thank you for inviting me and welcoming me to the Labor Day Picnic. I have been here many times over the years, but this time around it has been awhile. Let me thank Pete McLinden of the Cincinnati AFL-CIO Labor Council for urging me to come and speak today, and Tim Burga, head of the Ohio AFL-CIO, as well. They had invited me here to Coney Island when I served first as State Treasurer and then as Ohio Attorney General, and they saw our work from up close. Through the worst period of the financial crisis, our team safeguarded billions of dollars of our public money without losing a penny. And after it all blew up, we took the fight to Wall Street, and we managed to recover about $2 billion for Ohio taxpayers, businesses, and retirees.
For more than six years now, I have continued to fight for you, and for all American consumers, as the first Director of the new U.S. Consumer Financial Protection Bureau. My great colleagues and I have faced some difficult tasks over these years, but we just went right ahead and carried them out. So we built a brand-new federal agency from scratch. We designed and imposed reforms to fix the mortgage market that had wrecked the economy. And we sent a strong message to banks and large financial companies that in a frank and fair way, the Consumer Bureau would be pushing them to clean up their act and put their customers first.
That has been hard work. It has been good work. And, above all, it has been enormously satisfying and important work. Our vision has been to reorder a consumer financial marketplace that works for American consumers, responsible providers, and the economy as a whole.
As we do that, it feels at times like we are literally sitting with people at their kitchen tables all over America – agonizing with them, consulting with them, planning with them. We deal with common, everyday products like credit cards, loans for cars and trucks, home mortgages, and bank accounts. We help people know before they owe by arming them with information they need to make smart decisions about their money. We put in place protections against predatory practices. We hold companies accountable for following the law, and we come down hard on them when they don’t. So far, our enforcement work has led to about $12 billion in relief to 30 million people who were cheated or mistreated, and who deserve to get things fixed and get their money back. People from all over the country thank us all the time for getting results, and they often seem surprised to find that we are doing this work on their behalf.
Have you ever been treated unfairly by a large, often faceless, company? When that happens, it can feel like the deck is stacked against you. It may seem there is almost nothing you can do to make the company correct the problem. Well now you can complain directly to us. So far, we have handled well over a million complaints about problems with consumer finance and household credit. We send your complaints to the company and work with them to get you a quick response, generally within 15 days. Doing this work, we can provide real help for people. One of them is Deborah Jacobs. When she first heard about our agency, she says she thought, “Well, that’s a waste of taxpayer dollars.” But in 2014, she fell behind on her mortgage and tried to get it modified so she could save her home. The bank that had the mortgage approved the modification, but tacked on a nasty surprise – a closing fee of $11,600. She tried to find out why, but got no answers, and no relief, until she turned to the Consumer Bureau. Four days after she submitted her complaint to us, her bank sent her new loan papers – this time, without that $11,600 fee. And so she was able to keep her home. Now when she talks about the Consumer Bureau, she says that “they’re my saviors.”
The issues we deal with have a huge impact on people’s lives. They are especially important for hard-working people across the nation, people like the ones we all know, who are trying to figure out how to stretch their dollars to meet their needs. Too many are facing the reality that there is more month than money. Income inequality is one factor that has pushed more and more families into this situation. Our country once embodied the principle that if you work hard and act responsibly, you can get ahead in life. But in recent decades, many people have found that their incomes have not kept up with the cost of living, while the greatest share of income growth has gone to those who are already better off. That much we know. But from what I have seen in my current position, there is more to the story here. Income inequality is made worse for many people by three other forms of financial inequality that deepen the divide between those who are counted in and those who are left out.
The first is inequality of wealth, which differs from income because it covers all accumulated assets. Estimates indicate that the share of wealth held by the top 1/10 of 1 percent in the United States tripled over the past thirty years. In contrast, during the financial crisis, the bottom fell out on millions of people whose wealth was tied up in their homes, in many communities and certainly in communities of color. The financial crisis was a stark reminder of the devastating effect of predatory practices. Many mortgage lenders were peddling toxic loans to people without even checking to see if they had a job, let alone sufficient income to make the mortgage payments. Other loans had super-low teaser rates that misled people into thinking they were affordable when they were not. Homeownership, long the ticket to prosperity for middle-class Americans, betrayed millions of people as foreclosures dumped them out of their homes, stripped away their wealth, and ruined their credit records.
To keep this calamity from happening again, our agency imposed strong consumer protections that prevent lenders from setting people up to fail with mortgages they cannot afford. Our rules also protect against the kind of surprises and runarounds that prevented too many people from saving their homes. These protections are important steps forward, but they do not erase the damage done to millions of families. The recovery has been uneven and painful and it may take generations to restore what was lost.
Another significant form of financial inequality, which is unequal access to financial services, compounds the problems created by income and wealth inequality. About 10 million households in the U.S. do not use banks. But living without a bank account is expensive. Saving is harder, and no interest is earned. Cashing a check or paying a bill means going in person and paying a fee. This takes time and costs precious dollars, all of which makes it hard to climb the economic ladder. We are tackling this issue through initiatives to empower consumers by making them more financially capable. We are urging banks and credit unions to offer low-risk checking or prepaid accounts, which allow many more people to gain access to the mainstream financial system.
One more form of financial inequality is lack of access to traditional credit. Credit can bridge troubled financial waters and cushion economic shocks. It can also be a path upwards. If you can borrow money for a car or an education, you can create new opportunities. Yet 26 million people in this country are “credit invisible,” which is one way to describe adults with no formal credit history. Without it, they cannot qualify for most loans. To attack this problem, we are looking at how other kinds of information, such as payments for rent or mobile phone bills, can be used to build credit records. We are pushing for more accurate credit information, and more transparency, so people are not unfairly denied credit. And we work to clean up discriminatory practices that prevent even those with good credit histories from obtaining loans on fair terms.
For millions of Americans, policies like these that support basic financial needs are crucial to raise their prospects for a brighter future. If you cannot access credit, getting ahead is nearly impossible. Every time someone is unlawfully denied a loan or pays more for a loan to go to school, buy a home, or start a small business, our nation’s commitment to opportunity is diminished, and the inequality gap grows a little wider. It fuels a kind of “hyper-inequality” that undermines communities and spreads hopelessness. Without hope, people’s futures can dwindle away pretty quickly. They drop out of the workforce and stop thinking about their future, and they may give way to despair. These are real forces that affect people’s lives. Entire communities can get the feeling they are stuck in a rut, with nobody to stand on their side or give them a hand up to help them earn a shot at something better. The results can be highly unpredictable – maybe just a quiet fading away, or much more dramatic problems like the opioid crisis that has spread to such a vast extent all over Ohio.
What I have learned from my time leading the Consumer Bureau is this: our willingness to stand up for what is right, regardless of the obstacles, can make a real difference. If we do not push back on the forces that press people down, we are allowing America’s promises to go unfulfilled. We need to give voice to these concerns, and we need to join together to help each other rekindle the hope, the enthusiasm, and the willingness to find and make our own opportunities: to try, to fail, to try again, and to keep picking each other up because we just know that something is out there and we can figure out a way to find it. But to do that, we need a system that works for all of us, not just those at the very top. We need to be able to see that wherever we start in life, we can advance through our own merit and hard work. We need a marketplace, and a justice system, and other key pieces of our society to operate more effectively and truly reflect the principle that every one of us counts.
Economic injustice and illegal practices in consumer financial markets break that promise. That is why our work will always matter. As Dr. Martin Luther King taught us, economic rights are also civil rights. And they matter not just to some of us, but to all of us. We work with many strong leaders who strive to secure economic justice for more Americans. But when we fail to secure both economic rights and civil rights, we fall short of a just society. We know we can do better, but it takes our people and our government, working hand in hand, to make that happen. Eleanor Roosevelt, who was herself an active member of the AFL-CIO through the Newspaper Guild, said of this holiday: “On Labor Day we must remember that this nation is founded to do away with classes and special privilege; that employer and worker have the same interest, which is to see that everyone in this nation has a life worth living.” We must all find our own ways to dedicate ourselves to that great task. Thank you again for having me here today.
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.