Today, under the cover of a national crisis, five federal bank regulators issued small dollar bank lending guidance that lacks the consumer protections needed to ensure loans do not trap borrowers in a cycle of debt.
Policy Recommendations: Joint Policy Recommendations to Protect Consumers during the COVID-19 Crisis
The recommendations below are focused on direct relief for consumers and individuals with debt burdens, which should be in addition to other efforts to provide broader fiscal relief and to support small businesses.
This major crisis demands a massive and swift response, but it must focus first on health care, and then on easing the burdens on everyday people, communities, and small businesses who are hardest hit. The McConnell proposal falls far, far short of what the situation demands.
Apart from the obvious fact that this is a public health crisis and should be treated as such, we should all be immensely skeptical of any suggestion from Wall Street that it needs a bailout or any kind of assistance. We need to help people, not profits.
His career is marred by a record of supporting dangerous deregulatory policies that have left our financial system ill equipped to face the economic challenges it is now confronted by. This includes efforts to weaken the Volcker rule that will further damage the resiliency of major financial institutions and a housing policy that treats market deregulation as the solution to our nation’s housing affordability crisis.
In The News: Financial System Faces Biggest Test Since 2008 as Coronavirus Spreads (The New York Times)
“We are in a much more fragile situation than we should be because the regulators haven’t been on the job,” said Marcus Stanley, policy director for Americans for Financial Reform. “This is a real economic crisis we’re facing.”
The AFR Education Fund wrote a letter to the Commodity Futures Trading Commission supporting the agency’s proposal to require anonymous trading of cleared derivatives on Swaps Execution Facilities. Revealing the identity of trading partners can prevent new competitors from entering these markets and bidding down
In The News: Zombie debt – CFPB proposal could trick consumers into bringing dead debts back to life (The Washington Post)
It is “disappointing,” said Linda Jun, senior policy counsel for Americans for Financial Reform. The CFPB should bar the collection of debts that have passed their statute of limitations altogether. “The whole point of statute of limitations is that the government has decided that the debt is no longer collectible,” Jun said. “If you can’t be sued on it, why are you getting mail on it?”
The AFR Education Fund wrote a letter to the FDIC regarding the analysis of costs and benefits, in which we urged the regulator not to impose a false and excessively narrow framework of “cost-benefit analysis” on their decisions. Download the letter here.
In The News: ‘Super Swampy’: Kelly Loeffler Faces Tricky Ethical Dilemma as Senator (Atlanta Journal-Constitution)
Marcus Stanley, policy director of Americans for Financial Reform, which lobbies for stricter market regulation, put it more simply. Loeffler’s situation, he said, is “super-swampy.”