“Few practices are as abusive, unfair, and deceptive as the widespread use of forced arbitration clauses in most consumer contracts, including credit cards, student loans, debt settlement, credit repair, auto financing, and payday loans. Forced arbitration funnels consumers into a private system set up by corporations to protect and hide harmful and unlawful corporate behavior.”
AFR joined 80 organizations in support of Senator Durbin’s ‘Protecting Consumers from Unreasonable Rates’ Act. This bill, introduced to Congress on March 24th, caps interest rates and fees to 36% for all consumer credit transactions, putting an end to abusive lending that can top 300% and dig borrowers into a cycle of debt.
AFR’s Policy Director, Marcus Stanley, testified before the Senate Banking Committee regarding capital formation and reducing small business burdens.
“While the [proposed] rules are generally strong, we offer several suggestions below for strengthening the rules and closing loopholes. In particular, the CFPB should ban all overdraft fees; apply credit card protections to all credit transferred to a linked prepaid card; and limit fees before account opening and beyond the first year. We also urge the CFPB to require prepaid card funds to be held in accounts protected by deposit insurance and to adopt stronger rules to prevent coercive use of payroll, public benefit, student, released prisoner and other prepaid cards.”
“Republicans in the House of Representatives have come out with a budget proposal that, while vague on many points, is all too specific in its attack on Wall Street regulation, the Dodd-Frank Act, and the work of the Consumer Financial Protection Bureau. The proposal would tie financial (and other) regulators up in procedural knots… In addition, it would eliminate a key mechanism for the safe unwinding of a big bank in the event of failure; undermine the ability of regulators to detect and curb systemically dangerous practices; and end the independent funding of the Consumer Financial Protection Bureau.”
“There should be no mistaking the intent or inevitable effect if this change were actually made: it would cripple the first and only financial regulator with a mandate to put consumers’ interests first… The result would be a green light for more of the tricks and traps that characterized the banking and lending world for too long, and that the CFPB is working to clean up.”
“For the first time, consumers will be able to learn the details behind complaints against a company filed with the CFPB. In addition to searching by product, company, and complaint category, consumers will be able to discover what the real problem was that motivated someone to complain… Researchers and companies will be able to better analyze marketplace practices that are posing the most difficult problems.”
“This bill will unnecessarily raise the cost of mortgages for millions of prospective homebuyers by allowing some of the higher fees borrowers faced in the lead up to the mortgage crisis… H.R. 685 would allow high-cost loans to qualify as QM loans by creating exceptions to the points and fees threshold. These exceptions would exclude fees paid to certain title companies affiliated with the lender. The points and fees definition is designed to include all compensation received by the lender. It is a reasonable standard that provides basic protections for homebuyers.”
Wall Street banks and financial interests reported spending more than $1.4 billion to influence decision-making in Washington. That two-year total works out to an average of $1.9 million a day or about $2.6 million to elect or influence each of the 535 members of the Senate and House of Representatives.
AFR organized a briefing for Senate Banking staff on the regulation of large regional banks and the potential risks to the financial system that could emerge if regulatory authority over these banks is significantly diminished. AFR Policy Director Marcus Stanley and Professor Heidi Schooner of the Catholic University School of Law presented at the briefing.