opinion
A Chief Consumer watchdog Arrives in 2012
A
s 2012 unfolds, America’s
consumers have now
gained a top cop in a wide
range of financial affairs. Richard
Cordray, a former Ohio attorney
general and state treasurer was
appointed this week by President
Obama to become the first director
of the Consumer Financial
Protection Bureau (CFPB). After
the greatest financial collapse
since that of the 1930s Great
Depression, the historic Dodd-
Frank Act created a new bureau to
comprehensively address lending
abuses and the accompanying
power to enforce regulatory
change.
With a director in place, CFPB
can now take on oversight of pay-
day lenders, mortgage companies
and credit bureaus, writes rules for
the non-banking industry, and
becomes the consumer’s voice in
financial services regulation. Last
r eSPonSiBLe L enDing
Charlene Crowell
for their interest. You need some-
body looking out for your interest
and fighting for you – and that’s
Richard Cordray.”
Ohio consumers would readily
agree. As state attorney general,
Cordray recovered more than $2
billion from Wall Street to repay
the state’s wrongly-foreclosed
consumers, the state’s looted pen-
sion funds, and its cities and coun-
ties. His reputation as a fair and
reasonable advocate attracted
widespread support that included
businesses, civil rights and con-
sumer advocates, and 37 state
attorneys general.
Speaking to the specific con-
sumer needs in communities of
color, Wade Henderson, president
Although the majority of people
affected by foreclosures have been
white families, borrowers of color are
more than twice as likely to receive
high-risk loan products
year in late July, CFPB began
ongoing monitoring and regulat-
ing of large depository banks.
Announced Jan. 4 at an appear-
ance in Cleveland, President
Barack Obama said in part, “The
financial firms have armies of lob-
byists in Washington looking out
and CEO of the Leadership
Conference on Civil and Human
Rights said, “Communities of
color have always been targets of
predatory lenders who created a
financial mess that resulted in
losses of $194 billion in the
African-American community and
$177 billion in the Latino commu-
nity, the largest exodus of wealth
ever recorded for these groups. . .
We are ready to work with
Director Cordray to ensure that no
community is ever victim to these
practices again.”
The biggest factor contributing
With the CFPB and other provi-
sions of the Dodd-Frank Act, the
kickbacks known in the mortgage
industry as ‘yield spread premi-
ums are banned. Further, lenders
are now required to ensure a bor-
rower’s ability to repay a loan.
Another and lesser known duty
As state attorney general, Cordray
recovered more than $2 billion from
Wall Street to repay the state’s
wrongly-foreclosed consumers, the
state’s looted pension funds, and its
cities and counties
to this historic loss of minority
wealth has been foreclosures
wrought from high-cost and
unsustainable loans. Published in
November, CRL’s updated fore-
closure research, Lost Ground,
examined disparities in mortgage
lending and foreclosures. CRL
found that although the majority
of people affected by foreclosures
have been white families, borrow-
ers of color are more than twice as
likely to receive high-risk loan
products – even after accounting
for income and credit status.
These mortgage defaults are
strongly tied to abusive loan
terms, such as prepayment penal-
ties, ‘exploding’ adjustable-rate
mortgages and loans originated by
mortgage brokers. In many cases,
brokers received kickbacks for
placing borrows in these more
expensive and high-risk loans.
of CFPB includes oversight on
student loans for higher education.
With authority over private stu-
dent lenders, CFPB will require
lenders to follow fair rules and
provide families with information
they need to make informed and
smart choices in financing a col-
lege education for their children.
This particular provision will ben-
efit African-American families –
36 percent of whom already fund
college educations with student
loans.
For consumer advocates such as
the Center for Responsible
Lending
(CRL),
Richard
Cordray’s appointment was
viewed as welcome news not only
for consumers but also for busi-
nesses and the economy. CRL said
in a statement “Finally, the agency
can run at full speed, policing the
financial marketplace to make it
fairer and more competitive. . . By
promoting sensible oversight of
businesses and sounder choices in
consumer financial products, the
CFPB will help restore our econo-
my and prevent another melt-
down.”
Charlene Crowell is a commu-
nications manager with the
Center for responsible lending.
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January 11, 2012 The Portland Skanner Page 5