Greene County Democrat

Tag: Charlene Crowell

  • Newswire : U. S. Senate gives big banks $21 billion gift from consumers by undoing overdraft rule

    By Charlene Crowell

    (TriceEdneyWire.com) – While news headlines continue to focus on the chaos, confusion and legal challenges caused by the new administration’s recent changes, it could be easy to miss recent congressional actions that will cost consumers more than $5 billion annually in unnecessary and excessive bank overdraft fees 

     
     On March 27, a 52-48 Senate, party line roll call vote , the Consumer Financial Protection Bureau (CFPB) overdraft rule was overturned. It would have lowered the typical cost of an overdraft fee at very large banks (with at least $10 billion in assets) from around $35 to $5. The measure now moves to the House of Representatives, where it is expected to soon pass, and then reach the president’s desk for final action.


     South Carolina’s Republican Senator Tim Scott, who chairs the chamber’s Committee on Banking, Housing and Urban Affairs, sponsored a Congressional Review Act resolution that only required a simple majority to pass. Should the House concur with a second majority vote, large lenders could charge fees much higher than the actual cost of an overdraft to the financial institution. Following the Senate vote, Scott claimed a consumer victory – despite a wealth of research that documents massive and negative financial impact to consumers paying excessive overdraft fees.  
     
    “This overdraft conversation is a critically important conversation if you are like me, a guy who grew up in poverty, a single parent household, who understands the difficulty, the challenge, of single moms making those ends meet,” said Scott. “I want every single hardworking American to have access to our financial system.”   
     
    But access on what terms?   It is curious that Sen. Scott’s comments do not acknowledge how overdraft fees already disproportionately impact Black and Latino consumers.  
     
    “Black and Latino consumers are already four to five times more likely to be unbanked than white Americans,” wrote the Center for Responsible Lending (CRL) in a comment letter supporting the overdraft rule. “They are also disproportionately likely to be ejected from the financial mainstream. Ejection from the mainstream financial system can have long-lasting and negative systemic effects.”  CRL urged senators to vote for the interests of consumers, not the profits of large banks.
     
    “This legislation, which should be called the ‘High Bank Fees Forever Act,’ would block the type of price cut that Americans have been clamoring for,” said Nadine Chabrier, senior policy counsel at CRL. “The measure would deny hundreds of dollars of relief each year from reaching families living paycheck-to-paycheck while letting huge financial institutions perpetually price gouge these families.” 
     
    CFPB’s overdraft rule required bank fees to correspond with their actual costs and losses – instead of generating a revenue stream designed to boost bank profits. Also, by requiring bank account-opening disclosures, consumers would assured choices to compare offerings and decide whether to pay overdraft fees automatically or manually.    
     
    A near 300-member coalition of national and state advocates in civil rights, labor, religion, higher education, and other areas are working to raise awareness about the need to continue CFPB’s consumer protections.  
     
    “The CFPB is an agency of the people. From the protection from junk fees, to fighting excessive overdraft fees, providing assistance to impacted victims of natural disasters, and holding predatory practices accountable, the NAACP stands firm in bringing back the CFPB,” said Keisha D. Bross, NAACP Director of Opportunity, Race, and Justice. ”The NAACP will fight to hold financial entities responsible for the years of inequitable practices from big banks and lenders.” 
     
    “It is shameful that Republicans are effectively writing bonus checks to executives at the nation’s largest banks while ordinary people struggle with high prices and increased costs of living,” added Lauren Saunders, the National Consumer Law Center’s associate director.  
     
    “Banking charters were never supposed to be a license to rip people off, but unfortunately, many banks rely on gotcha penalty fees to pad their profits, effectively diminishing the difference between insured depositories and payday lenders,” noted Adam Rust, director of financial services for the Consumer Federation of America. “Reversing this rule is a gift to banks, and if the House goes forward with their version, it will harm people for decades to come.”   
     
    As the measure advances to the House for further deliberation, California Congresswoman Maxine Waters, the Ranking Member of the House Financial Services Committee, posed an apt question to her colleagues:  
     
    “Whether you like the CFPB or not, it doesn’t make any sense to hike bank fees on 23 million hard-working families,” said the longtime lawmaker, “Why do you want to force them to pay $5 billion in more fees every year? 
     
    Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org”

  • Newswire : Plans to shutter Education Department add to Financial Aid Confusion

    Black couple reviewing bills.

    by Charlene Crowell


    (TriceEdneyWire.com) – The chaos and confusion resulting from systemic changes and closures at multiple federal agencies have now reached the $242 billion budget of the Department of Education. With the agency’s workforce cut in half, and plans announced to shut it down, millions of students and families who rely on federal financial aid for higher education are facing a front-line assault.
     
    State attorneys general in 20 states and the District of Columbia filed a lawsuit challenging the agency’s gutting. According to the AGs, the department is a congressionally authorized executive agency with laws creating its various programs and funding streams. As such, the Executive Branch lacks the legal authority to unilaterally incapacitate or dismantle it without an act of Congress.
     
    “The administration’s lay-off is so massive that ED will be incapacitated and unable to perform essential functions,” said Maryland Attorney General Anthony Brown.  “As the lawsuit asserts, the administration’s actions will deprive students with special needs of critical resources and support. They will gut ED’s Office of Civil Rights, which protects students from discrimination and sexual assault. They would additionally hamstring the processing of financial aid, raising costs for college and university students who will have a harder time accessing loans, Pell Grants, and work study programs.”
     
    “This administration may claim to be stopping waste and fraud, but it is clear that their only mission is to take away the necessary services, resources, and funding that students and their families need,” said New York Attorney General Leticia James.
     
    While it is encouraging for state attorneys general to file legal challenges against administration actions, and education advocates to raise their voices and influence to thwart these changes, every day that passes without direct relief makes borrowers’ financial challenges harder and more difficult to resolve.
     
    For example, even before legislation was enacted to avert a government shutdown in March, the Congressional Budget Office (CBO) predicted the popular Pell Grant program that over six million students rely upon faced a $2.7 billion funding shortfall this year. Pell Grants, the single largest source of post-secondary education grants provided $31 billion in aid with approximately 6.5 million undergraduate students in FY2023.
     
    Without additional funding, the grant shortfall is expected to balloon to $10 billion in 2026. Currently, the maximum annual award per eligible student in the formula-based program is $7,395. Most Pell recipients come from families whose total income is $60,540 or less.
     
    It is relevant to note that the new round of cuts to the Pell Grant program are not the first time that significant changes have been made. Instead, the new changes come in addition to others never restored. For example, in the aftermath of the Great Recession in FYs 2011 and 2012, the option for “year-round” Pell, which helped students make continuous progress toward their credentials was eliminated. That same action also cut the number of lifetime semesters a student can receive Pell Grants from 18 to 12 semesters and remains unchanged.
     
    In response to CBO’s disturbing report, a coalition of over 100 higher education organizations signed a February letter appealing to committee chairs and ranking members in both the Senate and the House to act with dispatch. Its signatories included an array of organizations such as: the American Association of University Women, Center for Law & Social Policy, Georgetown University Center on Education & the Workforce, NAACP, National Education Association, National Consumer Law Center, Student Borrower Protection Center, and the United Negro College Fund.
     
    “If additional funding is not added to the Pell Grant program very soon, students could face eligibility or award cuts for the first time in more than a decade,” wrote the educators. “Students cannot afford such cuts during a time of rising living costs, and our economy cannot afford to have students lose access to the education and training they need to succeed in the labor market. The maximum Pell Grant already covers the lowest share of college costs in the program’s history, contributing to a persistent “affordability gap” that forces low- and middle-income students to either take out loans or forgo higher education and training entirely.” 
     
    And speaking of loans – borrowers understand that when it takes longer to repay principal owed, interest fees rise as well. Further, fixed interest rates on graduate student loans come at a higher price than those for undergraduate loans. New federal direct loans disbursed between July 1, 2024 and July 1, 2025 carry 6.53 percent fixed interest rates for undergraduate loans, but an 8.08 percent rate for graduate and professional loans. 
     
    In other words, higher education comes with higher costs. And the longer loan repayment takes, the higher and harder it becomes to fully repay them.
     
    Today, many borrowers currently enrolled in affordable, income-based repayment options have been frustrated by a lack of online access to complete mandatory income recertification. Without that timely access, spikes in monthly payments ensue.  As recently reported by Forbes, “This effectively keeps millions of student loan borrowers who had enrolled in SAVE stuck in a forbearance. The forbearance pauses payments and sets interest to zero, but the period does not count toward student loan forgiveness, including for Public Service Loan Forgiveness, or PSLF – a popular program for borrowers working in nonprofit or government settings.”
     
    “For many of us, student loans were supposed to be a path forward, not something that holds us back,” said Mike Pierce, executive director of the Student Borrower Protection Center. “We need leaders that prioritize policies that put working people first.”
     
    Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org” data linkindex=”10″>Charlene.crowell@responsiblelending.org.

  • Newswire : Student loan debt drops $10 Billion due to Biden Administration forgiveness

    by Charlene Crowell, Center for Responsible Lending

    (TriceEdneyWire.com) – As consumers struggle to cope with mounting debt, a new economic report from the Federal Reserve Bank of New York includes an unprecedented glimmer of hope. Although debt for mortgages, credit cards, auto loans and more increased by billions of dollars in the second quarter of 2024, student loan debt decreased by $10 billion.

    According to the New York Fed, borrowers ages 40-49 and ages 18-29 benefited the most from the reduction in student loan debt.

    In a separate and recent independent finding, 57 percent of Black Americans hold more than $25,000 in student loan debt compared to 47 percent of Americans overall, according to The Motley Fool’s analysis of student debt by geography, age and race. Black women have an average of $41,466 in undergraduate student loan debt one year after graduation, more than any other group and $10,000 more than men.

    This same analysis found that Washington, DC residents carried the highest average federal student loan debt balance, with $54,146 outstanding per borrower. Americans holding high levels of student debt lived in many of the nation’s most populous states – including California, Texas, and Florida.

    The Fed’s recent finding may be connected to actions taken by the Biden administration to rein in unsustainable debt held by people who sought higher education as a way to secure a better quality of life. This decline is even more noteworthy in light of a series of legal roadblocks to loan forgiveness. In response to these legal challenges, the Education Department on August 1 began emailing all borrowers of an approaching August 30 deadline to contact their loan service to decline future financial relief. Borrowers preferring to be considered for future relief proposed by pending departmental regulations should not respond.

    If approved as drafted, the new rules would benefit over 30 million borrowers, including those who have already been approved for debt cancellation over the past three years.

    “These latest steps will mark the next milestone in our efforts to help millions of borrowers who’ve been buried under a mountain of student loan interest, or who took on debt to pay for college programs that left them worse off financially, those who have been paying their loans for twenty or more years, and many others,” said U.S. Secretary of Education Miguel Cardona.

    The draft rules would benefit borrowers with either partial or full forgiveness in the following categories:

    Borrowers who owe more now than they did at the start of repayment. This category is expected to largely benefit nearly 23 million borrowers, the majority of whom are Pell Grant recipients.
    Borrowers who have been in repayment for decades. Borrowers of both undergraduate and graduate loans who began repayment on or before July 1, 2000 would qualify for relief in this category.
    Borrowers who are otherwise eligible for loan forgiveness but have not yet applied. If a borrower hasn’t successfully enrolled in an income-driven repayment (IDR) plan but would be eligible for immediate forgiveness, they would be eligible for relief. Borrowers who would be eligible for closed school discharge or other types of forgiveness opportunities but haven’t successfully applied would also be eligible for this relief.
    Borrowers who enrolled in low-financial value programs. If a borrower attended an institution that failed to provide sufficient financial value, or that failed one of the Department’s accountability standards for institutions, those borrowers would also be eligible for debt relief.

    Most importantly, if the rules become approved as drafted, no related application or actions would be required from eligible borrowers — so long as they did not opt out of the relief by the August 30 deadline.

    “The regulations would deliver on unfulfilled promises made by the federal government to student loan borrowers over decades and offer remedies for a dysfunctional system that has often created a financial burden, rather than economic mobility, for student borrowers pursuing a better future,” stated the Center for American Progress in an August 7 web article. “Meanwhile, the Biden-Harris administration also introduced income limits and caps on relief to ensure the borrowers who can afford to pay the full amount of their debts do so.”

    “The Center for American Progress estimates the interest waiver provisions would deliver relief to roughly 6 million Black borrowers, or 23 percent of the estimated number of borrowers receiving relief, as well as 4 million Hispanic or Latino borrowers (16 percent) and 13.5 million white borrowers (53 percent).”

    These pending regulations would further expand the $168.5 billion in financial relief that the Biden Administration has already provided to borrowers:

    $69.2 billion for 946,000 borrowers through fixes to Public Service Loan Forgiveness (PSLF).
    $51 billion for more than 1 million borrowers through administrative adjustments to IDR payment counts. These adjustments have brought borrowers closer to forgiveness and addressed longstanding concerns with the misuse of forbearance by loan services.
    $28.7 billion for more than 1.6 million borrowers who were cheated by their schools, saw their institutions precipitously close, or are covered by related court settlements.
    $14.1 billion for more than 548,000 borrowers with a total and permanent disability.
    $5.5 billion for 414,000 borrowers through the SAVE Plan.

    More information for borrowers about this debt relief is available at StudentAid.gov/debt-relief.

    Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org. 

  • Newswire : Supreme Court says ‘no’ to Payday Lenders; ‘yes” to Consumer Protection

    By Charlene Crowell

    
(TriceEdneyWire.com) – A recent 7-2 ruling by the U.S. Supreme Court gave consumers a long-sought victory that ended more than a decade of challenges over the constitutionality of the agency created to be the nation’s financial cop on the beat.
     
    The May 16 decision in the case  formally known as Consumer Financial Protection Bureau v. Community Financial Services Association of America LTD, ET AL refuted arguments by the billion-dollar payday lending industry that CFPB was unconstitutional because its funding is derived directly from the Federal Reserve instead of Congress’ annual appropriations.
     
    The majority opinion, written by Justice Clarence Thomas, concluded, “The statute that authorizes the Bureau to draw money from the combined earnings of the Federal Reserve System to carry out its duties satisfies the Appropriations Clause.”
     
    Two additional concurring opinions underscored this conclusion. Brown Jackson, the first Black woman to serve on the Supreme Court and its newest member, addressed why legislators created the CFPB.
     
     “As the Court explains, in response to the devastation wrought by the 2008 financial crisis, Congress passed and the President signed the Dodd-Frank Wall Street Reform and Consumer Protection Act… Drawing on its extensive experience in financial regulation, Congress designed the funding scheme to protect the Bureau from the risk that powerful regulated entities might capture the annual appropriations process,” wrote Justice Jackson.
     
    During the Financial Crisis, millions of Black and Latino borrowers suffered home foreclosures because they were targeted with high-cost, unsustainable mortgage loans, even though many were eligible for other lower-cost loans. But those were not the only predatory financial product foisted upon people of color.
     
    Payday loans that lure financially-strapped consumers with promises of easy cash can still be found in profusion in most urban areas across the country. The payday industry’s billion-dollar profits typically are generated on loans of $350 or less. With high fees that create deepening cycles of re-borrowing, these loans disproportionately affect Black and Latino borrowers who earn $40,000 or less per year, and do not have a college degree. Research by the CFPB   found that payday lenders collect 75 percent of their fees from borrowers who take out more than 10 loans per year.
     
    In the absence of federal regulation, 20 states and the District of Columbia have enacted laws to cap payday lending interest rates at around 36 percent annual percentage rate (APR), or required other measures to eliminate long-term debt traps for consumers. Further, since 2005, no state has authorized the expansion of traditional storefront payday lending.
     
    But for the remaining states without reasonable rate caps, triple-digit interest on payday loans continues. Many of these states also have large numbers of minority residents. For example, Texas allows payday APRs as high as 662 percent, similar to Missouri (652 percent), Mississippi (572 percent), Wisconsin (537 percent), and Nevada (548 percent).
     
    Against this backdrop, it remains important for CFPB’s work in support of financial fairness to continue. Consumer advocates’ reactions to this key decision were understandably jubilant.
     
    Massachusetts U.S. Senator Elizabeth Warren, broadly considered the chief strategist for CFPB’s creation during the Obama Administration, said the court decision is a noteworthy development:
     
    “For the last decade, the consumer agency has fought the big banks and predatory lenders that try to cheat hardworking people. As of this week, the CFPB has returned more than $20 billion in ill-gotten funds to American families,” said Warren. “This isn’t the last attack on the CFPB we’ll see from Wall Street, the banks, and their Republican allies.…The CFPB will keep on doing its work to slash junk fees, fight giant banks when they cheat people, and level the playing field for everyone in this country.”    
     
    Rev. Dr. Cassandra Gould, Senior Strategist at Faith in Action and Founding member of Faith for Just Lending, said the ruling was as much a moral victory as it was a victory for public policy.
     
    “This Supreme Court decision, which aligns with the moral compass of Proverbs 22:22, has sided with the least of these by protecting the CFPB. This decision is a testament to our shared commitment to not rob the poor because they are poor and to not crush those in need in court,” said the Rev. Dr. Gould.  
     
    And for the Center for Responsible Lending (CRL), Nadine Chabrier, Senior Policy and Litigation Counsel at CRL, said this consumer victory should be used as a springboard for even more consumer protection efforts.
     
    “Even with this decision, we must keep fighting to defend our consumer watchdog agency in the courts and in Congress as some industry actors sue and lobby to preserve illegal financial discrimination, billions in unlawful junk fees, and other exploitative behavior,” said Chabrier. “The nonstop crusade to undermine the CFPB goes against the wishes of the American people, who overwhelmingly support the CFPB’s work. The anti-CFPB campaign is an attempt to throw sand in the gears of financial justice and it must be rejected.”
    ###
    Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org. 

  • Newswire: $17.5 Billion returned to 200 Million defrauded consumers

    By Charlene Crowell

    (TriceEdneyWire.com) – This year marks the 12th anniversary of an important consumer protection that sprang as a response to millions of foreclosures and the resulting Great Recession. Today, just as then, all consumers need assurances that whether purchasing goods or services, they pay a fair price. For the first time in our nation’s history, a federal agency’s sole role became dedicated to consumers’ financial protection.  
    Since its creation, the Consumer Financial Protection Bureau (CFPB) has honored its mission by returning a cumulative total of $17.5 billion to 200 million consumers who have been harmed by violations of federal consumer financial protection law. Its Victim Relief Fund, administers the return of hard-earned monies to consumers as cancelled debts, reduced principal, and other illegal transactions.    
    A second use of this same fund underwrites costs for consumer education and financial literacy outreach with two distinct constituencies: economically vulnerable consumers who want to improve their approach to money management, and recent veterans who are transitioning from service member to veteran life, as well as military widows and widowers.  
    One-on-one financial coaching helps consumers learn how to manage their money more effectively and achieve their financial goals. While gaining key insights on ways to distinguish between useful financial products and frauds, consumers of different cultural, ethnic, racial, and other backgrounds become alert to scams targeted to urban and rural communities.  
    Each day the CFPB receives an average of 3,000 complaints. Additionally, the agency reports that 50 million consumers have accessed its web-based database for answers to hundreds of common financial questions.  
    But despite these measurable and successful efforts, many of the same organizations that opposed CFPB’s creation over a decade ago have since shifted their goals to weakening the agency in a variety of ways. Recent court filings continue to question whether the agency meets constitutional muster, while others seek to change the agency’s current independent financial status to annual Congressional appropriations. Opponents also want to change the agency’s leadership from a single director to a multi-member commission, curtail the number of businesses subject to its scrutiny, and more.  
    In response to these renewed anti-consumer efforts, an 84-member coalition representing civil rights, unions, consumer advocates, antitrust and general public interest groups at the local, state and national levels sent a strong statement of support for CFPB to key committee leaders in the U.S. House and the Senate.   
    “Americans see an agency responsibly undertaking the job given to it by Congress: making consumer financial markets fairer and more transparent, putting money back in the pockets of wronged consumers, and policing rules of the road that make the financial system work better for responsible businesses and consumers alike”, wrote the advocates.  
    “It has required lenders who break the law to return billions of dollars directly to individuals trying to make ends meet; it is establishing a more level playing field in crucial areas of the market; and it is doing so in an accountable and transparent fashion,” the advocates continued.  
    One emerging area of concern for consumers and CFPB is medical debt that impacts over 100 million Americans – accounting for a staggering $433.2 billion of out-of-pocket expenses, according to CFPB.  
    “Poor medical billing and collection practices can result in patients delaying or declining needed medical care while they struggle to cope with the financial consequences of the debt burden placed upon them, even when that debt burden derives from predatory pricing, faulty, inaccurate billing, or insurance company runarounds,” noted Rohit Chopra, CFPB’s Director in a July 11 hearing on Capitol Hill. “In fact, consumers report that errors in medical billing and insurance payment are common. Among those with medical debt, more than four in ten say they received an inaccurate bill, and nearly seven in ten say they were asked to pay a bill that should have been covered by insurance.”  
    “While medical payment products can offer an enticing promise of cost savings, convenient payment plans and administrative ease for medical providers, our research indicates that in many cases, patients who use these products end up worse off…Our research shows that these payment products have less favorable terms than other general credit products and can land patients with significant amounts of deferred interest. Indeed, over a three-year period, patients paid $1 billion in deferred interest on medical credit cards. This deferred interest isn’t something that’s fair or transparent — people can find themselves hit with large and unexpected interest costs even when they’ve been making payments on the bill all along,” added Chopra.  
    For the Center for Responsible Lending (CRL), a nonprofit, non-partisan research and policy advocacy organization that called for CFPB’s creation, and continues to defend the embattled agency, the key difference between the CFPB and its opposition is akin to the difference between right and wrong.  
    “The Bureau curbs worst practices, punishes repeat offenders, and creates a stable regulatory environment for consumer finance,” wrote CRL to a subcommittee of the House Financial Services Committee. “Inversely, those who stand to benefit from neutering the CFPB peddle in worst practices, break the law repeatedly, and seek to exploit an inconsistent regulatory environment with unsafe products and services.”  
    Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.  

  • Newswire: Nation’s racial wealth gap worsens with Federal Tax Cuts: Black families have a dime for every dollar held by whites

    NEWS ANALYSIS By Charlene Crowell

    (TriceEdneyWire.com) – If you’re like me, every time you hear a news reporter or anchor talk about how great the nation’s economy is, you wonder what world they are living in. Certainly these journalists are not referring to the ongoing struggle to make ends meet that so much of Black America faces. For every daily report of Wall Street trading, or rising corporate profits, you’re reminded that somebody else is doing just fine financially.

    To put it another way, ‘Will I ever get past my payday being an exchange day…when I can finally have the chance to keep a portion of what I earn in my own name and see how much it can grow?’

    When new research speaks to those who are forgotten on most nightly news shows, I feel obliged to share that news – especially when conclusions find systemic faults suppress our collective ability to strengthen assets enough to make that key transition from paying bills to building wealth.

    Ten Solutions to Close the Racial Wealth Divide is jointly authored by the Institute for Policy Studies, Ohio State University’s Kirwan Institute for the Study of Race and Ethnicity, and the National Community Reinvestment Coalition. This insightful and scholarly work opens with updates on the nation’s nagging and widening racial wealth divide. It then characterizes solutions offered as one of three approaches: programs, power, and process.

    According to the authors, programs refer to new government programs that could have a major impact on improving the financial prospects of low-wealth families. Power refers to changes to the federal tax code that could bring a much-needed balance to the tax burden now borne by middle and low-income workers. Process refers to changes to the government operates in regard to race and wealth.

    “For far too long we have tolerated the injustice of a violent, extractive and racially exploitive history that generated a wealth divide where the typical black family has only a dime for every dollar held by a typical white family,” said Darrick Hamilton, report co-author and executive director of the Kirwan Institute for the Study of Race and Ethnicity at The Ohio State University.
    From 1983-2016, the median Black family saw their wealth drop by more than half after adjusting for inflation, compared to a 33 percent increase for the median White households. Keep in mind that these years include the Great Recession that stole nearly $1 trillion of wealth from Black and Latinx families, largely via unnecessary foreclosures and lost property values for those who managed to hold on to their homes.
    Fast forward to 2018, and the report shares the fact that the median white family had 41 times more wealth than the median Black family, and 22 times more wealth than the median Latinx family. Instead of the $147,000 that median white families owned last year, Black households had $3,600.

    When Congress passed tax cut legislation in December 2017, an already skewed racial wealth profile became worse.

    “White households in the top one percent of earners received $143 a day from the tax cuts while middle-class households (earning between $40,000 and $110,000) received just $2.75 a day,” states the report. “While the media coverage of the tax package and the public statements of the bill’s backers did not explicitly state that it would directly contribute to increasing the racial wealth divide, this was the impact, intended or otherwise.”

    With the majority of today’s Black households renting instead of owning their homes, escalating rental prices diminish if not remove the ability for many consumers of color to save for a home down payment. As reported by CBS News, earlier this year, the national average monthly cost of fair market rent in 2018 was $1,405. Recent research by the National Low-Income Housing Coalition on housing affordability found that more than 8 million Americans spend half or more of their incomes on housing, including over 30 percent of Blacks, and 28 percent of Hispanics

    Homeownership, according to the Center for Responsible Lending, remains a solid building block to gain family wealth. But with an increasing number of households paying more than a third of their income for rent, the ability to save for a home down payment is seriously weakened. CRL’s proposed remedy in March 27 testimony to the Senate Banking Committee is to strengthen affordable housing in both homeownership and rentals. To increase greater access to mortgages, CRL further advocates low-down payment loans.

    “The nation’s housing finance system must ensure access to safe and affordable mortgage loans for all creditworthy borrowers, including low-to-moderate income families and communities of color,” noted Nikitra Bailey, a CRL EVP. “The lower down payment programs available through FHA and VA, provide an entry into homeownership and wealth-building for many average Americans.”

    “Government-backed loans cannot be the only sources of credit for low-wealth families; they deserve access to cheaper conventional mortgages,” added Bailey. “Year after year, the annual Home Mortgage Disclosure Act data reveals how consumers of color, including upper-income Black and Latinx households are disproportionately dependent on mortgages that come with higher costs. Our nation’s fair lending and housing finance laws require that the private mortgage market provide access for low-wealth families. We need additional resources for rental housing to address the affordability crisis that many working families face.”

    There’s really no point in continuing to do the same thing while expecting a different result. When the status quo just isn’t working, change must be given a chance.

  • Newswire: $62 Billion in Education Cuts proposed, Key college aid could be slashed

    By Charlene Crowell

    College graduates

    (TriceEdneyWire.com) – Every budget defines priorities and values. To put it another way, what’s really important in life gets supported financially. For many families, having a home, food, and utilities usually rank pretty high. Then there are other budgetary concerns like saving for college or having a ‘rainy day’ fund to cover less frequent costs that can be much higher than the size of the next pay check.

    Government budgets, built on taxpayer dollars, also reveal priorities. At the federal level, budgets are proposed by the executive branch, but it is the legislative branch that passes and funds budgets. What is in the best interest of the nation is supposed to be the guiding force in government budgets.

    But as Sportin’ Life sang in the folk opera Porgy and Bess, “It ain’t necessarily so”.

    The White House’s FY 2020 proposal cuts Education funding by $62 billion compared to that of FY 2019. Even worse, as the cost of higher education continues to climb, federal student aid would be seriously slashed while other programs would be totally eliminated.

    Some of the most disturbing college federal cuts affect programs that lessen the amount of student loans that need to be borrowed for every academic term. As rising college costs have worsened the financial challenge faced by many Black and other low-wealth families, the availability of grant programs that do not have to be repaid and/or work-study programs are key sources for many college students and their families.

    Among its many revisions, the Trump Administration stands ready to risk a sizeable portion of the proposed $7.25 billion in Pell Grant funding next year. This program is the single largest source of grant aid for low-income households for post-secondary education.

    On March 26, the Fiscal Year (FY) 2020 Education budget was the focus of a hearing before the House Appropriations Subcommittee for Labor-Health and Human Services-Education. Secretary Betsy Devos delivered testimonythat expanded upon previously released materials from the Trump Administration.

    “Since President Trump took office, Congressional appropriations for U.S. Department of Education programs have increased dramatically – in spite of the Administration’s call to slow spending,” said Secretary DeVos. “We are not doing our children any favors when we borrow from their future in order to invest in systems and policies that are not yielding better results.”

    In response, Connecticut’s Rep. Rosa DeLauro, the subcommittee chairwoman did not mince words. “This budget underfunds education at every turn”, said DeLauro who added “This budget inflicts harm.”

    Even Rep. Tom Cole from Oklahoma who serves as the subcommittee’s Ranking Member viewed the White House proposal as “short-sighted”.

    Representatives DeLauro and Cole were absolutely correct.

    The Work-Study program that brings campus-based jobs to students would suffer a double blow. Its monies would be reduced by 55 percent and remaining funds would be shared with proposed pilot program that targeted to private sector employers for workforce development of nontraditional and low-income students. That’s the window dressing on these cuts.

    The Work-Study program that received over $1.2 billion in 2019 would be cut to $500.4 million. Secondly, instead of students working on campus, they would need to figure out how to reach employment at private business.

    Not every student has a car. Nor is public transit always available near college campuses. These businesses would supplement their revenue streams with public monies but the profits derived would still be private. Previously, Work-Study was jointly funded by the federal government paying 75 percent of hourly wages, with the remaining 25 percent paid by the college employer.

    What for-profit business wouldn’t want the government to pick up 75 percent of its labor costs? Seems that the private business – not the student – is the greater concern with this budget.

    “Betsy DeVos has some explaining to do – her disinterest in prioritizing quality and affordable education for students is disheartening and erodes the confidence the public has in the Department of Education,” said Debbie Goldstein, an EVP with the Center for Responsible Lending.

    Currently, the formula-based Pell Grant award averages $4,251 per participating student. Next year as proposed, the program’s average award will be slightly less at $4,149 and traditional grant recipient students would be forced to share those funds with others enrolled in workforce development training that does not accrue credit hours or traditional academic terms.

    Regular readers of this column may recall, many career and technical training institutions are also for-profit entities that in recent years have either failed to provide the training promised, or the earnings assured by admissions personnel – or both. In the worst-case scenarios, tens of thousands of students have been enrolled at the time of closures that came with little or no notice.

    The Supplemental Education Opportunity Grant is need-based and financially helps low-income, undergraduate students. For the past two fiscal years, this program was funded at $1.7 billion. If the Trump Administration’s proposal holds, no monies will support this program next year.

    The Iraq and Afghanistan Service Grants are available to students whose parent or guardian was a member of the Armed Forces and died as a result of their military deployment in either Iraq or Afghanistan after September 11, 2001. In FY 2019, the average grant in this program was $5,293. In FY 2020, the White House would end it with no appropriation.

    These are only a few of the cuts proposed to higher education at a time when education is more important today than ever before. The global economy requires a highly-skilled and knowledgeable workforce. It seems so ironic that this White House keeps placing businesses before the needs of people.

    “Instead of punishing for-profit institutions that have deceived students and encouraged them to take on unaffordable levels of student debt, Secretary DeVos will defend President Trump’s proposal to extend taxpayer money to finance unproven short-term programs, many of which will be offered by these very same for-profit college,” added Goldstein.

    Here’s hoping that Congress will hear a loud outcry on gutting federal financial aid. Enacting a budget that represents the needs of people should and must prevail.

  • Newswire :  Center for Responsible Lending calls for firing of fair lending official who used N-Word

    By Charlene Crowell ( TriceEdneyWire.com) – Recent and stunning disclosures of racially-offensive writings by a high-ranking official at the Consumer Financial Protection Bureau (CFPB) has unleashed an escalating barrage of criticisms, including calls for the official to be fired and more probing questions regarding the agency’s commitment to fair lending. Since a September 28 Washington Post article first reported how Eric Blankenstein, CFPB’s Policy Director for Supervision, Enforcement and Fair Lending, used a pen name in blogs dating as far back as 2004, a spate of fury has been unleashed. Disguising his authorship, Blankenstein claimed that the use of the N-word was not racist, and further alleged that most hate crimes were hoaxes. A subsequent New York Times article alleged that people who perpetuated the Obama birther conspiracy are not racist either, and noted that as late as 2016, Blankenstein’s personal Twitter account posted racially charged comments. Keep in mind that Blankenstein was hand-picked by CFPB head Mick Mulvaney. Patrice A. Ficklin, a CFPB career staff member and Director of its Office of Fair Lending and Equal Opportunity reports to Blankenstein and is quoted in the Post article. Ficklin said, “And while he has been collegial, thoughtful and meticulous, I have had experiences that have raised concerns that are now quite alarming in light of the content of his blog posts — experiences that call into question Eric’s ability and intent to carry out his and his Acting Director’s repeated yet unsubstantiated commitment to a continued strong fair lending program under governing legal precedent.” By October 1, Anthony Reardon, National President of the National Treasury Employees Union, advised CFPB of its dissatisfaction with the Blankenstein blogs. “There should be zero tolerance for comments that Blankenstein has admitted authoring and nothing less than swift and decisive action is called for,” said Reardon. “That someone with a history of racially derogatory and offensive comments has a leadership position at CFPB reflects poorly on CFPB management and your commitment to fulfilling the mandate of the agency to ensure that discriminatory and predatory lending practices are stopped.” Two days later, on October 3, the Center for Responsible Lending (CRL) publicly called for Blankenstein to be fired. “Mr. Blankenstein must be removed from his post and this must be combined with a demonstrable commitment by CFPB head Mick Mulvaney to fair lending,” said Yana Miles, CRL’s Senior Legislative Counsel. “Thus far, the Mulvaney approach has been worse than inaction – it has been an appalling retreat from enforcing anti-discrimination laws…. The enduring legacy and present-day experience of financial discrimination is the key driver of the racial wealth gap. Vigorously addressing this is a legal and moral imperative.” A second civil rights organization agreed with CRL’s call for Blankenstein’s termination. “Eric Blankenstein’s racist and sexist remarks show that he is not fit to lead the CFPB Office of Fair Lending,” said Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights. “Our nation’s history of financial discrimination is the key factor in the growing racial wealth gap.” “Entrusting Blankenstein given his history of racially derogatory remarks will undermine progress for fair lending efforts to close the gap,” continued Gupta. “If the CFPB is serious about eradicating discrimination, it must immediately remove Blankenstein, and must ensure that it is led by a person with a demonstrated commitment to civil rights enforcement. His writings make clear that Mr. Blankenstein is not that person.” The same day, another pivotal development occurred. A letter signed by 13 U.S. Senators representing 11 states wrote Mulvaney, demanding answers to a series of questions no later than October 22. The questions span Mulvaney’s personal awareness of the writings, the guidelines and procedures used to fill the position, whether a Member of Congress, or an executive branch employee recommended his hiring, what action he intends to take as Acting Director and more. In part, the Senators’ letter states, “We are deeply concerned that you have placed a person with a history of racist writing at a senior position within the Consumer Financial Protection Bureau…Mr. Blankenstein was not hired through the competitive service process like most CFPB employers; he is one of your hand-selected political appointees. Further, you have specifically tasked him with overseeing the CFPB’s fair lending supervision and enforcement work at a time when you have decided to restructure the Office of Fair Lending and Equal Opportunity.” The letter was signed by Senators Richard Blumenthal (D-CT), Cory Booker (D-NJ), Sherrod Brown (D-OH), Maria Cantwell (D-Washington State), Kirsten Gillibrand (D-NY), Kamala Harris (D-CA), Edward Markey (D-MA), Catherine Cortez Masto (D-NV), Jack Reed (D-RI) Mark Warner (D-VA), Robert Menendez (D-NJ), Elizabeth Warren (D-MA), and Ron Wyden (D-OR). Even before the Blankenstein scandal, Mulvaney’s actions and inactions at the CFPB have brought a series of concerns by civil rights and consumer advocates alike. Particularly noteworthy among their stated concerns under Mulvaney include: CFPB has yet to issue any violations of the Equal Credit Opportunity Act; The Bureau declared an intent to ignore the Disparate Impact standard, a long-standing legal test that holds the effects of discrimination, not the intent are legal violations; Personally praised the repeal of anti-discrimination auto lending guidance; Sided with payday lenders in their challenge of the Bureau’s payday rule promulgated under the previous director; Announced the Bureau’s fair lending office would be stripped of its supervisory and enforcement powers; and Relegated the development of regulation on fair lending for minority and women-owned businesses to a low-level concern. It took decades of vigilant struggle for civil rights, fair lending, and consumer protection to be codified in federal laws. It is time to remind the CFPB and all federal agencies that they have a duty to uphold the nation’s fair lending laws – regardless of personal beliefs. Charlene Crowell is the Center for Responsible Lending’s Communications Deputy Director. She can be reached at Charlene.crowell@responsiblelending.org.

  • Newswire : CBC members back CFPB payday lending accountability actions

    By Charlene Crowell

     

    bw2020-waters.jpg
     U. S. Rep. Maxine Waters (D-Calif.)
    (TriceEdneyWire.com) – In the wake of a recent series of anti-consumer actions taken by Mick Mulvaney, the Trump-appointed Consumer Financial Protection Bureau’s Acting Director, a bicameral call for accountability was released on January 31. Led by Congresswoman Maxine Waters of California and Sen. Elizabeth Warren of Massachusetts, two other Congressional Black Caucus Members, Congressmen Keith Ellison (MN) and Al Green (TX) joined Senators Richard Blumenthal (CT) and Jeff Merkley (OR) as signatories.
    Together, the group of lawmakers seek to know what prompted Mr. Mulvaney’s actions as well as his ties to the payday lending industry.
    A January 31 letter calls into question the following specific actions that have occurred over the past month:

    Halting implementation of the agency’s final rule preventing abusive payday lending (the ‘Payday Rule);
    Announcement of the Bureau’s intention to initiate a rulemaking process that appears designed to weaken the Payday Rule;
    Withdrawing a Bureau lawsuit against four online payday lenders who allegedly misled customers on interest rates that spanned a low of 440 percent to as high as 950 percent; and
    Ending an investigation of World Acceptance Corporation, a high-cost installment lender that began in 2014 after consumers complained of unaffordable loans and aggressive collection practices.

    “For too long, some payday, auto title, and installment lenders have taken advantage of American workers who need a little extra money to pay an unexpected medical bill or fix their car,” wrote the lawmakers. “For too many families, one unexpected expense or tight week traps them in a cycle of debt that lasts months or years…The rule finalized by the CFPB last October was carefully balanced to end that cycle of debt while ensuring that borrowers retain access to needed credit.”
    The Dodd-Frank Wall Street Reform Act that created the CFPB intended for it to be an independent agency, charged with serving as the consumer’s financial cop-on-the-beat. Its director was to be nominated by the President and confirmed by the Senate to a five-year term of service. Additionally, CFPB was to secure its funding directly from the Federal Reserve Bank, rather than through Congress’ annual appropriations process that could enable powerful special interests to restrict necessary funding.
    Even though he Dodd-Frank Act also a defined succession plan for an Acting Director in the event of personnel changes, two people were appointed to this same role. One, Leandra English was lawfully appointed by the now-departed Director Richard Cordray, while another, Mr. Mulvaney, was appointed by President Trump. The lawmakers’ letter is addressed to both appointees.
    An appellate federal court will eventually decide who should be the legal Acting Director; but in the interim, Mulvaney leads CFPB while retaining his position as Director of the Office of Management and Budget. In his prior role as a South Carolina Congressman, he co-sponsored a bill to eliminate the CFPB and accepted nearly $63,000 in campaign donations from payday lenders. These donations included $4,500 from World Acceptance Corporation’s political action committee.
    “The CFPB spent five years honing the Payday Rule, conducting research and reviewing over one million comments from all types of stakeholders: from payday lender, to state regulators, to faith leaders,” wrote Ranking Members Warren and Waters.
    Now Mr. Mulvaney oversees the daily operations of the same Bureau that returned $12 billion to nearly 30 million consumers in about six years. Instead of regulating financial services, this Acting Director prefers allowing private enterprise to determine consumers’ choices – including those that are harmful and predatory. He also wants financial businesses to have more input on determining what regulations CFPB should use in their supervision and monitoring.
    As CFPB’s Acting Director, Mulvaney also wrote a letter to Federal Reserve Chairwoman Janet Yellen advising that “for Second Quarter of Fiscal Year 2018, the Bureau is requesting $0.”
    Mulvaney added, “While this approximately $145 million may not make much of a dent in the deficit, the men and women at the Bureau are proud to do their part to be responsible stewards of taxpayer dollars.”
    When the federal deficit is hundreds of trillions of dollars, it strains credulity to believe that $145 million will lighten the nation’s debt. But an emerging pattern of the current Administration is to allow lengthy delays that could eventually become denials. As this column has previously reported, key consumer protections in student loans have been delayed as well, and through the Congressional Review Act, a rule that would have allowed consumers to have their own day in court to resolve financial and credit issues has also been rejected. Moreover, Mulvaney directed the CFPB to delay implementation of its prepaid card rule that was designed to help stop abusive fees for users.
    If sparing taxpayers unnecessary costs is the guiding force, then why has both the CFPB and Department of Education rejected earlier negotiated rulemaking and begun the process anew – at taxpayers’ expense?
    “I certainly understand the desire to protect taxpayer dollars,” said Debbie Goldstein, Executive Vice President with the Center for Responsible Lending, “but I think the mission of the CFPB is to protect the taxpayers, the American people, from lenders who target them for high-cost and unaffordable loans. And the best way to save Americans millions of dollars is by preventing predatory lending, not by draining the CFPB’s resources.”
    Charlene Crowell is the Center for Responsible Lending’s communications deputy director. She can be reached at charlene.crowell@responsiblelending.org.

  • Newswire : Civil rights leaders, clergy support Federal crackdown on payday lending

    By Charlene Crowell, communications deputy director with the Center for Responsible Lending

    Richard Corday and  Hilary O. Shelton

    (TriceEdneyWire.com) – After five years of field hearings, town hall meetings, multiple research reports, and over one million comments, the Consumer Financial Protection Bureau (CFPB) has announced a new rule to rein in predatory payday and car-title loans.
    “These protections bring needed reform to a market where far too often lenders have succeeded in setting up borrowers to fail. . . Faced with unaffordable payments, consumers must choose between defaulting, re-borrowing, or failing to pay basic living expenses or other major financial obligations,” said Richard Cordray, CFPB Director.
    Central to the CFPB’s rule, established Oct. 5, is the establishment of an ability-to-repay principle. High-cost loans of 45 days or less, as well as longer term loans that end in a balloon payment, must first take into account whether the loan is affordable when both borrower income and expenses are considered. These loans allow lenders to seize funds from either a borrowers’ bank accounts (payday loans) or repossess vehicles that were used as collateral (car-title loans).
    Although marketed by predatory lenders as an easy lifeline in a financial emergency, research by CFPB, and other consumer groups found otherwise: payday lending’s business model is the tool that drowns borrowers into a sea of debt. With triple-digit interest rates of 400 percent or higher, payday and car-title loans drain $8 billion in fees on loans averaging $300-$400. Borrowers stuck in more than 10 loans a year generated 75 percent of all payday loan fees. Similarly, 85 percent of car-title loan renewals occur 30 days after a previous one could not be fully repaid.
    Across the country, these high-cost lenders are most-often found in communities of color where Blacks, Latinos, and low-wealth families reside. The data and consistency of business locations in these areas suggest that lenders target financially vulnerable consumers.
    Upon learning of CFPB’s payday rule, clergy and civil rights leaders who have steadfastly opposed payday and car-title lenders’ triple-digit interest rates were swift to speak in support. Their desire to rein-in the debt trap of these unaffordable loans was both strong and consistent.
    “With little accountability for their actions, payday lenders have long preyed upon communities of color and drained them of their hard-earned savings,” said Hilary O. Shelton, the NAACP’s Washington Bureau Director and Senior Vice President for Policy and Advocacy. “This CFPB rule establishes a much-needed set of transparent responsibilities for lenders and basic rights and protection for borrowers.”
    “We will work to defend and strengthen this rule,” continued Shelton, “so Americans face fewer burdens in establishing financial security.”
    For Reverend Willie Gable, Jr., Pastor of Progressive Baptist Church in New Orleans and Member of the National Baptist Convention, USA, Inc., the country’s largest predominantly African-American religious denomination, the payday rule was both personal and pastoral.
    “In my home state of Louisiana, the average payday loan interest rate is 391 percent,” said Reverend Gable, Jr., “With rates this high – and even higher in other states, cash-strapped people who needed only a couple hundred dollars soon discover they are in financial quicksand, paying loan fees were after week, that only sink them deeper into debt.”
    “As best I can, I comfort those caught in payday lending’s web of debt,” Gable added. “Yet I also know that it is time for change. These shackles of debt must be broken.”
    “President Trump and Congress should get on the side of civil rights advocates, the religious community, consumer organizations, and the public at-large by supporting and strengthening the CFPB’s new rules on payday lending,” challenged Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights, a coalition of more than 200 national organizations to promote and protect the civil and human rights of all persons in the United States. “Payday lending is bad for many consumers; but like many predatory scams, it invariably ends up as a weapon against the disadvantaged communities that are least able to bear its terrible burden.”
    Looking ahead, many consumer advocates remain hopeful that CFPB will go even further with its rules, to include similar actions against harmful and longer-term loans.
    At both the state and federal levels, civil rights leaders and consumer advocates must remain watchful to preserve, expand, and enforce existing interest rate caps now in effect in 15 states and the District of Columbia. Advocates must also remain watchful for any congressional actions that may be taken to preempt or undermine consumer protection