With Wall Street profits back, a new federal initiative should help residents on Main Street with their finances, a U.S. legislator says.
Democratic U.S. Sen. Sherrod Brown addressed the Consumer Financial Protection Bureau’s (CFPB) “Know Before You Owe” initiative which should make credit card and mortgage terms easier to understand, would explain key prices, and would be written in plain language without legal jargon as well as be shorter in length. A prototype created by CFPB is two pages, much shorter than the industry average of 5,000 words.
“It is hard to believe Wall Street profits have returned to pre-financial crisis levels with the banking industry earning more than $35 billion during the first quarter of this year, almost a 50 percent increase over last year, and the highest level for profits in the last four years,” Brown said Wednesday in a weekly media teleconference. “Wall Street may be back to business, but Main Street Americans — far too many who have lost their homes, their pensions, their jobs because of reckless Wall Street practices — have not been so lucky.
“The easier we can make it for consumers to understand their financial products, whether it is mortgages or credit cards,” he said, “the stronger our economy becomes.”
The new initiative would cover the more than 500 million credit cards in circulation, mortgage terms and student loan forms. According to J.D. Power, nearly 514 million credit cards were in circulation in the U.S. at the end of 2010.
The credit card market in the U.S. represents more than half a trillion dollars in outstanding household debt.
CFPB Associate Director Raj Date stopped in Cleveland Wednesday to explain the new initiative to state bankers and leaders.
“With rising credit card debt, it is time to level the playing field for consumers,” Brown said. “One more point this is one of the many steps the CFPB are taking to give consumers as strong a voice in the marketplace and in Washington, D.C., as Wall Street and their lobbyists.”
Brown said the work of the CFPB could be enhanced if the Senate would confirm President Barack Obama’s nominee, Richard Cordray, to serve as director of the new bureau. The Senate is expected to vote on Cordray’s nomination today.
Obama nominated Cordray, who served as Ohio’s state treasurer and attorney general, on July 18, with support from Democrats, Republicans, business leaders and consumer advocates and even state Attorney General Mike DeWine, who defeated Cordray in the state attorney general’s race in 2010.
Cordray currently serves as chief of enforcement for the CFPB.
“Richard Cordray is a tough and fair-minded public servant who has earned the support of top business executives, law enforcement, and community leaders from both political parties,” Brown said. “It’s time to end the partisan bickering in Washington and curb Wall Street’s lobbying influence. We can’t afford to play games with the financial security of Ohio families — who deserve an advocate in Washington as powerful as the big bank lobbyists. By confirming Rich Cordray, we can strengthen the voice of consumers and ensure that our banking system works for all Americans.”
Brown bristled at the fact 44 Republican senators pledged to block his nomination unless more changes are made to weaken the CFPB — noting, “it’s never happened that one political party has blocked the confirmation of someone because they didn’t like the way the agency was constructed or they didn’t like the fact that the agency existed at all.” The U.S. senator also said they compromised with Republicans on the responsibilities and oversight capabilities of the CFPB when the bureau was created.
As state attorney general, Cordray recovered more than $2 billion for Ohio’s retirees, investors and business owners and took steps to help protect the state’s consumers from fraudulent foreclosures and financial predators.
Prior to his tenure as attorney general, Cordray spent two years as Ohio’s state treasurer and four as the Franklin County treasurer.
Earlier in his career, Cordray was an adjunct professor at The Ohio State University College of Law (1989-2002), and served as a state representative.