I certainly do not think the Democratic Party has been particularly pro-consumer in the past, although the party has taken the lead in the consumer protections that have developed over the years. From Clinton’s second term deregulation of Wall Street to the passage of the Bankruptcy Bill under Bush, the banks were on an absolute roll. It could be, however, that one of Obama’s most lasting positive legacies is his refocusing on the consumer. As the Senate prepares to battle over judicial and executive nominations, including Richard Cordray to be the permanent head of the Consumer Financial Protection Agency, the administration is moving ahead with regulations and enforcement that will protect the indebted from abuse.
Apparently, the laws that we currently have about how debt can be collected only pertain to third party debt collectors. If you owe money directly to Macy’s, for example, then Macy’s can call you morning, noon, and night.
The debt collection practices of banks and lenders have long existed in a kind of regulatory gulf. The primary federal law that governs how companies pursue consumers behind on their bills does not apply to firms that are trying to recoup money that they lent directly to a consumer.
As a result, the lenders — from national banks like Capital One to big department stores like Macy’s — can hound consumers behind on their bills with repeated calls, even though the practice is restricted by the Fair Debt Collection Practices Act.
But on Wednesday, the Consumer Financial Protection Bureau plans to assert at a hearing that it has the authority to regulate banks’ debt collection practices under the Dodd-Frank financial overhaul law. The act bars the firms from employing “unfair, deceptive or abusive acts.“
“It doesn’t matter who is collecting the debt — unfair, deceptive or abusive practices are illegal,” Richard Cordray, the agency’s director, said in a statement early Wednesday.
From the beginning of his administration, Obama has been highly focused on how people get into debt and how they are treated once they are indebted. In 2009, he signed the Fraud Enforcement and Recovery Act and the Credit Card Accountability, Responsibility, and Disclosure Act. In 2010, he signed the Patient Protection and Affordable Care Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act. And, while not debt-related, in 2011, he signed the Food Safety and Modernization Act, which was the first major overhaul of our food safety laws since 1938.
When I was working for ACORN in the black community in North Philadelphia, I became acquainted with the types of concerns people have in our country’s inner cities. These aren’t unique concerns, but they are concerns that disproportionately impact our urban poor. Near the top, after crime and schools, is predatory lending. Check cashing joints, pay day lenders, income tax preparers, unscrupulous mortgage providers, all prey on the poor and undereducated, making fraudulent claims and/or charging usurious interest rates. One of the main things ACORN did, God rest its soul, was help advise people facing foreclosure on how to save their homes. Most of the time in the mid-2000s, the problem was that consumers had been duped into taking out mortgages they could afford initially but not once the hidden conditions of the loan kicked in later on.
Fraud and usury were the areas most in need of attention on the federal level, as crime and schools are more local issues. This is where Obama has delivered most effectively on a progressive agenda to help his urban base of support.
He seems to get very little credit for it from the progressive commentariat, so I thought I should mention it.
