Financial reform measure seen as vital to hispanic community
The bill to overhaul financial reform passed the Senate May 20, after losing a cloture vote the day before. The overarching regulation was approved 59-39 with Sen.
The bill to overhaul financial reform passed the Senate May 20, after losing a cloture vote the day before. The overarching regulation was approved 59-39 with Sen. Scott Brown (R-Mass.) joining three other Republicans to push the bill through.
Along with trying to keep big corporations from engaging in risky financial practices, the bill aims to protect consumers from being victimized by predatory lending and further financial hardship.
The National Council of La Raza outlined some of the provisions in the current bill that are of special benefit to the Hispanic community.
Establishes a Consumer Financial Protection Bureau to enforce consumer protection laws
Includes new disclosure requirements that establish a more transparent process of wiring money abroad
Provides expanded access to independent financial advice and guidance
Promotes access to safe and affordable bank accounts and credit for low-income communities, and under-banked families
NCLR called the bill a “strong step forward in the fight to improve the accountability of Wall Street and eliminate deceptive lending practices.”
Last month Hispanic Link News Service commissioned the non-profit, non-partisan research policy group Center for Responsible Lending to do a five-part bilingual series Our Money Our Future (available at hispaniclink.org) identifying bad financial practices and products and alerting readers to the pitfalls that disproportionately affect Latino consumers.
In February, NCLR along with the Center for Community Capital at the University of North Carolina at Chapel Hill reported that Hispanics and people of color were more than twice as likely to fall prey to sub-prime lending schemes and default on their mortgages. This, coupled with unemployment figures for blacks and Hispanics well above the national average, has left thousands of families with major credit and financial difficulties.
In the Hispanic Link series, CRL’s César Castro spoke of then-pending legislation that would work to eliminate some financial traps that were destabilizing Latino communities nationwide and causing thousands of families to lose their savings and homes.
The reform bill addresses many of most onerous practices, emerged a month later, It is now headed to the House-Senate conference committee, where lawmakers and legislators are working to resolve final differences.
“It’s a really great bill,” CRL Communications Director Kathleen Day tells Hispanic Link. “The bottom line is that this new agency will actually protect consumers. It will watch out for consumers and stamp out bad products as they crop up — not wait until they torpedo the whole economy.”
Despite the bill’s effort to protect consumers by creating a new Consumer Financial Protection Bureau, Castro and Day share some concerns.
Under this new legislation, two industries lobbying for exceptions from federal regulation are auto dealers and the payday loan industry. Both have a direct effect on Hispanic market.
“We are still concerned regarding proposals which give some industries a loophole that allows them not to adhere to the rules of the intended law,” Castro says. “Car dealers that lend you money to finance your vehicle are seeking exemptions.” Without government regulation, car dealers can spike interest rates with something he referred to as the “yoyo scam” — a procedure whereby they can adjust car loans.
Payday lenders are exempt from regulations, leaving Latinos and people of color vulnerable, Castro explained, saying exemptions would allow businesses to decide interest rates—oftentimes as high as 400 percent rate.
Deputy Director of Wealth-Building Policy at NCLR, Janis Bowdler told Hispanic Link that NCLR has been working closely with legislators to make sure Hispanics are better protected.
NCLR has been working closely with the community to provide financial counseling. They’ve worked with Sen. Robert Menéndez (D-N.J.), and House members Luis Gutiérrez (D-Ill.) and José Serrano (D-N.Y.) to create a financial education and counseling program with the Treasure Department.
“We have been working on the banking reform bill to ensure Latino priorities are addressed,” Bowdler says. “Part of that includes educating the community about what’s at stake and getting them to weigh in with their Congress members.”
(Luis Carlos López. of Washington, D.C., is editor of Hispanic Link Weekly Report. Email him at [email protected])