LaFalce introduces Consumer Bill of Rights

WASHINGTON-Congressman John LaFalce (D-N.Y.) wants consumers to have a fighting chance in today's complex financial marketplace. On March 15, LaFalce introduced 11 bills that he said would expand the protections in current law for financial services consumers. He argued that with the increasingly complex financial arena, consumers need additional help in sorting through the fine print. LaFalce announced his bills at a press conference where he was flanked by several fellow House Democrats and consumer interest groups. "Consumers confront unfair and deceptive practices that can only be described as predatory in connection with almost every financial decision that affects their daily lives," LaFalce said. "We see predatory practices in connection with the homes we buy, in connection with the home equity loans we take out on the homes we already own, with the automobiles we buy or increasingly lease, with the credit cards we use for everyday purchases and with the short-term credit we need to stretch our paychecks." LaFalce said he has observed two very disconcerting trends involving unequal financial service structures between the upper and lower income levels and the incorporation of predatory practices by traditional financial institutions. "Millions of American families are being relegated to a substructure of subprime debt and high-cost services from which few will escape.," LaFalce explained. "Where once the local bank epitomized integrity, confidentiality, and customer service, today the practices of some of our traditional institutions are nearly inseparable from the non-regulated lender that pushes unaffordable debt and preys on consumers misfortune. The practices we once associated with the loan shark are now commonplace in the market for credit cards, second mortgages, auto financing and other short term debt." Congresswoman Carolyn Maloney, also a Democrat from New York, attended the press conference in support of LaFalce's consumer bill of rights. "Many people think the financial services industry runs on money. I think it runs on trust," she said. Maloney added that individuals need to be empowered and their confidence must be bolstered through greater protections, such as the ones LaFalce introduced. Joining the conference, Congresswoman Barbara Lee (D-Calif.) went so far as to call the Republican-controlled Congress an "anti-consumer Congress" that "needs to be run out of business." She, along with several other Democrats-including LaFalce, were extremely disappointed in the passage of the bankruptcy abuse reform legislation. The bills (H.R. 333 and S. 420) are aimed at making it more difficult to file for bankruptcy, but some Democrats contend that the legislation only serves to increase creditors' ability to recoup debts incurred by the lenders' unethical lending practices. Credit union trade associations strongly supported the bills, which easily passed through both Houses of Congress. Consumers Union Legislative Counsel Frank Torres also tenaciously opposed the bankruptcy bill and supported Congressman LaFalce's efforts to protect consumers. He proposed using a series of checks and balances to provide the best protection to consumers. "When the mortgage industry wants to reform the mortgage lending laws, we're going to insist predatory lending reform be part of that package," Torres clarified. Consumers Union also backed LaFalce's legislation to extend the Federal Reserve Board's Bank Fee Survey indefinitely. The proposal would serve to include credit union fees in the survey, which credit union groups have long supported. Credit union fees, if they charge them, have historically been less expensive than bank fees. Ed Mierzwinski of the U.S. Public Interest Research Group told Credit Union Times that adding credit unions to the fee survey would better allow consumers to chose the best priced financial services provider for themselves. He added that he would like to see it published on the Internet. Also in favor of LaFalce's Predatory Lending Consumer Protection Act-and the consumer bill of rights in general-was National Community Reinvestment Coalition President and CEO John Taylor. "Like wolves waiting to pounce on their prey, predatory lenders flooded neighborhoods of new homeowners with abusive loans that strip homeowner wealth and result in foreclosures," he said. "Stories abound of predatory lenders convincing families with 0% Habitat for Humanity loans to refinance at much higher interest rates." The bill Taylor referred to would lower Home Ownership Equity Protection Act (HOEPA) fee triggers against lenders, prohibit up front collection and financing of credit insurance, and expand HOEPA liability to parent companies and officers of lenders, among other issues. Other subjects covered under Congressman LaFalce's bill of rights include consumer credit cards, payday lending, and mortgage lending protections; Truth in Lending and Truth in Savings expansions; and auto leasing advertising improvement, as well as a required affordable transaction account at financial institutions. -scooke@cutimes.com