Sarah Byrnes

Americans for Financial Reform and the Showdown in Chicago

The movement for consumer justice has gotten bigger and stronger, and if you’re in Chicago next week you can experience it firsthand.  Americans for Financial Reform (AFR), a big coalition of which AFFIL is a member, is organizing a series of demonstrations on October 25 – 27.  Over 5,000 people are expected to attend.

And that’s not all Americans for Financial Reform (AFR) is up to.  This mega-coalition was formed a few months ago to take advantage of the current opportunity to reform the nation’s financial regulatory system.    Keep Reading »

Sun Sentinel shines on AFFIL

This is a great week for AFFIL because our friend Denise Richardson devoted an entire column to us at the Florida Sun Sentinel. (Thanks again Denise!) You can see her column here.

Coincidentally, a while back Sam asked me to write a “what AFFIL is up to” blog post, and lucky for me, Denise has now done some of the work for me. Here’s an excerpt of what she has to say:

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Re-regulation on the Squawk Box

This weekend I got embroiled in a discussion with someone who insisted that government regulation caused the economic meltdown. This person is not alone in believing that regulation is always a bad thing, and can only cause harm.

At some point I realized that this was a silly debate to be having, sort of like whether or not there should be traffic laws. Promoting sensible traffic laws does not make a person “anti-traffic.” Yet somehow promoting sensible market laws is seen as being anti-market.

Good regulations and laws sustain the market, rather than thwart it. Not all regulations are good. But we should be debating what types of regulations are good and sensible, not whether regulation should exist at all.

Always one of the most eloquent proponents of re-regulation, Elizabeth Warren made another public appearance last week to explain why we need it.  (Skip ahead in the video above to the last few minutes to get to the good part.)

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48 hours left to save 1.7 million homes and $300 billion

The word from AFFIL’s Partners in Washington is that the Senate will vote on Thursday on judicial loan modifications.  Lifting the ban on these court-supervised modifications would save 1.7 million homes and $300 billion in home equity for neighbors of families facing foreclosure.  (For background info on judicial loan mods, see this previous post by Sam, or this one on the AFFIL blog.)

Even though this measure would be incredibly helpful and effective in fighting foreclosures, it’s not certain that 60 Senators will vote for it.  (It’s already been approved by the House.)  Without 60 votes to get around a filibuster, the measure won’t pass.

You can use this link to contact your Senators and make sure they support judicial loan modifications.

Senator Durbin’s office put together this useful table showing how many homes and how much home equity would be saved in each state by lifting the ban.  Even the numbers at the state level are huge – for example, 25,000 homes could be saved in Minnesota, 43,000 in Ohio, and a whopping 206,000 in Florida.

When you contact your Senators, make sure they know just how many homes a “no” vote on Thursday will cost your state. Keep Reading »

Congress thinks a 391% APR is a-okay

Last week, the House Subcommittee on Financial Institutions and Consumer Credit held a hearing on H.R. 1214, the Payday Loan Reform Act.  AFFIL and our Partners are calling this the “Payday Lender Protection Act.”  It’s the first bill that AFFIL has ever officially opposed (PDF link).  Unfortunately, the bill enjoys a lot of support and the full House could vote on it soon after they return from recess.

H.R. 1214 would allow payday lenders to charge $15 per $100 borrowed – which for a two week loan amounts to an annual percentage rate of 391%.  Over 80% of AFFIL members and 48% of the general public think 36% interest is too high, let alone 391%.  Of course, a 36% cap is the best we can hope for, and would be a big improvement over the status quo.  (See this post about Senator Durbin’s “Protecting Consumers from Unreasonable Credit Rates Act” for more info.) Keep Reading »

Overdraft loans drive everyone crazy

Above, watch the trailer for Karney Hatch’s “Overdrawn!”, a documentary which chronicles his fight against absurd overdraft fees.  In his journey, Hatch ends up talking with several AFFIL Partners as well as Ralph Nader. He currently has an action posted on (a fantastic social network) where you can show your support for H.R. 1456, the Consumer Overdraft Protection Fair Practices Act.  AFFIL supports this bill, and signed on to joint Congressional testimony (PDF link) about it last week with eleven other groups. Keep Reading »

Credit card companies hike rates and cut credit lines

It’s tough to follow up on a post about how to make a Black and Tan, but I’ll give it a try.  I was inspired to write by an interesting discussion over at the Consumerist about credit card rate hikes and credit line cuts.  Many AFFIL members have written to us about this phenomenon, and we’ve also spoken with industry insiders who confirm that the issuers are cutting limits and raising rates even on long-standing good customers.  (The Consumerist discussion got started because of this article in the New Yorker.)

Consumers with some financial cushion can probably wiggle around these credit card changes and come out unscathed. If their rate goes up they can pay off the card in full; decline the new terms, stop making new charges, and pay off the existing balance at the old rate; or transfer the balance to a different card.

But there are plenty of consumers who are, in the New Yorker’s words, “captive customers.”

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Elizabeth Warren’s Financial Product Safety Commission

Senator Durbin (D, IL) is soon expected to introduce legislation which would create a federal “Financial Product Safety Commission” (FPSC). This concept was originally proposed by the ever-fabulous Professor Elizabeth Warren of Harvard Law School (pictured).

Her idea to make a regulator for financial products modeled on the Consumer Product Safety Commission has been floating around for a while, and was perhaps first explained to the public in a May 2007 article in Democracy. The article begins with the powerful “toaster analogy”:

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Is the moment right to bring back a usury cap? (AFFIL Week)

payday_loansTriple-digit interest rates used to be illegal. From Biblical times through the Middle Ages through English colonial law, people realized that the government needed to regulate the inherently unequal relationship between lender and borrower.  One by-gone civilization that didn’t do this was ancient Greece, and they ended up with loads of literal “debt slaves.”  Not exactly an enviable outcome.

In today’s small loan market, plenty of people borrow money at triple-digit interest rates.  These rates show up in payday, car title, overdraft, and refund anticipation loans.  Capping interest rates across the nation is a simple way of preventing this from happening and saving people lots of money, but that option was politically impossible for a long time.  Now, that may be changing. Keep Reading »

Does July of 2010 seem a long way off to anyone else? (AFFIL Week)

On December 18, the Federal Reserve Board released new regulations for credit card issuers.  The substance of the regulations is great – in some ways it’s even stronger than what was proposed (more on this below).  But the ridiculous problem with the Fed’s announcement is that, for some reason, the rules won’t go into effect until July 1, 2010.  That’s eighteen months from when the regs came out in December.

Eighteen months is a long time!  In eighteen months people can get into and out of all sorts of shenanigans, financial, and otherwise.  And given the direction the economy is heading, doesn’t it seem like now would be a better moment to enact these long-overdue consumer protections, and keep more money in consumers’ hands?

Of course, banks do need some amount of time to conform their procedures to the new rules.  But this really shouldn’t take longer than three months.  After all, the industry is miraculously efficient when adopting new procedures that they stand to profit from.  Why on earth do they need eighteen months in this case?

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