Despite benefitting from trillions of dollars in U.S. taxpayer support, Wall Street still believes nothing has changed. The six largest banks — Goldman Sachs, Citigroup, JP Morgan, Bank of America, Wells Fargo and Morgan Stanley — have plans to pay out up to $150 billion in bonuses, even though their greed and recklessness did so much to cause our current financial crisis.
The divide between Wall Street and Main Street couldn’t be greater. While bankers raked in their bonuses for the last year, almost 87,000 Coloradans lost their jobs.
A recent Center for Responsible Lending report found that financial institutions’ abusive practices are hurting Coloradans. From 2006 to 2009, the start of foreclosure proceedings increased by a whopping 94 percent. In the last 18 months, 62,943 families were forced to start foreclosure on their homes.
Coloradans’ lost wealth is staggering. Statewide, lost home equity totals $15.7 billion, and 1,581,158 homes experienced foreclosure-related declines at an average of $9,950 per home. Other findings include:
• Twenty-three percent of higher rate mortgages and 40 percent of mortgages overall were made by institutions whose regulator pre-empted Colorado state law;
• Coloradans pay $381.7 million in overdraft fees (46 percent nationally are from debit card transactions); and
• Coloradans pay $318.5 million in dealer overcharges on auto loan interest rates.
Colorado’s citizens deserve better from these reckless financial institutions. As a member of the U.S. Senate Banking Committee, our own Sen. Michael Bennet helped make sure a much-needed financial reform bill passed out of the Senate Banking Committee this week.
It is critical to enact financial reform. For too long the big banks and financial institutions have been the ones largely writing their own rules. They have been indiscriminately increasing credit card fees, offering mortgages that continually reset and creating new financial products like derivatives and credit swaps that allowed them to gamble with our money.
A strong, independent Consumer Financial Protection Bureau must be included in the final version of the financial reform bill. It will protect consumers from these abusive practices and hold banks accountable for their actions. The Consumer Financial Protection Bureau will help build a more robust economy. Recent polls show strong bipartisan support for the bureau, and 71 percent of Americans back the idea.
Existing regulators have looked the other way much of the time on predatory mortgages, unfair credit card practices, triple-digit payday loans, big overdraft loan fees for small debits, confusing fine print, and other consumer problems. Since 1995, regulators have charged only one top 10 credit card company with breaking the law, even though consumers have filed numerous complaints.
Hard-working families and growing small businesses deserve someone to look out for them when banks use confusing terms and unfair practices and features in loans, checking accounts, and other financial products.
A Consumer Financial Protection Bureau will help the nation prevent another horrifying economic meltdown.
Richard Eidlin is a member of the management team of the American Sustainable Business Council and the principal at Progress Group, a Denver-based strategic planning and business and policy development company in support of clean energy and sustainability.
