Is the consumer movement a “horseless headman”?

Even after the subprime mortgage meltdown, support for real regulation is dangerously absent in Congress, as their recent behavior shows.

At a March townhall event here in Boston organized by MassPIRG and SEIU, Representative Barney Frank lamented that the consumer movement is like a “horseless headman.” This, of course, is a pun on the infamous literary character, the headless horseman.

What he meant to say, I suppose, is that the consumer movement has some top-notch thinkers

in DC monitoring legislation and fighting for consumers. But we’re missing the powerful horse; we’re missing enough involvement by everyday American people to make real change.

As Chair of the House Financial Services committee, Frank is familiar with the consumer movement. And unfortunately, he was on to something. There are advocates from the National Consumer Law Center, US PIRG, Center for Responsible Lending, Consumers Union, Consumer Action, Consumer Federation of America and other organizations monitoring Congress and the

Fed’s every move. Armed with the truth, they point out that the subprime mortgage meltdown didn’t have to occur, and that future problems can be prevented by regulation. If they ruled the world there would be airtight consumer laws in place protecting us all, and not just from bad mortgages but from usurious credit cards, overdraft fees, payday loans, abusive auto financing and more.

The problem is that Congress isn’t gonna budge until there’s a serious political cost involved in constantly doing the banks’ bidding at the expense of the American consumer. So we’re working with the advocates to build up public support for reform of the industry. We’re helping match up the horse with the head. You can visit our website to get involved – or stay tuned here.

Originally Posted on Caveat Emptor by Sarah Byrnes on April 30, 2008

Talking about predatory lending.

Ever have trouble explaining to your friends and family why they should care about "predatory lending"? I know I have, so AFFIL devised these ten talking tips for just that conversation. They are on our site, but we're sending them around in case you missed them. Use these tips to talk about the need to regulate the renegade lending industry. Even better – share your own story of being tricked or trapped by a lender with friends.

Let us know what we're forgetting - post a comment telling us your reason for caring!

1. Your lender wants you to pay late.
Did you know your credit card company can change your payment due date each month hoping you'll miss your payment? And lenders can charge that $39 late fee even if you're only an hour late.

2. You can't win.
If you have a problem with your credit card company (imagine that), you cannot sue them in court. Instead, you have to take your complaint to an "arbitrator" – who, 95% of the time, will rule in favor of the credit card company.

3. Banks donate more money to politicians than the oil industry.
Clearly, they're up to something.

4. There are more Payday Loan outlets in the United States than McDonalds restaurants.
And you'll never guess where they all are: in low-income and minority neighborhoods.

5. People can't choose the careers they want.
In 2001 the average college grad with loans had $20,402 in debt, and young people are taking on higher-paying but less meaningful work because of the debt albatross.

6. Abuse is their business.
The more we pay in interest and fees, the higher their profits, so the credit card companies are always looking for excuses to add new fees or jack up interest rates on our debts.

7. All those credit card offers that come in the mail are bad for the environment.
Enough said.

8. The poor pay the most.
23% of low-income families don't have a checking account, so they rely on expensive financial services instead. Payday lending and Tax Refund Anticipation Loans alone drain $5 billion from families each year.

9. Discrimination.
Anyone smell racism in the mortgage market? If not, read the stats: over 70% of high-income African American homebuyers in Boston received a subprime mortgage in 2006. Over half of African American homebuyers and over one third of Latino homebuyers nationwide received a subprime loan in 2006, as compared to one in five white homebuyers.

10. The subprime mortgage scandal.
Over two million families who received subprime mortgages since 1998 will end up losing their homes to foreclosure. Many already have. This will cost Americans as much as $164 billion.

What's your reason?

Let us know what your reason for caring about predatory lending is by posting a comment on this blog!

"...and maybe we'll have all of the fascists out of the way by then." And then....Maybe Not.

A shocking and historic 11 page investigative report by David Barstow of The New York Times produces telling and indicting evidence of the large extant to which the Pentagon and Defense Department has sought, since before the invasion of Iraq, to dominate and control the messages poured forth daily by American news media organizations.

Using retired generals and colonels of the armed forces, who in the aftermath of 9/11 found their professional opinions of particular value to the news media, as self described “surrogates” for their message (that Iraq was an imminent threat to US security, that the insurgency was in its last throes, that democracy was taking hold, that Guantanamo Bay was more like a resort hotel etc, etc…) the Times report details a carefully managed defense department public relations campaign to spoon feed these former soldiers (and therefore the American public) that famous concoction of Neo-Con kool-aide.

By participating in this media whitewash, the former soldiers, many of whom work in defense contracting industries, were privy to top secret government information which they could advertise to their prospective clients as “timely and in the know.” It was a very cushy deal. All they had to do was subvert any preconceived notion about their responsibilities as disinterested media analysts.

This, in case you haven’t surmised it yet, is GOVERNMENT CONTROLLED MEDIA. This was the tactic of Soviet Russia, Communist China and Nazi Germany. The idea is to quash dissent and encourage citizens to wrap themselves around the warm security blanket of the ever burgeoning national security state.

Once again, it is the ghosts of Vietnam and its misinterpreted lesson which are rearing its ugly head. One of the main lessons which Conservatives took from that misbegotten war was that it was the news media, who for the first time in world history, displaying the horrific images of war in a ghastly nightly barrage, cost our nation the humiliating defeat which absolutely wrecked our Armed Forces. It wasn’t that the US army was doctrinally incapable of fighting a protracted guerilla war, or that failing to mobilize the country for said conflict was unsustainable and irresponsible. No, it was the media’s fault.

Vietnam refuses to exit from the American psyche. That is why in 2008, with the chicken-hawks in office, we are never permitted to see body bags. That is why our army does not “do civilian casualty figures.” We are not to know the reality. That is the bottom line.

There are no sufficient words in the American lexicon to accurately portray my indignation. The obfuscation and systematic deception organized by the former Secretary of Defense Donald Rumsfeld and his cronies, have resulted in an a tragically endless war which has left our Army debilitated and our nation once again internally divided over a war which never should have begun.

Credit card horror story hour with Jessica from AFFIL

So, here at AFFIL, one of the things we work diligently on is raising awareness of the evils of the debt trap - how late fees and high interest rates can lock you into a cycle of debt that can overwhelm you. This is a particularly sore subject for me because I, myself, got sucked into the debt vortex at a very young age. Here's a little tale of how that shiny piece of plastic can be the bane of your existence for years to come:

I was 16 and on my way to my future - not to mention a total know-it-all that thought I had the world on a string. I was due to start classes at the local community college in a month and was stressing out over the fact that I hadn't received my Pell Grant funds yet. I knew if I didn't pay the $200 tuition deposit by the deadline they would auto drop my classes and I would end up waiting in that miserable open registration line at 6am the day before classes started - a nightmare of chain-smoking, gum-smacking, 18-yr. olds, just itchin' for a good reason to go back to juvi (I'm from a small southern town rife with kids that simply do not have enough to do).

That afternoon I received a magical envelope in the mail - You are pre-approved! Moi? Pre-approved? A magical word to a 16 year old that no one seems to approve of. All I had to do was sign my name on the dotted line and mail it back in the postage-paid envelope and I would have me a shiny new piece o'plastic with a $500 limit! You better believe I sent that bugger back just as soon as I could get it in the envelope. A week later I had my golden ticket.

I think this is where I should mention that, at the time, I was a hostess in a local brewery and made $5.50/hr. working 20-30 hours per week. I lived with two friends, paying $300/month for rent and about $100/month for utilities. I didn't have a car, but did spend around $20/week on the bus. Surely, I didn't have enough disposal income to merit being pre-approved for a credit card...oh, but apparently I did.

What was the first thing I did with my new plastic card, fabulously decorated with a hip art deco design? I paid my tuition deposit. And when the first week of classes came around and my Pell Grant was still no where to be found, what did I do with my little plastic friend? I bought $250 worth of books. Then I went out for sushi.

When my Pell Grant showed up, I still hadn't gotten my first credit card bill, so of course, it was the farthest thing from my mind - I paid the rest of my tuition, my rent, and bought some crap for my apartment. When my very first credit card bill came around I was buried in books, had cut back my hours at the restaurant, could barely pay my rent and was eating Ramen noodle on a daily basis. My payment was late. The $39 late fee pushed my balance over the limit. I was charged a $39 over limit fee...and it was all down hill from there.

In the first year or so after getting the card I would pay the minimum payment every month. Every month I would be charged another $39 over limit fee. Sometimes I would have a slow week at work or have a particularly high electric bill (summer in NC is cause for lots of AC), causing me to be late and adding another fee.

By the time I was 18 my credit card bill for that shiny $500 limit was over $1,000. As time went on and life got more expensive, I did the stupidest thing I could have ever done - I just completely stopped paying on my credit card. I felt like I was just throwing good money after bad, and I was sick of it, so I simply stopped.

In the meantime I had gotten two other cards - one with a $500 limit and another with a $1500 limit. Both had similar fates - tuition, books, replacing the head gasket in my boyfriend's car after breaking down and getting stranded in the mountains of TN. Oh, and my personal favorite, B of A using my credit card as overdraft protection, which meant cash advances with 29% APR automatically charged to my credit card if my bank account so much as slipped $.50 cents into the negative. All of them I tried my hardest to pay on time, but simply gave up when it came down to rent or credit card bills.

Fast forward to now. I am 24. I am a savvier consumer, a bit of a politician, somewhat more fiscally stable and responsible, and work in a place that has taught me tons about consumer credit and the cyclone of debt banks want you to fall in. I don't have an open line of credit. If fact, I probably won't be able to get one for years (though I still get "pre-approved" offers in the mail). I paid off one of my $500 limit cards last year to the tune of $2,342. The other two are in collection. I make regular monthly payments on the other $500 limit card. The balance is currently around $900, and I estimate I have paid well over $2,000 to them over the years. The third card is the $1500 limit card with B of A - the balance is currently $2,867. The collection agency refused to negotiate a settlement with me, so now, again out of stubbornness and a little bit of apathy, I have cut off communication with them, though I receive a letter threatening a lawsuit from them every month or so. They have yet to file suit.

Heed my warning young college students: it is not free money, and you will not have anymore money when the bill comes than you have in your pocket right now. Credit card companies are not your friends. Just say no.

A Litany Of Abuse

I do not think the American vernacular has ever been subjected to the kind of brutal, systematic mutilation that is has been exposed to in the past seven years. The Clean Skies Act, The Healthy Forests Act, The Patriot Act, The Bankruptcy Abuse and Consumer Protection Act, and most recently The Foreclosure Prevention and Sound Servicing Act are all offensive manifestations displaying our nation's descent into an Orwellian world.

What the *%# are tax breaks for Ford and General Motors doing in The Foreclosure Prevention Act?! Domestic airline companies are also eligible for government sponsored bailouts which I’m sure comforts the 234,685 families who received foreclosure notices just last month. Oh, and the 6 billion dollars slipped in to encourage alternative energy production is also another brilliant addition to the bill sure to get families hit hard by unscrupulous, greedy lenders back on their feet. This despicable, disgraceful, disingenuous bill does absolutely nothing to help anyone who is losing their home and speaks volumes about the competency of the new democratic majority. Our government is a joke. Let’s get on with the steroid hearings.

The 2005 Bankruptcy Abuse and Consumer Protection act, designed and packaged by one of the largest organizations in the credit card industry (MBNA) and sold to Americans using the tried and true method of fear mongering, did two things: 1. addressed a fictitious problem and 2. did, in fact nothing, to “protect consumers.” The U.S courts just reported a 38% increase in bankruptcies in 2007 (despite the industry’s best effort to eliminate the biblically inspired, colonial-aged legal statute). How ‘bout that for protection?

John Rao, an attorney with The National Consumer Law Center, considered a guru by many consumer attorneys on the nuts and bolts of this immoral law just passed in front of my tiny AFFIL cubicle as I sit here typing this rant. Our organizations share the same office space - sometimes we even exchange office supplies and share the eating utensils in our common kitchen space.

Cops and Robbers

We all know college is expensive - the bar tabs, late night munchy runs, beer keg deposit down payments we never get back because some drunken Andy Warhol wanna- be “art-student” spray painted profanities on its cold, defenseless exterior………..

For many, student loans are the only way to fund these venerable age old traditions. But what does one do when the bill comes due? The way I see it, there are only two options:

• Set yourself on a carefully regimented allowance which, barring a job loss, health emergency, divorce or any other moderately likely economic emergency, will have one out of debt just in time to inherit a mid-life crisis.
  

• Rob a bank.
  

Queen’s resident and New York City police officer Christian A. Torres chose the latter. Click here to find out more about this man who hated meeting his monthly minimum payment more than you.

An Ode to Cleveland

By Sarah Byrnes

Cleveland is a city on Lake Erie
The amount of foreclosures there makes me weary
It's a very bad thing
Subprime lenders did bring
But we could fix it if our reps would see clearly!

Okay, so it doesn’t rhyme perfectly. But I do have a soft spot for Cleveland in my heart, which is particularly note-worthy because I grew up 2 ½ hours away in Pittsburgh (we have a die-hard football rivalry).

AFFIL was “born” in Cleveland in 2004, and there are a great group of advocates working to stem the foreclosure crisis there. Ohio as a whole has been aggressive as well—check out this cool settlement where the Ohio AG is making Potbelly Sandwich Works provide 1,600 sandwiches and pay for a Maxed Out screening in exchange for being dropped from a lawsuit. The sandwich chain previously handed out food to get students to sign-up for credit cards. This trinkets-for-debt practice is one AFFIL and PIRG have been working hard to regulate. We don’t begrudge anyone an awesome free sandwich or t-shirt, but we have to say that years of credit card debt are probably not worth it in the long run. See this video and this study for examples of how this trap works.

But back to Cleveland – there’s a free Maxed Out screening there tonight! Register here if you plan to go - space is limited. AFFIL Board member Kathleen Engel will be on the panel discussion after the movie, along with Jim Rokakis, Cuyahoga County Treasurer and Richard Cordray, State Treasurer.

...and i thought people liked tazer guns and cattle prods

“China condemned the disruption of the Olympic torch relay in London and Paris, saying the "despicable activities" of pro-Tibet activists had tarnished the Olympic spirit.”

Apparently, the draconian methods of repression which the Chinese State employs against dissenters bestows a sleek, shiny, finishing gloss to the Olympic spirit. How fitting that the Olympic Flame relay - a concept originally introduced in 1936 at the behest of Hitler and his Nazi party as a celebratory propagandha tool - is once again being utilized by an oppressive, totalitarian Olympic hosting country.

I couldn’t help but evince a smirk upon hearing the news that the Olympic flame was periodically extinguished along its route in Paris. I’m elated that China’s attempt to promote itself on the world stage as a respectable, emerging diplomatic and economic power is being eclipsed by its oppression of the brave internal Tibetan dissenters and their external supporters around the world.

If China wants its Olympic spotlight, let’s let China have it. Really, let’s let her have it! Let’s start talking about China -

Let’s talk about Yang Chunlin, a land rights defender and Olympic critic, who was sentenced to five years imprisonment this past March for “inciting subversion of state power.” Executive Director Sharon Hom of the International NGO, Human Rights in China explains that (Chinese) “Prosecutors reportedly argued that Yang Chunlin’s petition stained China's international image, but it’s the ongoing crackdowns on critical voices by the Chinese authorities that are damaging China’s credibility and legitimacy at home and abroad.”

Let’s talk about Human Rights Lawyer Zheng Enchong and all his colleagues, who are subject to periodic incarceration, torture and harassment by the Chinese police force.

Let us talk about Zheng Enchong, former teacher and author of the 2000 book, Corruption in the Communist Party of China, who was recently arrested under the catch-all lasso of “inciting subversion of state power,” when he called for democratic state reforms.

If it’s attention China wants. There are plenty of things to talk about. Let’s not allow China to drag the ceremony back to the dredges from which it originated.

Congress and the fate of the American Dream

Jessica from AFFIL here - thanks to MBG for sharing your space with Sarah and me!

I was trolling the headlines searching for morsels of information about subprime lending, predatory lending, banks and corporations taking advantage of the little guy… my usual morning routine, when I came across an intriguing headline in The New York Times: 81% in Poll Say Nation Is Headed on Wrong Track.

Despite not having any immediately striking relation to the big bad world of consumer credit and predatory lenders, the headline caught my eye, so I stopped to read on.

The poll was a nationwide telephone survey, conducted by The New York Times and CBS News. Respondents were asked to share their attitudes on a variety of issues, including the economy and overall confidence in the Nation. Rather dismal, but not all that surprising, until I came across this:

“The poll found that Americans blame government officials for the crisis more than banks or home buyers and other borrowers. Forty percent of respondents said regulators were mostly to blame, while 28 percent named lenders and 14 percent named borrowers.

In assessing possible responses to the mortgage crisis, Americans displayed a populist streak, favoring help for individuals but not for financial institutions. A clear majority said they did not want the government to lend a hand to banks, even if the measures would help limit the depth of a recession.”

So if polls are showing that the American people are in favor of better regulation, and help for families, not CEOs, then who exactly is Congress pandering to with their watered-down housing legislation (see previous post, “No love from the Senate”)? Doesn’t it make you wonder who bought out your vote? Was it MBNA, JP Morgan or maybe Bank of America?

It’s time to get loud. It’s time to start pitching fits and taking names. I’m serious. Doesn’t this make you mad? I’m mad. Grrrr...

In the meantime, the House Democrats are wildly trying to hammer out compromises with the lending industry and gain support for their housing legislation. The principle author of the bill is Representative Barney Frank (D-MA), Chairman of the House Financial Services Committee. Rep. Frank’s proposal would aid homeowners by allowing them to refinance risky mortgages with fixed-rate federally insured loans.

Oh, and an update on the Senate legislation: They will hold a cloture motion tomorrow (Tues. 4/8), and it is expected that the bill will pass this week. The bill, as it stands now, focuses on stimulating buying through grants to cities to rehabilitate foreclosed properties and tax breaks to builders. It also gives tax breaks to people who buy foreclosed properties (like investors and people who flip houses – because, you know, they really could use some help right now). Since the removal of Title IV, what it doesn’t do is keep families in their homes. Click here for a list of the Senators who voted to get rid of the best part of the bill – yours might be on the list.

Let’s hope the American Dream fares better in the House than it did with the Senate.

No love from the Senate

Thanks MBG, for letting me blog here! Not to mention for being a stellar intern at Americans for Fairness in Lending (where I work).

Today the Senate Democrats are in the midst of handing another win to the lending industry. While debating The Foreclosure Prevention Act of 2008, they took out crucial Title IV, which would give judges permission to modify subprime mortgages for homeowners in bankruptcy. This kind of protection already exists for your yachts or your second homes (um, since you totally have a yacht) but it doesn't exist for primary residences. Go figure. Consumer advocates were supporting Title IV because it would work -- it would save 600,000 homes if enacted. And saving them this way wouldn't cost the U.S. Treasury a penny.

But. The Senate dropped the provision. I hear the excuses -- politics is a give and take and the Dems wanted to get some of their other reforms through, so they dropped Title IV. But a bill that's supposed to address the foreclosure crisis is a joke if it doesn't allow homeowners to modify their mortgages in bankruptcy.

Republicans are masters at making Dems look stupid for exactly these kinds of compromises. The Dems should at least make sure there is some public accounting for who votes for and against bankruptcy reform. Republicans (or anyone else who ends up voting against it) should have to go home, face their constituents in foreclosure, and explain why victims of predatory lending don't get this bit of relief when they throw in the towel and file for bankruptcy. And there's still hope that there will be an amendment to the bill containing bankruptcy reform
-- so stay tuned.

The lending industry has its claws into Congress pretty deep. They donate more to politicians than the oil industry does. And most Americans still internalize the stigma that goes along with being in debt or bankrupt. They don't realize that "we are the 90%"--so they don't realize that things could be different. It'll just take a little courage from our representatives.

By Sarah Byrnes

Debt "Settlement"

Confirming what I had already known- that debt settlement agencies are a waste of time and worse, a ripoff- a former debt settlement company worker tells all in an anonymous expose.

Know it all Liberals

Much like Barack Obama’s prescient, early position on the Iraq War, Americans For Fairness in Lending, a non-profit consumer advocacy organization in Boston, Massachusetts was ahead of the curve in calling for increased federal regulation of the banking industry. Yesterday, Treasury Secretary Hank Paulson unveiled a plan which many are calling the "most significant overhaul of U.S. financial regulation since the Great Depression.”

Leaning uncomfortably against a frozen emergency exit window, watching the sun rise over a waking New England I sat aboard a Peter Pan Bus destined for New York with two of my boss’s from AFFIL, Sarah Byrnes and Jessica Wheeler. I had begun an internship with the organization in the beginning of January. That day we were traveling down to the big apple to meet James Scurlock, the writer and director of Maxed Out- a groundbreaking documentary about the lending industry- to assemble near the hub of the American capitalist enterprise- Wall Street. The goal was to speak with as many lunch -breaking bankers and stock brokers as possible and give away free DVD copies of his film. I am no stranger to this kind of high-minded, well intentioned provocation- back in my vegetarian days, I used to duct tape various pictures of skinned animals to all the pretty, popular girls’ lockers in my high school to "politely encourage" them to stop wearing leather and fur. The ladies were all over me after that, but not exactly in the way a teenage boy desires.

What we discovered that day in New York was surprising to say the least. Instead of encountering the vociferous opposition which I had grown accustomed to, we found that many in the banking industry, in lieu of recent downturns in the market, were now willingly embracing some form of federal regulation! Below is a video compilation of that day- you can see my righteous, do-gooder fingers make a cameo holding up a Maxed Out credit card…...

Since that day I have really come to appreciate and respect the diligent work of my bosses as they have taught me to believe that it is possible to fuse one's moral outrage and desire for change with the practicalities of the working world.