Transcripts For CSPAN2 Richard Cordray Watchdog 20240713 : v

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As i looked at tonights bio, i realize it sort of works backward in time, and unit take the time to change and i didnt take the time to change that, so working backward, Richard Cordray is previously the democratic nominee for ohio in 2018. Before that, the first director of the Consumer Financial protectionbureau from 20122017. Cordray served as ohios attorney general, solicitor general and treasurer. In 2008 he received the Financial Services champion award from the Small Business the u. S. Small buzz Administration Business administration. He was an adjunct professor if at Ohio State University college of law and served as representative for the 33rd ohio house district, was also the first solicitor general in that states history. He was the editor editorinchif the university of ohio law review. His book watchdog how protecting consumers can save our families, our economy and our democracy, is the subject of tonights timely talk. Please join me in welcoming richrd ard cordray. Thank you,ware richard. And thank you for making this format available during these challenging times. Im glad to have the chance to be with you virtually and to talk about my new book, watchdog. Watchdog is a story that is very timely to our Society Today and to our economy today, and as we move into another financial crisis, we need to brace ourselves for the same types of problems that we have seen before. The book is about consumers. And who are consumers . Consumers are all of us, every one of us is somebody who goes into the financial marketplace if every day and makes decisions and makes choices, and its out of those billions of decisions that we make every day that the economy of the United States of america, the most powerful, the most affluent economy the world has ever seen, has its, has its activity generated. Now, when i started the book, i wanted to start with some stories about average consumers; that is, you and me and the people we know, our brothers and sisters, mothers and fathers, sons and daughters. What i want people to understand is consumers often face challenging situations. And they sometimes get into problems that are not of their own making. Some responses are of their own make, but theres in situations where people are misled or cheated or mistreated in the financial marketplace, and i start with a variety of those. Im talking about people who are using products that we all use like credit cards, like auto loans if youre buying a car or a truck, like mortgages if you buy a house. Very few people buy a house with cash. Some do, most dont. Student loans, an increasingly prevalent fact of life for so many families across this country trying to finance an education for their children or grandchildren. And people run into problems, and they often are stuck. They dont know where to go, they dont know where to turn. They often find that when theyre dealing with large Financial Companies, they get no response or they get the run around, and they often cant get satisfaction, and that is alienating and creates a sense of disrespect that is widespread. We all know those feelings of being on hold for long periods of time or being told nothing can be done about that for this or that reason thats often buried in the fine print. So thats the nature of consumers. Its important for us to know were not alone in facing these challenges. Sometimes you may feel youre the only one who didnt understand that or the only one to whom this happens. Okay. So im going to resume at this point. We had technical difficulties for a moment, and i may be repeating myself slightly, but one of the important things for people to realize is Consumer Finance has dramatically changed in the last two generations, really since world war ii. There was very little credit available to our grandparents. It wasnt a big part of their lives. They didnt face a lot of risk. They couldnt get into a huge amount of financial trouble. But in todays society, fast forward two generations, credit card spending is pretty ubiquitous among americans. Auto loans are a big part of peoples lives in any part of the country where people drive to work. Mortgages are the way in which we buy houses, and they are a significant obligation. And Student Loans are now a very prevalent part of life for many families, and people can carry those loans for years, even for decades. So people have a lot more opportunity that credit provides, but they face a lot more risk and get into more trouble, so this is a bigger piece of our lives. This brings us to the financial crisis of 2008 which was caused by widespread irresponsible and predatory mortgage lending that caused many families to lose their homes during that crisis and really upended the entire economy. That led to congressional reform to try to prevent a crisis like that from happening again, and it created as part of that reform an idea, an idea that has been put forward by thenprofessor, nowsenator Elizabeth Warren for a Consumer Agency to protect consumers in the financial marketplace. Her very straightforward analogy that was a winning argument for many was that we had gotten to the point in america where it is basically impossible to sell someone a toaster with a 20 chance of bursting into flames and burning down their house. Finish but it is entirely was entire legal to sell them a mortgage that had a 20 chance of putting them into foreclosure and putting them out on the street with their families. That we werent providing protection for financial products, was a huge oversight. And the financial regulatory system in washington was really focused on the big banks and the Financial Companies themselves. It was about keeping them safe and sound, it was about making sure that they prosperedded over time. Thats important. Its important to remember that the types of Consumer Protection too if your bank is closing up, its got doing not going to be good for the customers. But it was important to turn around 180 degrees and look at the customers of these institutions and realize that if they were mistreated in the marketplace, something was wrong, and we needed to redress the balance and rebalance the marketplace so that consumers had the protection and support they need in order to flourish. If we have strong consumers in our society, were going to have a stronger or economy. And, again, it was mortgage lending of consumerfinanced markets that broke and upset the chi and hurt us economy and hurt us so horribly in 2009, 2010. So this book is about consumers and the problems they faced, its about Consumer Finance and how it has changed, and its about the new Consumer Finance Protection Bureau and the role and importance of the work that it engages in to protect people across america. Now, something thats important to realize is as Consumer Finance if has expanded in our society, so has the position of the financial sector. Financial services are becoming a much bigger part of our economy. Over this period they really doubled in size, and we now carry its a staggering figure almost 40,000 per person of Consumer Debt in america today. And that means the Financial Services industry has grown in clout and might and importance, especially in the corridors of power this washington. There is more money spent on lobbying, theres more money spent on Campaign Contributions by the financial industry than by any other part of our economy. And so when you have a new agency, a Little Agency like the Consumer Finance Protection Bureau Whose Mission is to make sure that it oversees the Financial Companies and holds them accountable for mistreating their customers, theres bound to be significant pushback. And there was. I tell some of the political story in the book. First of all, the fight that preceded my time in washington over creating the agency in the first place, and then the secondary fight that that developed over blocking the first director of the bureau which turned out to be me as the first nominee. I was blocked from being confirmed by the senate for two full years while they battled over trying to weaken the agency. And i come back to that fight later in the book in part four where i talk about what it was like to serve for almost a full year under the Trump Administration where i was continuing to push forward the agency as holding Financial Companies accountable for their misdeeds and the new Trump Administration had a deregulatory mindset and was really at odds with me. And i talk about some of the battles that we had back and forth over the course of that year and efforts that that weree to have me fire or have me intimidated into not doing my job the way i saw and understood that job to be which, again, was to rebalance the marketplace and give consumers a louder voice and a bigger role in the economy. Let me give you an indicative story from the book. Its a story about a Young Service member named ari and his father. Ari went into the service, and he went to basic training. And like many Young Service members, he was leaving home for the first time, and he was going to be on his own for the first time having to manage his own finances. Those people are ripe targets, and financial predators know it. They realize that these are often unsophisticated, naive, inexperienced consumers, but they had a guaranteed paycheck from the u. S. Government. And what youll find is that pred if story Financial Services congregate around military bases. This has been mapped around the country, and its been described as like grizzly bears next to the stream when the salmon are coming upstream to spawn. And they will try to sell Service Members high cost loans, high cost products, especially cars and trucks, especially electronics. And this is what happened with ari. He wanted, like many young people who are on their own for the first time and now making money, he wanted to buy his first set of wheels. And so he went out and he found a lender that looked like a very legitimate lender called the miles Lending Program which was military installment loans and educational services. Sounds very legit, doesnt it . And when he walked out of that lenders showplace, he had bought a used dodge ram truck. It was costing him 70 of his take home income, and some of that was undisclosed fees, which is against the law, some of it was misleading addon products that were basically worthless that he was charged for those, and that was folded into the price. He didnt understand that, it was all in the fine print. But that was what he was saddled with, and for years to come most of his take home pay was going to pay for this truck. When he was deployed to go overseas, he turned his finances over to his father and kind of confessed and explained his situation. His father was outraged at what had happened and tried to undo it. But when he tried to work with the lender to have the loan changed, he was asked didnt ari sign the paperwork . Well, yes, he did. Case closed, that was the end of the story. Or so they thought. And for many people like ari, he was stuck. His father, though, didnt let it rest at that. He complained to everybody he could find, and eventually he found his way to this newfangled agency hed never if heard of called the Consumer Financial Protection Bureau, and he filed a complaint with the bureau. Our folks investigated the complaint, and they found the undisclosed fees and the misleading addon products where he was deceived in the marketing of those products, and we brought an enforcement action. We found that the miles Lending Program was a nationwide string of lenders, and the same thing had happened to 50,000 other Service Members, not just ari. And we brought ab enforcement action and recovered millions of dollars back for the consumers who were harmed by that and reformed the terms of their accounts. So we fixed the problem for ari and 50,000 other Service Members. That was the kind of good work that the bureau did holding these lenders to account. But it went even one step further, and this is something that only government can do is to understand a pattern of a problem and figure out how to fix it. What we did was we found that ari had been told that he had to have the loan be repaid out of his military salary through the Allotment Program which meant that the lender got their money before it ever went to his account. He had lost control of his own budget, and he could not prioritize some other payment that month if he preferred. This had to be paid out first. The Allotment Program had been created years ago as a convenience to Service Members when they were deployed overseas. This was before the advent of Online Banking which is now so easy and convenient and typically free at most institutions. And debt collectorsed had begun using the allotment system as a onesided collection tool requiring Young Service members to sign up to have the loan repaid through the Allotment Program. They didnt realize that was an option. They didnt understand, that was something in the fine print. And we went to the pentagon, and they created a task force and worked with us, and they ended up reforming the Allotment Program to make it illegal to use the awe lotment program for Allotment Program for high Cost Electronics and auto purchases for Service Members. So thats a story that is indicative of what the bureau could do. But providing the muscle and having the insight of being able to analyze markets. Ari thought he was the only one with this problem. He wasnt. There were thousands, tens of thousands of others who were affected, and there was a broader systemic problem that could be fixed here. And my point in the book watchdog is the Consumer Bureau is emblematic of what we can do with government when government didnt focus only on those with clout and those at the top of the pyramid. When its focused on middle class and working class americans and understands their problems and the problems of the average american household, we can put americans first, put consumers first and see to it that they get a fair shake. Thats something we need to do in Society Today, and its how democracy works. And thats a sample of how it is that i say that protecting consumers can save not only our families, families like aris, not only our econo