Sometimes, it is said, what a poor man needs is a hand up and another offering a pat on the back. Help and encouragement.
What no one needs is that back-patting hand reaching down and picking your pocket.
That scenario flashed through my mind as I read in on the Financial Choice Act, a piece of faux-liberation that the Republican majority in the House passed June 8 on a strict party line vote, but which faces an uncertain fate in the Senate.
As with so many of their most retro-grade proposals, House Republicans have sold this as relief for the many, when really it’s a bundle of boons for the very rich few.
“In some countries, credit is simply not available to those who need it most: the people at the bottom of the income ladder.” So begins a recent op-ed by Republican New Mexico Congressman Steve Pearce in my local Albuquerque Journal. But luckily for those folks at the bottom, Rep.Pearce continues, “In the United States, we’ve developed a highly sophisticated system with opportunity available to all.
“That is,” he adds, “until the Consumer Financial Protection Bureau was created in the Dodd-Frank legislation” of 2010.
What Pearce calls “a highly sophisticated opportunity system” others, like the Southern Poverty Law Center call “payday and car title loans [which] trap millions of poor people across America in a nightmare of debt, sometimes with legal interest rates as high as 456%.”
The predatory lending industry has been reined in by the Consumer Financial Protection Bureau. Congressman Pearce and his Republican colleagues passed the Financial Choice Act which would gut CFPB and keep it forever out of the short-term, high-interest lending business.
Another reason Pearce proposed for rolling back the regulations of the Dodd-Frank Act is about limits on loans for manufactured houses and trailers. Pearce notes, his is a poor district in which “Half of the homes are manufactured housing.” A regulation called “Qualified Mortgage” he says has slowed home sales and hurt the NM economy.
The final point in Pearce’s op-ed is that Dodd-Frank set up one set of rules for, as Pearce put it, a bank in Deming and one in New York City. A lot of people think this is an absurdity, but they say, you don’t need legislation to fix it.
Especially when the Financial Choice Act legislation does so many other things beyond freeing small banks from big bank stress tests and oversight.
Like what? Akshat Tewary, writing in American Banker listed these: the nullification of key shareholder rights for all but the largest investors…gutting the Consumer Financial Protection Bureau, which has provided a whopping $11.7 billion in restitution to exploited consumers in six short years…taking away the Federal Deposit Insurance Corp.’s authority to oversee bank liquidations, such as we saw in 2008, and ending the Volcker Rule, which would let banks go back to their old pre-2008 habits of speculating with customers money.
Jordan E. Goodman is “America’s Money Answers Man” and a nationally-recognized expert on personal finance. He is a regular guest on numerous radio and television call-in shows across the country, answering questions on personal financial topics. He appears frequently on The View, Fox News Network, Fox Business Network, CNN, CNBC and CBS evening news.
For 18 years, Jordan was on the editorial staff of Money magazine, where he served as Wall Street correspondent. While at Money, he reported and wrote on virtually every aspect of personal finance. In addition, he served as weekly financial analyst on NBC News at Sunrise for 9 years and the daily business news commentator on Mutual Broadcasting System’s America in the Morning show for 8 years.
He is the author / co-author of 13 best-selling books on personal finance including Master Your Debt Fast Profits in Hard Times, Everyone’s Money Book, Master Your Money Type, Barron’s Dictionary of Finance and Investment Terms and Barron’s Finance and Investment Handbook.