Protecting the Middle Class News

Reining in Predatory Lenders with a Consumer Watchdog

President Barack Obama participates in a discussion with, from left: Mr. William Eason; Richard Cordray, former Ohio Attorney General and nominee as director of the Consumer Financial Protection Bureau; Mrs. Endia Eason; and Deonna Kirkpatrick, Communications Director ESOP (Empowering and Strengthening Ohio's People), at the Eason home in Cleveland, Ohio, Jan. 4, 2012. (Official White House Photo by Pete Souza)

For William and Endia Eason, the trouble began in 2001. Officials in Cleveland issued the couple a citation to make repairs to bring their home up to code.

Then a mortgage broker knocked on their door, telling the Easons that they needed a loan to get the work done. They would go to jail, he said, unless they made the changes, and after telling them it was too late to back out of the loan process, the broker talked the couple into borrowing $8,000 to repair their steps, garage, and roof.

He also convinced them to open up a line of credit -- backed by the deed on their home -- that he said would help them make the changes to the house. The repairs never got done, however, and the loan flipped multiple times.

After living in their home for 30 years, the Easons suddenly found themselves owing almost $80,000. When they fell behind on the payments, the lender started the foreclosure process. In desperation, the Easons reached out to a nonprofit that assists victims of predatory lending -- and with support from that nonprofit, they were able to convince the mortgage company to write off part of the loan and back away from foreclosure. The mortgage broker, on the other hand, made $4,000 from the deal and walked away.

That's the story that William and Endia Eason told President Obama when they met with him today, and it's the perfect illustration for why he appointed Richard Cordray to lead the Consumer Financial Protection Bureau.

This week, CFPB is officially launching a service that could have helped the Easons. They're establishing a 1-800 hotline for mortgage related consumer complaints. The Bureau will forward each issue to the proper financial institution for review and resolution. And if the institution doesn't resolve the issue, CFPB will investigate the complaint directly and make sure that the financial institutions are held accountable under Federal law.

If we'd had the Consumer Financial Protection Bureau ten years ago, the Easons and families like them across the country could have turned to this resource for help.

But going forward, the Bureau will be a watchdog for anyone who owns a mortgage, uses a credit card, or applies for a loan. And that's good news for families like the Easons.

Josh Earnest is Principal Deputy Press Secretary and Special Assistant to the President.

2011 in Review: What People Were Talking About on Facebook

More than 1.2 million people “Like” WhiteHouse.gov on Facebook, and one thing we noticed throughout 2011 is that many of you also like sharing your thoughts on the stories and videos we post on our page. Here are the top 10 stories people commented on in 2011:

December 20, 2011: What Does $40 Mean to You? What would you have to give up or go without? Share your story here and add your voice to the debate.

August 6, 2011: President Obama outlines a number of steps that can be taken right away to create jobs and help grow the economy.

December 10, 2011: "Do Republicans in Congress think our financial crisis was caused by too much oversight of mortgage lenders or debt collectors?  Of course not.  And every day America has to wait for a new consumer protection watchdog is another day that dishonest businesses can target and take advantage of students, seniors, and service members." - President Obama

October 1, 2011: “These are the people who need a win, and I will be fighting for this jobs bill every day on their behalf.  If anyone watching feels the same way, don’t be shy about letting your Congressman know.  It is time for the politics to end.  Let’s pass this jobs bill." - President Obama 

September 17, 2011: President Obama discusses the need for Congress to pass the American Jobs Act to put more people back to work, and more money back in the pockets of people who are working. 

What Does $40 Mean to You?

President Barack Obama delivers remarks on the payroll tax cut during a statement in the James S. Brady Press Briefing Room of the White House, Dec. 20, 2011. (Official White House Photo by Pete Souza)

House Republicans are refusing to extend the payroll tax cut, which expires on December 31. If it does, taxes will go up for 160 million working Americans. Nearly everyone--from President Obama to Congressional Democrats to Republicans in the Senate--is committed to making sure that doesn't happen, but a faction in the House is dragging their feet.

Ending the payroll tax cut will cost the typical family making $50,000 a year about $1,000 a year, which is a lot of money for struggling families. President Obama explained today:

Our failure to do this could have effects not just on families but on the economy as a whole. It’s not a game for the average family, who doesn’t have an extra 1,000 bucks to lose. It’s not a game for somebody who’s out there looking for work right now, and might lose his house if unemployment insurance doesn’t come through. It’s not a game for the millions of Americans who will take a hit when the entire economy grows more slowly because these proposals aren’t extended.

That $1,000 a year works out to about $40 a paycheck that families won’t have to spend or save. Although opponents of the payroll tax cut might say $40 isn't much, we know that’s not the case. So we’re asking Americans to explain what that tax increase would look like in their house.

What does $40 mean to you? What will you and your family have to cut or go without if Congress refuses to pass the payroll tax cut?

Here are some of the stories we’ve collected so far. Tell us your own story here, or tweet @WhiteHouse with the hashtag #40dollars, to help us add to the list.

------

I can buy lunch from the cafeteria for almost a whole month for my twins, I can buy food, or pay for gas. I can save it for my daughter’s prescriptions deductibles.  To some people $40 is nothing, but $40 is big money for us.

L.A., Hamden, Connecticut

Forty dollars a paycheck is a lot of money. I am the primary care giver for my 91 year old father who is living with me. Though his estate pays me for his care, the $40 will help with groceries, gasoline and miscellaneous expense for his care. I work a part time job so $40 a paycheck is a lot of money extra in my pocket.

I.O., Arlington Heights, Illinois

After everything that comes out, including my mortgage my take home pay is $150.00 every two weeks. So minus forty would be $110.00. I can barely get by now, that forty bucks is my gas for my car to get to work. Taking forty away from my pay would, just about put me under.

R.T., Charleston, West Virginia

$40 less a paycheck means I will have to pick between my insulin and the water bill. It means never being able to see my doctor - even though I have insurance.

B.T., Roswell, New Mexico

A single mother of two, with no financial support from my children's father, 40 dollars means lunch money for my children at school. It means a tank of gas, and it means covering my weekly visit copays to the doctor.

L.O., Gaithersburg, Maryland

Extending the Payroll Tax Cut

President Barack Obama makes a statement on the extension of the payroll tax cut in the James S. Brady Press Briefing Room of the White House, Saturday, Dec. 17, 2011. (Official White House Photo by David Lienemann)

This afternoon, President Obama took a moment to address reporters on the plan from Congress to extend the payroll tax cut. He said:

Today, Congress has finally agreed to extend this middle-class tax cut into next year.  And they’ve also agreed to another part of my jobs plan, extending unemployment insurance for millions of Americans who are out there trying as hard as they can to find a job.  This is spending money that also benefits families and businesses and the entire economy.  And it’s a lifeline that would have been lost for more than two and a half million people in the first two months of next year if Congress had not acted. 

So I'm very pleased to see the work that the Senate has done.  While this agreement is for two months, it is my expectation -- in fact it would be inexcusable for Congress not to further extend this middle-class tax cut for the rest of the year.  It should be a formality.  And hopefully it’s done with as little drama as possible when they get back in January. 

Watch:

Ensuring Fair Pay for Homecare Workers

President Barack Obama delivers remarks on new minimum wage/overtime protections for in-home care workers at a “We Can’t Wait” event in the Eisenhower Executive Office Building of the White House, Dec. 15, 2011. Among the workers joining the President was Pauline Beck, right, a home care worker from California who, in 2007, was shadowed by then Senator Obama as part of an event called “Walk a Day in My Shoes.” (Official White House Photo by Pete Souza)

Four years ago, President Obama spent the day with Pauline Beck, a home health care worker. He followed her throughout her day -- as she got up at 5:00 in the morning to care for an 86-year-old amputee. He saw first-hand the demands of her work.

Their business is a growing industry -- one of the fastest in America. As the population of this country gets older, more Americans are turning to people like Pauline Beck to help make sure they have the care they need. And as the President said this morning, "As the homecare business has changed over the years, the law hasn’t changed to keep up." In the eyes of the law, homecare workers fall into the same category as a teenaged babysitter.

President Barack Obama delivers remarks on new minimum wage/overtime protections for in-home care workers at a “We Can’t Wait” event in Room 430 of the Eisenhower Executive Office Building of the White House, Dec. 15, 2011. Attendees include: Labor Secretary Hilda Solis, Karen Kulp, President & CEO Home Care Associates; and home care workers: Pauline Beck, Thelma Reta, Iterra Blackshear, Tracy Dudzinski, Manuela Butler, Elma Wauneetta Phillips, Bertie Caraway, Margaret Glover, Elva Munoz, Michelle Wise, Olive Nanette Lyons, April Jones-Britt, Martha Cobos, and Gilda Brown; and home care employers: Sascha M. Bittner and Robin L. Shaffert. (Official White House Photo by Lawrence Jackson)

So today, the President did something to help homecare workers like Pauline Beck. He announced his support of a law to extend overtime pay protections and a guaranteed minimum wage to those who do this work:

We are going to make sure that over a million men and women in one of the fastest-growing professions in the country don’t slip through the cracks. We’re going to make sure that companies who do right by their workers aren’t undercut by companies who don’t. We’re going to do what’s fair, and we’re going to do what’s right.

Watch.

By the Numbers: $1 Trillion

In the coming days, the final troops will cross the border out of Iraq and America’s war there will end. Over nearly nine years of fighting, tens of thousands of American troops who were wounded, and 4,500 lost their life in service to our country. The war cost $1 trillion.

American is safer and stronger because we ended the Iraq War, as President Obama promised to do. But now it’s time to invest in the American people. We must work on creating jobs, rebuilding our strong middle class, and sustaining the growth that supports our prosperity and leadership around the world.

Part of ending a war responsibly is standing by those who have fought it and providing all who served with the care and benefits they have earned. And, President Obama is enlisting our veterans in the mission of rebuilding America by funding a post-9/11 GI Bill that helps our veterans and their families pursue a college education, and creating jobs for our veterans so they can become the backbone of the middle class.

If we come together to tackle the big challenges that we face with the same sense of common purpose that our troops showed in Iraq, there’s nothing we can’t do as a country.

By the Numbers: 1 in 5

One out of every five Americans over the age of 65 has reported being a victim of a financial scam. The Consumer Financial Protection Bureau will help put an end to the kind of unscrupulous financial practices that target our senior citizens.

The Consumer Financial Protection Bureau was created as part of the Wall Street Reform and Consumer Protection Act to protect all consumers, especially the most vulnerable groups, from abusive and scam-ridden tactics. In addition to regulating large banks financial industries like those whose unchecked risk-taking and shady practices led to the financial crisis, CFPB will establish and enforce rules that ensure other types of services like payday lenders, mortgage lenders, and debt collectors don’t build their businesses around taking advantage of consumers.

President Obama has nominated Richard Cordray to direct CFPB. His confirmation will allow the bureau to exercise its full authority and protect borrowers from unfair, deceptive or abusive financial practices, regardless of the type of bank, business or industry that uses them. Republicans in the Senate, however, refused to even vote on Cordray’s nomination this week, leaving Americans at risk of falling prey to many of the harmful practices that contributed to the worst financial crisis since the Great Depression.

The Vice President Talks College Affordability in Florida

Vice President Joe Biden and Secretary of Education Arne Duncan hold town hall on college affordability at Fletcher High School in Neptune Beach, Florida, December 8, 2011. (Official White House Photo by David Lienemann)

This week, Vice President Biden and Secretary of Education Arne Duncan visited Fletcher High School in Neptune Beach, Florida to talk to students and their parents about college.  President Obama and Vice President Biden have focused on making college affordable for middle-class families since the day they took office. We increased the value of the maximum Pell Grant award by more than $800 and created the American Opportunity Tax Credit, which is worth up to $10,000 over four years for tuition and other expenses. Even after grants and tax credits, most students still need to borrow money for school. That’s why we are allowing borrowers to cap federal student loan payments at 10 percent of their discretionary income.

The Vice President reminded the audience of all these accomplishments, but he didn’t stop there. As proud as we are of this Administration’s record, increasing student aid is just one part of keeping college affordable. State higher education leaders and individual schools must also do their part. On Monday, the President gathered a group of college presidents at the White House to talk about rising college costs and strategies they can pursue to reduce these costs. In Florida, the Vice President argued that colleges "can cut cost and limit student debt without in any way compromising the quality of an education." He acknowledged that "it won’t be easy" but forcefully concluded that "there is no excuse for complacency."

Finally, the Vice President assured students who might be concerned about rising tuitions and debt loads that going to college is an excellent investment. College graduates earn more money and have a significantly lower unemployment rate than high school graduates with no post-secondary degree. And as the Vice President told the audience, "having a college degree is about a lot more than how much money you make. It’s about the independence it bestows upon you, the significantly broader range of choices it gives you…it’s about your sense of self-worth…it’s about being able to fulfill your potential."

Brian Levine is Deputy Domestic Policy Advisor to the Vice President

What a Fair Shot at Success Means

In the state where his mother was born, President Obama made an argument about laying a new foundation for broad-based prosperity in America.

"It starts," he said, "with making sure that everyone has a fair shot at success."

That means giving Americans the education, infrastructure, and resources necessary to out-innovate our global competitors, structuring our tax system fairly to pay for those investments, and it means creating an environment where everyone -- from Main Street to Wall Street -- plays by the same set of rules. The President said:

As infuriating as it was for all of us, we rescued our major banks from collapse, not only because a full blown financial meltdown would have sent us into a second Depression, but because we need a strong, healthy financial sector in this country. 

But part of the deal was that we would not go back to business as usual.  That’s why last year we put in place new rules of the road that refocus the financial sector on this core purpose:  getting capital to the entrepreneurs with the best ideas, and financing to millions of families who want to buy a home or send their kids to college.  We’re not all the way there yet, and the banks are fighting us every inch of the way. 

And Republicans are standing with Wall Street to block broader reform by refusing to confirm a head of the Consumer Financial Protection Bureau -- the watchdog group is charged with protecting everyday Americans from lenders who are out to take advantage of them. Here's what President Obama had to say:

The man we nominated for the post, Richard Cordray, is a former Attorney General of Ohio who has the support of most Republican and Democratic Attorneys General throughout the country.  

But the Republicans in the Senate refuse to let him do his job.  Why?  Does anyone think the problem before that led to this crisis was too much oversight of mortgage lenders or debt collectors?  Every day we go without a consumer watchdog in place is another day when a student, or a service member, or a senior citizen could be tricked into a loan they can’t afford – something that happens all the time.  Financial institutions have plenty of lobbyists looking out for their interests.  Consumers deserve to have someone whose job it is to look out for theirs.  And I intend to make sure they do.

The Senate is slated to vote on Richard Cordray's confirmation later this week. Check back at WhiteHouse.gov for more information.