Financial Reform

Deceptive and abusive mortgage lending was a fundamental cause of the financial crisis and of the worst recession since the Great Depression. Year in and year out, tricks and traps on credit cards, student loans, overdraft fees and more cost working families tens of billions of dollars.

Even as Congress and the Obama Administration continue to argue over its powers and leadership, the Consumer Financial Protection Bureau began its work as top cop for all consumer finance matters, including mortgages, on July 21.

The failure of the current bank regulators to stop predatory lending and other reckless Wall Street practices is widely recognized as a primary cause of the 2008 mortgage meltdown that triggered the current recession. For years leading up to the 2008 financial collapse, federal bank regulators ignored numerous warnings of increasingly predatory mortgage practices, credit card tricks and unfair overdraft policies used by banks. The banks were earning billions from “gotcha” practices. Incredibly, bank regulators actively encouraged this behavior, arguing it was profitable and kept banks safe.

A new study claims banks are still hiding fees from customers. WISPIRG Program Associate Kyle Bailey says in their nationwide survey of more than 350 bank branches, fewer than half complied fully in disclosing the policy of customer fees. Roughly 25-percent of the branches never provided the information at all.