Thank you, Dan, for that kind introduction, and thank you, Bill and the members of CUNA, for inviting me to join you this morning. I have been a proud member of a credit union for many, many years, and I have long believed that credit unions are a model for how financial services institutions can provide real value for their customers and their communities.
Last year, I stood with Judy - an Air Force veteran and mother of four - at the Worcester Credit Union in Worcester, Massachusetts. Judy believed she had a fixed-rate mortgage from a bank, but shortly after she separated from her husband, her payments doubled. She tried to get a modification, but her bank sold the mortgage before the process was complete. Facing the immediate loss of her home, she turned to her credit union-and her credit union was there for her. Worcester Credit Union quickly helped her keep what she called "the only home her children have ever known." Judy's eyes filled with tears when she talked about her credit union, and, the truth is, so did mine.
That's what credit unions do-they work for their members.
Across Massachusetts - and all around the country - member-owned credit unions have been looking out for people like Judy.
As one Wall Street banking scandal after another has unfolded, the credit unions have been a bright spot in the financial industry. Credit unions did not break this economy. They did not build business models around tricking their customers. When the economy faltered, they did not turn their backs on the families and small businesses that needed them. On the contrary, credit unions worked hard to lead our economic recovery, responsibly and reliably providing credit to their members that need it. The credit union motto says it all: "not for profit, not for charity, but for service."
I am here today because we share a goal: We want to build a level playing field and a consumer credit market that works for families, works for the financial services industry, and works for our economy.
As many of you know, I spent most of my career studying the economic pressures on middle class families -- families that worked hard, played by the rules, but still found themselves hanging on by their fingernails. Starting in the 1970s, even as workers became more productive, their wages flattened out, while core expenses, things like housing and health care and sending a kid to college, just kept going up.
Working families didn't ask for a bailout. They rolled up their sleeves and sent both parents into the workforce, but that meant childcare costs, a second car, higher taxes. So they tightened their belts. Families today spend less than they did a generation ago on food, clothing, furniture, appliances, and other flexible purchases. And when that still wasn't enough, they took on debt - credit card debt, college debt, debt just to pay for the necessities. Too many families ended up with financial products that got them into more trouble, products where fine print and legalese covered up the true costs of credit.
The story America's families over the last generation is linked to the story of financial services in this country.
A generation ago, the price of financial services - credit cards, checking accounts, mortgages, and signature loans - was pretty easy to see. Both borrowers and lenders understood the basic terms of the deal.
But by the time the financial crisis hit, those days were gone. While credit unions continued to provide clear, high-quality service, for millions of Americans, a different form of pricing had become all too prevalent elsewhere. Too many credit card companies and mortgage lenders used a low advertised price on the front end to entice customers, and then made their real money with fees and charges and penalties and re-pricing on the back end. The costs and risks of products became harder to see, which meant that comparison shopping was almost impossible and the market became less and less efficient.
And who got hurt? It wasn't just families. Small financial institutions like credit unions also got hurt. Credit unions that wouldn't adopt a business model based on tricks and traps were competing with slick outfits that pretended to underprice them. In other words, the game was rigged - rigged against consumers and rigged against small financial institutions.
When I set up the Consumer Financial Protection Bureau, I wanted to increase transparency in the marketplace and to level the playing field for credit unions and other providers that want to do right by consumers. That means clear rules that give a break to those that provide a clear, valuable product to their customers. We worked hard, and I'm proud of what we did with credit unions and with so many stakeholders to stand up the new agency and set it on the right course.
When I got back to Washington last month after a year in a half on the campaign trail, I felt like I'd landed on a different planet, so much had changed. QM and servicing rules from CFPB were out-and consumer and industry groups applauded. The CFPB had a new building. Rich Cordray was doing a great job as Director. I was really pleased when I started seeing industry groups saying nice thing after nice thing not only about the Bureau's work but also about Rich Cordray in particular.
For a couple of weeks, it felt really good. But then a group of Senators wrote to the President insisting that they would never confirm a Director-any Director-unless the basic structure of the agency was changed. Three years ago they fought for a weaker agency, and they lost that vote. Today, they know they still don't have the votes to weaken the agency - and so they are determined to hold Rich Cordray hostage. Never before in American history has a minority in the Senate blocked a nominee to try to get changes in a law they don't like and don't have the votes to change.
Maybe I shouldn't have been surprised. This is the same position those Senators took two years ago. But I am surprised. This agency works. It has already forced credit card companies to refund nearly half a billion dollars that they tricked consumers out of, and the complaint center is giving more people a chance to fight back against big lenders when they are cheated. The agency works for consumers. It also works for the lenders and small financial institutions, like credit unions, that were pleased to see the final QM rules promulgated last month. So I am surprised, but that just means it's time to stand up once again for American consumers. So I am going to close today with a pitch and with an ask that we do this together.
The pitch is that Rich Cordray is a stellar director. He has won praise from consumer groups and industry groups - including CUNA - for his balanced rulemaking and measured approach. He has been a friend to credit unions. And while I know that people had concern at its outset that CFPB would be an overly aggressive regulator, I don't know how anyone could have that concern now. Rich has been providing balance, creating space for credit unions and other small financial institutions to run their businesses and serve their customers without drowning them in regulations.
Here we are, two years after Rich's initial nomination, and the need to get things settled and move on has become greater than ever. It has been more than four years since the crisis. It has been almost three since the passage of Dodd-Frank. The CFPB has issued rules to protect consumers and to protect small financial institutions. Without those rules, the world of financial regulation is a lot more complicated and there is a lot more uncertainty. There are the more complex automatic default rules of Dodd-Frank, the risk of more litigation, the possibility of a free pass for the unregulated non-depository financial institutions, and the bad press that reminds consumers that they still can't be sure there's a cop on the beat watching out for them. We are back to automatic default Dodd-Frank rules that, unlike the QM ones, lack the exemptions for small financial institutions. I hope you listened closely to that: back to Dodd-Frank default rules that lack exemptions for small financial institutions.
That's my pitch. It's time for Washington to stop re-litigating settled decisions - holding our government hostage over ideology. It is time for a clear path forward that allows for certainty.
Now here's my ask:
You are in Washington this week, interacting with your representatives. If you think the CFPB has done balanced work and has looked out for credit unions, I hope you will say so. If you think the CFPB's latest rules and the exceptions for small lenders make sense, and if you like the CFPB better than the automatic Dodd-Frank rules with no exceptions, I hope you will say so. The credit unions have clout in every state in this country. So please, please use your clout. Do what you can to tell your Senators and those who will listen that it's time to move on, time to stop re-litigating settled decisions, and time to confirm a director so the CFPB can create a safe harbor for your work so you can go about the business of serving your members. It's time to move forward.
Thank you for inviting me to join you today. Most of all, thank you for your partnership. Thank you for your friendship. Credit unions have been great partners for me in Massachusetts, and I look forward to all of us working together for many years on behalf of Judy and her family and all the families we serve.