Financial Reform Bill Offers Real Benefits for African Americans

Despite the debate between black pundits and black leaders about whether or not the Obama administration has a “black agenda,” one thing is clear — the financial reform proposals President Obama would like to sign into law this year are poised to bring clear and immediate benefits to an African American population that has borne its share of the subprime mortgage meltdown.

The landmark health care legislation passed by Congress last month will have a significant impact on black Americans by improving our access to regularly scheduled preventative care, which should reduce considerably the number of strokes, heart attacks, high blood pressure related illnesses and health complications due to diabetes that we suffer from disproportionately today. But many of health care reform’s benefits won’t be seen until 2014.

Financial reform, on the other hand, is likely to have more immediate tangible benefits for blacks who are credit card users or mortgage loan borrowers. While the headlines mostly describe the effect financial reforms could have on Wall Street banks and large financial services companies, the proposed consumer protection elements of the bills in the House and the Senate are some of the strongest pro-consumer language that has ever seriously been considered on Capitol Hill.

Both bills transfer all federal consumer financial protection functions to the new unit from the following entities in nearly identical language:

• The Federal Reserve
• Comptroller of Currency
• Director of the Office of Thrift Supervision
• Federal Deposit Insurance Commission (FDIC)
• Federal Trade Commission (FTC)
• National Credit Union Administration (NCUA)
• Department of Housing and Urban Development (HUD)

Both bills task the new unit with preventing unfair, abusive or deceptive acts. Both bills grant the new unit broad powers to create consumer financial protection rules and regulations and to enforce them, through court if necessary. Both entitle the unit to provide exemptions from its own regulations based on a variety of factors such as asset, volume of business etc.

The People’s View

If you’ve ever had a financial services product presented to you one way, but turned out later to be an entirely different product than the one you thought you were getting, you know how difficult it can be to seek restitution or get out of the contract you’ve signed. As a former loan officer, I’ve dealt with far too many African American clients who thought they had a fixed rate loan but were really in an adjustable rate mortgage or a balloon note. On mortgage industry message boards, you would often see an unscrupulous mortgage broker exclaiming “thank god for black people” right after he bragged about the amount of origination and fee income he’d booked for the month.

“…this financial crisis wasn’t just the result of decisions made by large financial firms; it was also the result of decisions made by ordinary Americans to open credit cards and take on mortgages. And while there were many who took out loans they knew they couldn’t afford, there were also millions of people who signed contracts they didn’t fully understand offered by lenders who didn’t always tell the truth.”

President Barack Obama
Weekly radio address, March 20, 2010

With a new consumer protection initiative that is focused on transparency, simplicity, fairness and access, and has real enforcement power, middle class and working class African Americans will finally have a fair chance to get ahead financially when the worst abuses in these industries are curbed.

Kris Broughton combines searing opinions with emotionally engaging commentary to provide insightful, original criticism of today's social and political events. He is the blogger behind Brown Man Thinking Hard, and a blog contributor at Big Think.com. His work has been featured in the Chicago Sun-Times, Reuters, the Post Tribune, Beacon News, and TV ONE Online.

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