Many of us are still recovering from the nightmare financial crisis of 2008 – just getting back on our financial feet, finally seeing our retirement funds bounce back.
But greedy bankers and the new banker-friendly administration are working together to put our finances in peril, so they can get even richer. And they’re doing that by blowing up the law intended to make sure that kind of fiasco would never again destroy our personal finances.
Dodd-Frank, officially known as the Dodd-Frank Wall Street Reform and Consumer Protection Act (I added the bold), came about in response to the 2008 financial devastation – after millions of Americans saw their investments and retirement savings wiped out, and many lost their homes. Dodd-Frank was drafted to protect us from financial predators, greedy Wall Street manipulators, and banks that gamble away our money.
Eliminating those protections puts our money…our financial futures…our families’ futures…at risk. That’s not just a possibility. Stripping us of these safeguards will absolutely impact our finances, unless we take steps to protect our money right now.
Big bank executives do everything they can to make money for themselves and their shareholders. That includes making extremely risky investments, that they may not fully understand, if there’s a possibility they’ll see huge returns. Everything looks fine when their bets pan out – and that’s what these are, just bets – but when the banks lose, it’s our money that disappears – TWICE. Not only will that torpedo our savings and investments but we’ll also – again – have to pay to bail them out.
But you can protect your family finances from the next inevitable bank crash. First, get your money out of the big banks, and go local. Check out your community banks – they often offer more services, better customer care, and better deals than national bank conglomerates. Credit unions also look out for their customers, mainly because they’re customer-owned. Since these not-for-profit institutions don’t answer to shareholders (who only care about the bank’s bottom line), they focus on providing the best service possible, strong interest rates on savings, and minimal fees.
The Consumer Financial Protection Bureau, led by Richard Cordray, has one goal, and it’s right in the name: Protect consumer finances. And it’s not just talk. Since their doors opened in 2010, the CFPB has given more than $11 billion (between cash compensation and debt reduction) back to consumers duped by predatory lenders and financial fraudsters (like the Wells Fargo bank account scam), along with protection against harassment by debt collectors. If you have a complaint about debt collectors, credit card companies, payday lenders, student loan officers, or mortgage banks, let them know before it’s too late – and they will fight for you.
And that’s just the beginning of how the CFPB serves your interests…
Dodd-Frank protects us from predatory mortgage lenders, unscrupulous bankers who prey on our desire to make a permanent home for our children. Before this shield, held firmly in place by the CFPB, vulnerable borrowers who wanted homes for their families would get bamboozled into signing loan documents for houses and mortgages they couldn’t afford. Tricked with persuasive talk of no money down, confusing lingo describing interest and payment structures, and big loans with no credit or income verification, millions of us ended up in extreme financial distress…and so many of us lost our homes to foreclosure.
Right now, that trickery and manipulation is explicitly against the law – mortgage lenders have to give you the best loan for you, must make sure you understand and can afford the monthly payments, and verify that you will be able to keep up with those payments. Erase this protection, and Americans will once again be trapped by unmanageable debt – and a high risk of losing their homes. The only way to avoid that terrible fate is to know what you can afford, both in home price and total monthly payments (I’ll be posting on exactly how to figure that out ASAP).
Another way Dodd-Frank and the CFPB protect us: with clear and simple language. Most of us have never read a credit card application all the way through – including the terms and conditions. Financial companies bank on the fact that most of us can’t get through all of those mind-numbing paragraphs, and bury important information about things like fees, fines, and rates smack in the middle of dense, convoluted language.
Dodd-Frank calls for “plain language” explanations of fees and terms when it comes to bank accounts, credit cards, and loans. Under this law, everything you need to know has to be stated clearly, in simple language, and included up-front rather than buried somewhere most people don’t get to. If that provision disappears, the only fix will be to read everything, all the way through, so you know what you’re getting into. Especially look for information about extras like late payment charges, interest rate increases based on payment activity, and overdraft or insufficient funds fees (for checking accounts). Here’s a great guide to some of the most common credit card fees to be aware of.
If you don’t want to see the Consumer Financial Protection Bureau dismantled, let your representatives know. We’ve seen how much influence we can have when we voice our opinions. Here’s how to get in touch with your Senators and your Congressman.
But even if Dodd-Frank disappears completely, you can still take charge of and protect your finances and your future. All it takes is information to make the best choices – and I’ll keep giving you the kind of information you need to preserve and grow your nest egg.