Protecting Consumers, Taxpayers, and the Economy
Restoring Rules of the Road on Wall Street
The Great Recession may have started on Wall Street, but it’s Main Street where small businesses and families suffered from unemployment, frozen credit, and foreclosures. In his position on the Senate Banking Committee, Jeff has worked hard to bring about tough new reforms and is committed to ensuring they work. Risk-taking and speculative investing are an important part of capitalism, but people and firms that take risks need to be prepared to suffer the losses. If we can’t afford to let the bank take the losses, it shouldn’t be taking the risks. Never again should any financial firm depend on taxpayer-funded “Wall Street welfare” to bail them out if they make risky bets.
Turning this common sense concept into reality, Jeff led the effort to crack down on high risk speculation at our depository banks and other critical financial firms. The Wall Street reform law included the Merkley-Levin amendment, commonly known as the Volcker Rule, which will make sure that high-risk trading no longer jeopardizes the banking system on which families and small businesses depend. Finalized in 2013, the Volcker Rule puts clear limits on conflicts of interest to keep Wall Street honest.
Recognizing that failures in consumer protection were at the root of both the financial crisis and foreclosure crisis, Jeff has also been a vigorous supporter of the new Consumer Financial Protection Bureau (CFPB). The CFPB is ending hidden tricks and traps buried in fine print that bleed families’ wallets, like $35 cups of coffee when debit cards are overdrawn or late fees incurred because credit card companies hold onto payments before depositing them. Jeff was instrumental in winning confirmation for the CFPB’s first director in the face of a filibuster by allies of the big financial institutions.
Rebuilding the Housing Market
As Director of Portland Habitat for Humanity, Jeff saw firsthand how home ownership transforms families. A home provides the foundation for families to thrive and for children to reach their full potential.
Unfortunately, millions of Americans have lost their homes to foreclosure since the crisis, and thousands more remain at risk of losing their homes in the near future.
A significant contributor to the foreclosure crisis was that a huge number of families who qualified for affordable prime loans – more than half at the peak of the subprime boom – were instead steered by unscrupulous mortgage brokers into high-cost, high-risk loans. To prevent predatory lenders from directing families into bad loans in the future, Jeff successfully passed two bills as part of the Wall Street Reform and Consumer Protection Act to end deceptive mortgage lending practices. The first banned hidden steering payments or kickbacks to mortgage originators who directed homeowners into high-cost, high-risk mortgages that they could not afford over the long term. The second prohibits lenders from including costly prepayment penalties that prevent homeowners from refinancing into a more affordable loan.
To speed the recovery of the housing market, Jeff has supported aggressive efforts to create refinancing alternatives to costly and time-consuming foreclosures, including allowing federal bankruptcy judges to modify existing mortgages so homeowners can keep their home under new terms. Current law allows federal bankruptcy judges to modify the terms of debt repayment for virtually all loans, including loans on luxury items like sports cars, yachts, and vacation homes, but it doesn’t allow families to restructure their home mortgages. Middle-class families should have the same lifeline option as yacht-owners.
Cracking Down on Predatory Payday Lenders
When money is tight, as it has been for a long time for many families, many Americans turn to short-term payday loans with massive interest rates just to deal with day-to-day expenses. If not paid off right away, though, the costs of payday loans can balloon to more than 400 percent of the original loan, causing financial burdens that are practically impossible for families to escape.
As Speaker of the Oregon House of Representatives, Jeff led an effort to crack down on predatory payday lenders in Oregon. Jeff was successful in imposing a 36 percent interest rate cap on state-regulated consumer loans and limits on check cashing fees. In the Senate, he introduced legislation to crack down on internet payday lenders skirting state laws by offering their predatory loans online.
Many states don’t have the protections that are now in place in Oregon, and Jeff supports legislation to provide these safeguards for all Americans.