How quickly a disturbing number of our elected representatives in Washington seem to forget.
The leaders of the House Financial Services Committee, to be more specific, will devote Tuesday morning to a hearing they have entitled “Who’s in Your Wallet? Examining How Washington Red Tape Impairs Economic Freedom.” Representatives of five major financial watchdog agencies will be quizzed on the cost of regulation – the cost, the Committee says, not only to banks and lenders, but to the country. It’s the latest in a series of similar sessions conducted over the past few years by the Financial Services Committee and the Government Oversight and Reform Committee.
Judging by the enormous amount of time they have set aside for these inquiries, you would never know we were living in a country that had recently experienced a cataclysmic loss of jobs, homes, household wealth, and economic output as a result of an era of financial deregulation, which left us with an out-of-control banking and lending industry.
Here are a few pieces of cost data that appear to have slipped off the Committee’s radar screen. First, on the impact of the financial and economic meltdown of 2008-09:
- $13 trillion or more – projected loss of U.S. economic output, according to a January 2013 report by the Government Accountability Office.
- 8.8 million Americans – number who lost full-time jobs, according to the Associated Press, between December 2007 and June 2009, when the country was officially in recession.
- 42 percent – median amount of home equity lost by Americans between 2007 and 2010, according to the Federal Reserve.
- $49,100 – average per-family loss of household wealth during those years, again according to Federal Reserve data.
The Financial Services Committee is expressing particular concern about the work of the Consumer Financial Protection Bureau, and its impact on consumer choice.
The Consumer Bureau has been a frequent Financial Services Committee target ever since it opened its doors in 2011. Unlike the Committee leadership, however, consumers overwhelmingly support the CFPB’s efforts to write and enforce rules against lending-industry tricks and traps. That agency, moreover, has actually been putting money back in the wallets of mistreated consumers. Its enforcement actions against credit card companies, debt collectors, and payday lenders have thus far delivered about $1.1 billion to nearly 10 million consumers. A recently announced CFPB mortgage servicing settlement promises another $2 billion in relief.
And there is plenty of work left to do. Abusive financial products continue to transfer billions of dollars a year from families and communities to the very worst players in the financial services world.
A few more numbers for the Committee to factor into its calculations:
- $3.4 billion – estimated annual fees collected by triple-digit-interest payday lenders, according to a September 2013 report by the Center for Responsible Lending.
- $3.5 billion – approximate total interest collected each year by auto-title lenders on loans of $1.6 billion, according to a study conducted by the Consumer Federation of America the Center for Responsible Lending.
- $25.8 billion – estimated amount, according to another Center for Responsible Lending report, that consumers who bought cars in one year (2009) will ultimately pay because of kickbacks from third-party lenders to auto dealers for steering buyers into loans with higher interest rates than they could have qualified for.