Women Deserve a Strong Consumer Bureau to
Protect them from Unfair Financial Practices
Too many women have paid the price for an outdated regulatory system that has left our financial system vulnerable to collapse and our families without adequate protections. In the summer of 2010, Congress passed and President Obama signed the Wall Street Reform and Consumer Protection Act to rein in excessive risk on Wall Street and preserve economic opportunity on Main Street. This comprehensive financial reform, which put in place the strongest consumer financial protections in history, included the creation of a new, dedicated Consumer Financial Protection Bureau (CFPB).
The CFPB has one mission: to make the market for consumer financial products and services work for American consumers, responsible providers, and the economy as a whole. The Bureau seeks to promote transparency and consumer choice while preventing unfair, deceptive, abusive, and discriminatory practices. It uses a wide range of tools—from rule writing and enforcement to financial education and empowerment—to achieve these goals and protect consumers from the harmful practices that contributed to the financial crisis.
Women and the Financial Crisis
- Women made up 30 percent of borrowers for mortgages of all types in 2005, as well as 38.8 percent of borrowers with subprime loans. [Consumer Federation of America, “Women are Prime Targets for Subprime Lending” (December 2006) (“CFA”)]
- Women were 32 percent more likely to have received subprime mortgages of all types than men, regardless of income. About a third (32 percent) of all women received subprime (three percentage points above the Treasury threshold) mortgage loans of all types compared to about a quarter (24.2 percent) of men. [CFA]
- Women were 41 percent more likely to have received high-cost subprime loans, regardless of income. 10.9 percent of women received high-cost subprime (five percentage points over the Treasury threshold) mortgages compared to 7.7 percent of men. [CFA]
- Women disproportionately turn to payday loans, tax refund anticipation loans, and title loans. [AARP,”The Alternative Financial Services Industry” Issue Brief (August 2001)] Based on analysis of the 2007 Survey of Consumer Finances, the Center for American Progress reported that “payday loans are disproportionately taken out by families headed by single women, followed closely by married couples.” Of families who borrowed from a payday lender, 41 percent were headed by single women, just 19 percent were headed by single men, and the remainder were headed by a married couple. By contrast, 59 percent of families who did not take out a payday loan were headed by married couples while only 27 percent were headed by single women and the remainder were headed by single men. [Center for American Progress, “Who Borrows from Payday Lenders,” (March 2009)]
How the Consumer Financial Protection Bureau Benefits Women
- Fair markets for women: One pillar of the CFPB’s mission is to ensure that markets for consumer financial products and services operate transparently and efficiently to facilitate access for all Americans, including women. The CFPB will enforce fair lending laws that protect women from discriminatory lending practices. The CFPB is empowered to focus on improving disclosures and cracking down on abusive practices to make it easier for families to identify and avoid high cost, high risk products that don’t meet their needs.
- For women who want to buy a home: The CFPB is taking steps to consolidate and simplify with plain language two overlapping and sometimes inconsistent federal mortgage. The CFPB will, for the first time, provide ongoing federal oversight of both nonbank companies and banks in the mortgage market and protect borrowers from unfair, deceptive or other illegal mortgage lending practices.
- For women using alternative financial services: The CFPB will establish robust federal supervision and oversight over payday lenders and larger participants in other financial service markets, such as check cashers. The CFPB will combat abusive practices that harm consumers, helping young people avoid hidden fees and keep more money in their wallets.
- For women with credit cards: The CFPB will prevent evasion of the Credit CARD Act of 2009, which bans arbitrary rate hikes on existing balances and other unfair practices. For women who have used credit cards to get by when times are tight, the law will give them clarity on the interest rates they are charged.
- For women caught by unexpected overdraft fees: The CFPB will prevent evasion of rules that give consumers a real choice as to whether to join expensive overdraft programs so that they are not unknowingly charged unnecessary fees.
- For women who take out loans to cover the costs of higher education: The CFPB will supervise private student lenders, fight unfair lending practices, and require lenders to follow fair rules of the road so that students have the information they need to make smart choices.
- Empowering women to make smart financial choices by promoting financial literacy and financial capability: The CFPB promotes consumer financial literacy and capability with a dedicated office focused on ensuring that the CFPB’s expertise and research are used to help raise awareness, educate and empower consumers to avoid unfair practices, and make the best financial choices for themselves.