Lets look at both sides of the coin.

On one side, few businesses are willing to extend credit offers to high-risk borrowers. While this offer may come with a high price tag, it presents the opportunity for consumers to rebuild their credit history.  As long as the process is transparent and the terms clearly stated (in laymen’s terms), I agree with the Bureau’s decision.

On the other side, opponents of the Bureau’s proposal highlight that they expect a stronger stance to protect consumers, especially those with damaged credit records and limited resources, making them more vulnerable.

The Consumer Rights Coalition is dedicated to preserving your access to credit.  We believe that the Consumer Financial Protection Bureau should serve as the watch dog over credit providers who disregard open and honest practices when interacting with hard working Americans.  Ultimately, we hope their work results in policies that preserve and expand a full range of credit options available to consumers while ensuring protection throughout the transaction process, including full disclosure, legal claims and federally compliant collection practices.

No matter which side of the coin you agree most with, there is no doubt that far reaching regulation that goes beyond consumer protection will limit and eventually eliminate credit products, making it more difficult for families to weather this storm and achieve financial stability.

Despite not having any businesses of that type currently in the city and there being no requests for new business licenses for payday lenders, the council heard from speakers that there is a tide of payday lending companies flowing into California.

Eleanor Clement Glass of the Silicon Valley Community Foundation testified that payday loans prey on the most vulnerable residents, including those with low incomes and seniors on fixed incomes.

But the reality is that – without access to short-term “payday” loans – consumers are forced to more expensive and credit-damaging alternatives like bounced check and late bill payment penalty fees. Research shows consumers use these loans responsibly, to avoid these more onerous alternatives.

One  consumer responded to the article on the Los Altos Patch website.: “Yeah, that’ll help out the blue collar working man. Make it against the law to borrow the small cash loan that the banks won’t lend. We borrowed from (unnamed company) and it helped us out just like we hoped it would.”

According to the 2010 Census, Los Altos has a population of 28,976 living within 6.487 square miles. The median household income was $158,745. The largest employer is the School District.

The City Council must recognize that in this economy, middle class families are also having a tough time. Los Altos residents and industry have a choice among 428 bank businesses, according to TOPIX.com  So why rush to eliminate a financial product that is a viable, transparent, and often a less expensive credit option for families who live and work in Los Altos?

Costly bank fees and services are negatively highlighted in varies news venues daily. Therefore it begs the question, “Why not let city residents and employees choose what works best for their households”. Is that not the American way?

In 2007 The New York Times reported that the average debt load for a student graduating from college was between $18,000 and $25,000 per year. No doubt that this price tag is higher nearly five years later. And this doesn’t take into account the credit card debt students are left with after paying for books, food and other living expenses.

With the mortgage crisis putting attainment of the American dream even further out of reach, could student debt be putting the final nail into the proverbial coffin?

Today’s graduates are entering the real world in one of the toughest job markets in years. If they are fortunate enough to find employment, chances are that their salaries will be no match for their monthly student loan payments.  So, what is the solution?

Although student debt is not something new, being aware and taking steps to offset this burden has just recently come to light.  Some suggest that high schools offer courses on financial literacy and money management to prepare students in managing both cash and student loans while in college.  Others have created tools to compare and match tuition costs. For example, last week the Consumer Finance Protection Bureau launched its new “Paying for College Cost Comparison Worksheet” in an effort to streamline the process of understanding the true cost of attendance by institution.

I suspect there are many solutions that will have to come to play to solve this problem. Let’s hope they come sooner rather than later.

According to a recent article from Consumer Reports, prepaid debit cards may carry additional fees for one or more of the following:

• Card activation
• Monthly usage
• Exchange for cash
• Requests for customer service and paper statements

And finally, to my surprise—an inactivity fee!  Consumer reports identified five out of sixteen prepaid debit cards that charge a fee for inactivity.

So what should you do to make the most of your prepaid debit card? First, know before you go. Know the fees, know the process and read the fine print on the back of each card—one may be better than the other.  Second, use the card within 30 days to avoid monthly, or even worse, inactivity fees.  And third, if you need cash, use the cash back option on in-store purchases to avoid ATM fees.

I would like to note that a pre-paid card is recommended when the only other card a consumer has is the ATM/credit card attached to their checking account.  In the past, I have recommended a pre-paid card as an additional tool to protect consumers from fraud when paying bills and making online purchases, etc.

The good news is that YOU can be part of the fix, but you have to pay attention, do your homework and be willing to move your account to a bank that is doing right by its customers. In addition, the new Consumer Financial Protection Bureau is going to be working to eliminate hidden fees and unfair or undisclosed penalties.

The Associated Press highlighted this issue yesterday in a story titled, “Even after backlash, banks quietly pursuing fees.” The story details how major banks continue to impose increased fees, both hidden and disclosed. For example, Bank of America is testing an array of checking accounts with monthly fees between $6 and $25; Wells Fargo has charged as much as $15 on certain checking accounts with consumers who do not meet a set minimum balance and other criteria; and, Citibank has charged up to $20 per month unless consumers maintain a minimum balance of $15,000.

This leaves consumers with limited banking options and dwindling credit. In a recent opinion piece appearing in The Wall Street Journal, America’s ‘Unbanked’ Masses, Meredith Whitney, CEO of Meredith Whitney Advisory Group LLC, notes that, “Excluding millions of Americans from traditional banking services is not an efficient means of commerce and will result in long-term negative consequences for our economy.”

While it is true that excessive regulation creates an environment where costs and fees are merely switched from one product to another, you – the consumer – have the ultimate say in this fight. Don’t stand still. Vote with your feet and move your account. Banks should compete for your business. Competition is a good thing and will ultimately lower costs to consumers.

Bank of America earned $93 billion dollars last year, but it took less than two weeks for them to retreat from their last attempt at raising fees of $5 per month on hardworking Americans who just want a safe place to put their money.

What should we to do?

We shouldn’t fear or hate our banks. We should be wise and vigilant to ensure they are treating us fairly. If they’re not, we should find another bank.

I encourage you to join CRC and me in calling for the new Consumer Financial Protection Bureau to require banks to clearly and prominently disclose all fees to consumers in plain, easily understood language. The Bureau’s recent inquiry into non-sufficient fund fees is one step in the right direction.

Review your bank accounts to ensure you understand all relevant fees and that all of those fees are clearly and prominently disclosed.

1. If you haven’t done so already, get involved and take action with the Consumer Rights Coalition. Click here for more information.
2. Ask your bank if you are being charged a monthly fee. If you are, ask how you are able to reduce or eliminate the fee.
3. Shop around and consider other financial products.

For more information and to continue to follow this and other important issues, visit www.consumerrightscoalition.org.

Overdraft protection programs enable banks to charge a fee for covering checks that would otherwise bounce and debit cards that would be declined due to insufficient funds. These products can be both useful and costly for consumers trying to make ends meet.

The CFPB is launching an inquiry into the impact of overdraft protection by asking banks and consumers for information. They want to ensure that overdraft protection is offered to consumers in a clear and transparent manner.

After watching the CFPB panel discussion last week, one of our CRC members, Marisol from San Antonio, told me that families like hers use overdraft protection to juggle car payments and urgent care costs, trading the high fees for much-needed short-term credit.

She even knows to pay her small bills first and use the overdraft to pay the car payment, thus minimizing her fees and effective interest rate.

Overdraft protection can be a useful product for those of us lacking a financial cushion, but as with any short-term financial solution, it is important to understand the terms. 

In 2010 new rules went into effect that dictate when banks can charge you overdraft fees.  Overdraft protection is automatic when you write a check or pay a bill online.  However, unless you have opted in for overdraft protection on your ATM and debit cards, banks will decline your charges if you don’t have the funds to cover the transaction and cannot charge you an overdraft fee.  Knowing whether you have opted in for debit overdraft protection will help you make the best decisions on when to use this tool in managing your household finances.  Contact your bank to find out how to opt in or out, if you have not already done so.

The best way to empower ourselves is by researching and understanding the financial tools and products available to us. When we have the information necessary to understand the terms, conditions and risks of these products; we can make wise decisions about what works for our families and what doesn’t.

At this time of economic stress, we ask that banks, non-banks and government regulators work to enhance clarity on fees and terms of competing financial products without limiting our access to short-term credit tools and solutions.  This will enable us to compare products and make our own decisions on the products that meet our needs.

The CFPB is gathering information now about overdraft protection, and we should share our experiences with using overdraft protection to make ends meet.  Do so by clicking on the link below to tell your story:

https://help.consumerfinance.gov/app/tellyourstory

Interest in personal information has increased in recent years, raising privacy concerns. Our personal information and everything from our shopping patterns to our medical history, can be made available to creditors, employers, landlords, insurance companies, law enforcement agencies, and, of course, criminals. All they need to do is tap into the public and private databases that gather, buy, and sell our information.

Ultimately, whether the data is accurate or not, data profiling can lead to higher costs for credit and insurance, prevent us from renting an apartment or opening a checking account, or the denial of a job.

If we have decided that a payday loan is the best option to manage a shortfall of cash or to get through a tough time, do we really need to be tracked on a database as if we had engaged in criminal activity? After all, it’s not as if we’re entering into a 30 year mortgage or been provide with have had a $5,000 credit limit.

Our current economy is challenging enough without consumers having to compromise our privacy in order to preserve our credit options.

Last week, the Consumer Financial Protection Bureau (CFPB)  held its first hearing on payday loans in Birmingham, Alabama as it begins to consider how best to regulate payday lenders.

In a packed auditorium, consumer advocates, bank representatives, payday lenders, and consumers all spoke up to give Director  Richard Cordray their opinion.

I am happy to report that our Alabama consumers stood up and were heard!  Hardworking Alabamians described payday loans as a lifeline that has helped them when they needed it most.

Media reports featured stories from consumers who have relied on these loans. Consumers like LaDonna Banks, who had taken out a payday loan in advance of a disability check she was receiving when she had to take time off of work to recuperate from donating a kidney to her brother.

It’s so easy to write-off something as bad when you don’t understand it or have never needed it, but reading stories like Ms. Banks’ really brings home the need for short-term credit. Sometimes we get stuck and we have nowhere else to turn. Sometimes a bank or a family friend isn’t an option.

Thank you to all of you who have shared your stories with us and with the CFPB.  They really are making a difference.

If you haven’t yet done so, please submit your story to the CFPB. They continue to ask for stories so that they can make reasonable regulations.  These regulations will determine whether or not you will still have access to a variety of credit options, like payday or installment loans.

We will continue to work on your behalf to develop an effective two-way communication with the CFPB. We support their mission to improve transparency of all consumer lending products; create a level playing field between banks and non-bank lenders; and ensure that all financial products and services are fair.

Now is the time to speak up! Submit your story today!

As we adjust to life during an economic downturn, many of us are worried about how to afford the holidays this year. And we are not alone. According to Consumer Reports, last year at this time, about 13.6 million Americans were still paying off their credit-card bills from the previous year’s holiday season.

As gifts are given and received, we‘re reminded that there can be no greater gift than the gift of our time. Perhaps consider volunteering time to charitable organizations, since more and more people are relying on charity, especially during these economic times. Volunteering at a food bank, shelter or other charitable centers will not only help organizations facing an increased demand; but may help you appreciate the things you have.

Spending time with family, friends and neighbors and sharing cookies and other goodies, or perhaps a homemade wreath can be memorable and fun, without breaking the bank. And don’t forget your local library has holiday-related books music and movies.

Often, too much emphasis is placed on buying and opening presents. Let’s shift the focus to what is being celebrated during this holiday season.

At this joyous time of year, we are grateful to work with you. Wherever you are and however you celebrate in the coming weeks, we wish you abundance, happiness, and peace in a new year filled with hope. Happy holidays!

 With the celebration of Hispanic Heritage Month, I was invited to participate on a panel for the Congressional Hispanic Caucus Institute Policy Summit.  Along with other speakers from the real estate, education, and finance industry, I discussed the issue of “Housing, Wealth-building, and Financial Services.” The panel moderator was California Congresswoman Loretta Sanchez, who is very passionate about consumer access to credit the ability of all Americans to live the “American Dream”. In the audience were leaders and folks from all walks of life, including students. Our message of the need for greater access to credit was well received.

 I was also honored to have the opportunity to testify before the Congressional Committee on Financial Services. I found the members of the Committee to be very thoughtful and informed when it came to what consumers, including CRC members, face when choosing among financial services and products.

 I came away from the hearing hopeful that the Committee members in attendance will work with us to develop greater and more transparent credit options, so that we can select the credit options that work best for our households.

With every speaking opportunity, I am more committed than ever to telling our stories. I believe our message about the importance of increased access to a broad range of credit sources is just starting to be heard. Your voices and participation in our organization has made all the difference and are critical to the Consumer Rights Coalition success.

 So if I haven’t said it lately, Thank You!!