Hunter Hosts U.S. Bureau Town Hall to Protect ConsumersConsumer protection agency gives first NY town hall
Kimberly Devi Milner
Associate News Editor
The Consumer Financial Protection Bureau held its first New York town hall meeting in Hunter College’s Kaye Playhouse Feb. 22 to share and discuss matters pertaining to citizens’ financial rights. Over 300 dissatisfied banking customers gathered and shared their tales of questionable bank fees.
The Consumer Financial Protection Bureau (CFPB) gave special focus to the issue of overdraft fees. “We have heard many stories about the $40 cup of coffee,” said CFPB Director Richard Cordray to the packed audience.
Banks often advance funds to consumers who have overdrawn from their checking accounts, but typically charge fees ranging from $30 to $35 for every underwritten transaction. The popular practice of processing transactions out of chronological order often made it difficult for customers to anticipate or avoid the bank’s penalty fees, said the CFPB director in a prepared statement.
Hunter student Peter Sabien recalled one day when he bought a coffee at Dunkin’ Donuts and a sandwich at Subway and then receiving a $95 overdraft fee when his bank allowed the purchases to process despite the insufficient balance in Sabien’s checking account. “But I had my savings [account],” Sabien said.
More than half of young adults with checking accounts incur overdraft fees, the FDIC reported in a study in 2008. “These charges greatly impact young consumers who are often inexperienced in the banking system,” Cordray said. Low- income customers bear the brunt of the fees, he added.
But the forum to elicit feedback on overdraft fees quickly broadened its focus as consumers asked the CFBP to also regulate alternatives to traditional checking accounts, such as pre-paid cards and retail financial services, such as offered by companies like Wal-Mart.
A New York resident criticized pre-paid providers that charged fees from mothers using pre-paid debit cards to collect child support. “I don’t think it’s fair that money for the children should go to the banks,” the union member said.
Without commenting on how the agency would regulate pre-paid cards, Cordray said the CFPB would “provide guidance within the state” for government agencies to negotiate with pre-paid providers.
A critical spotlight also shed upon retail giant Wal-Mart, as consumers asked the CFPB to regulate the chain’s debit card and check cashing services. Bronx resident Amador Reefus, speaking in Spanish with his grandson translating, expressed his concern that the developing Wal-mart financial services (which are also offered to Sam’s Club members) could wipe out community banks which struggle to compete with global giants like Wall-Mart.
“Wal-Mart’s business practices [are] on all fronts predatory,” added a representative of the grocery union Local 1500. “Let’s actually try to stop the criminal this time before they rob the poor people.”
Cordray responded that the CFPB was in the process of gathering information on the retail chain.
Throughout the night speakers broadened the forum’s focus to emphasize larger ways financial institutions affected their lives.
One Retail Action Project member recalled unsuccessful negotiations with his financial firm to pay for a medical procedure. He was left with a bill for $10,000 in out-of-pocket expenses, which inspired him to go to law school. “[Working with financial firms] is the exact opposite of financial empowerment. You’re often under pressure to make a decision when you’re sick – so you just sign the dotted line,” he said.
The CFBP opened and closed the town hall addressing the hassles college students face taking out and repaying school loans. Cordray said the bureau was working with the Board of Education to create a shopping-sheet to help students take control of their finances. The CFPB wants “to shed light on private student lending,” said the agency director.
Despite attracting a full house, few Hunter students took to the microphone at the forum. Kaitlyn O’Hagan, chief information officer of the public policy program at the Roosevelt House, acknowledged the historical significance of the bureau’s visit. “Checking accounts are relevant,” said the history major, “but talking about what students should do to build their financial understanding would have gotten a better turnout from students.”
Hunter Economics professor Karna Basu said in an email he believed the CFPB was a necessary organization needed to protect consumers from the costly and hidden aspects of contracts. “[The CFPB’s] focus should be on ensuring that the agreement a consumer believes she is entering is indeed in line with the actual agreement,” he said.
The Kaye Playhouse meeting was the second formal meeting of the CFPB nation- wide and the CFPB plans to increase its outreach to consumers in its effort to shrink banking abuses on working class consumers.