September 18, 2014

JOHNSON HOLDS HEARING ON CONSUMER PROTECTIONS

WASHINGTON – Today, Senate Banking Committee Chairman Tim Johnson (D-SD) held a hearing titled “Assessing and Enhancing Protections in Consumer Financial Services.”

Below is Chairman Johnson’s statement as prepared for delivery:

“I call this hearing to order. Six years ago this week, the collapse of Lehman Brothers sparked a financial panic more severe than most of us have seen in our lifetimes. The crisis exposed many failures in the financial system, including a failure to adequately protect consumers from financial products designed against their interests. We created the Consumer Financial Protection Bureau to make sure that consumers would always have a voice and a guardian in the financial marketplace.

“In the three years since the CFPB opened, the Bureau has proven itself to be a vigilant watchdog, standing up for hardworking American families and obtaining nearly $5 billion of relief for consumers.

“Extensions of credit should be provided on fair and transparent terms and should be affordable and accessible to all populations, a point I also emphasized throughout this Committee’s work on housing finance reform. Small-dollar short-term credit products serve an important demand, but, like mortgages, should be carefully managed by both consumers and credit providers. Other financial products, such as prepaid cards, installment loans, and payment developments, should include appropriate consumer protections.

“And consumer protections should also be part of student loans to guard the next generation of Americans as they enter and leave college, an important topic this Committee has explored.

“Ensuring that financial products are safely designed is one piece of the consumer financial puzzle. Another is ensuring that consumers are treated fairly when consumer debt enters collections. Debt collection has consistently ranked as one of the most complained about issues, with attempted collection of debt that is not owed as the most common complaint about debt collection. Among other effects, errors in debt collection can have adverse impacts on a consumer’s credit report.

“Credit reports, another top area of consumer complaints, are increasingly used for many purposes outside of credit decisions, including employment, rental decisions, and child custody. Although the accuracy and reliability of credit reports is of paramount importance, recent studies show that one in four consumers identified errors on their credit reports that might affect their credit scores.

“I look forward to hearing from the witnesses today on these important topics and other financial issues facing consumers today. I am especially looking forward to hearing from Ms. Ekdom about issues in my home state of South Dakota, which unfortunately has the highest student debt and also unique consumer challenges facing its tribal and rural populations.

“As memories of the crisis fade, we must remain diligent in focusing on consumer financial issues, ensure that consumers have adequate protections and access to affordable credit, and support the CFPB’s efforts to guard against abusive practices.”

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