[Congressional Record Volume 156, Number 59 (Monday, April 26, 2010)]
[Senate]
[Pages S2608-S2609]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      FINANCIAL REGULATORY REFORM

  Mr. AKAKA. Mr. President, enactment of emergency legislation in the 
fall of 2008 to stabilize the financial markets and the economy brought 
with it an obligation to reform our financial system to make it fairer 
for working families.
  I support S. 3217, the Restoring American Financial Stability Act of 
2010. I appreciate all of the extraordinary work done by the chairman 
of the Banking Committee and his staff on developing this vital 
legislation. Many of my colleagues on the committee and I worked 
together to develop a bill that protects, educates, and empowers 
consumers and investors. The legislation incorporates many ideas from 
Members of both parties. We must act quickly to enact this bill.
  A lack of consumer protection was a core cause of the financial 
crisis. Prospective home buyers were steered into mortgage products 
that had risks and costs they could not understand or afford.
  We must do more to protect consumers. This legislation includes 
essential protections to do so. The new Consumer Financial Protection 
Bureau has tremendous potential for restricting predatory financial 
products and unfair business practices. The bureau will work to prevent 
unscrupulous financial services providers from taking advantage of 
consumers.
  The legislation also creates an Office of Financial Literacy within 
the bureau. The Financial Literacy Office is tasked with developing and 
implementing initiatives intended to educate and empower consumers. A 
strategy to improve the financial literacy among consumers that 
includes measurable goals and benchmarks must be developed.
  I am also proud of the work we have done in the bill to better 
protect, inform, and empower retail investors. My proposal to create an 
Investor Advocate within the Securities and Exchange Commission is in 
this legislation. It is necessary to create an Office of the Investor 
Advocate within the SEC to strengthen the institution and ensure that 
the interests of retail investors are better represented. The Investor 
Advocate is tasked with assisting retail investors to resolve 
significant problems with the SEC or the self-regulatory organizations, 
SROs. The Investor Advocate's mission includes identifying areas where 
investors

[[Page S2609]]

would benefit from changes in Commission or SRO policies and problems 
investors have with financial service providers and investment 
products. The Investor Advocate will recommend policy changes to the 
Commission and Congress in the interests of investors. I have highly 
valued the contributions of the National Taxpayer Advocate, Ms. Nina 
Olson. Ms. Olson has helped us develop policies that have improved the 
lives of taxpayers. A similar office in the SEC will benefit retail 
investors. The creation of the Office of the Investor Advocate has 
widespread support from consumer, labor, and industry 
organizations. Ms. Barbara Roper, director of investor protection for 
the Consumer Federation of America, has stated that:

       For far too many years, investors have found it difficult 
     to make their voices heard at the SEC on uses that are 
     important to them while business interests have dominated the 
     agency agenda . . .

  The text of an amendment I had developed which clarifies that the SEC 
has the authority to effectively require disclosures prior to the sale 
of financial products and services is included in the legislation. Many 
working families rely on their mutual fund investments and other 
financial products to pay for their children's education, prepare for 
retirement, and attain other financial goals. We must ensure working 
families have the relevant and useful information they need when they 
are making decisions that determine their future financial condition. I 
appreciate the efforts of Senator Michael Bennet on this issue.
  I worked with Senator Kohl to develop title XII of the legislation, 
which is intended to increase access to mainstream financial 
institutions for the unbanked and the underbanked. About one in four 
families is unbanked or underbanked. Many are low- and moderate-income 
families who cannot afford to have their earnings diminished by 
reliance on high-cost or predatory financial services. Underbanked 
consumers rely on nontraditional forms of credit, including payday 
lenders, title lenders, or refund anticipation loans for financial 
needs. The unbanked are unable to save securely for education expenses, 
the downpayment on a first home, or other financial needs. Regular 
checking accounts may be too costly for consumers unable to maintain 
minimum balances or unable to afford monthly fees. Poor credit 
histories may also hinder their ability to open accounts.
  More must be done to promote product development, outreach, and 
financial educational opportunities at banks and credit unions intended 
to empower consumers. Title XII authorizes programs intended to assist 
low- and moderate-income individuals establish bank or credit union 
accounts and encourage greater use of mainstream financial services.
  Title XII will also encourage the development of small affordable 
loans as an alternative to more costly payday loans. Payday loans are 
cash loans repaid by borrowers' postdated checks or borrowers' 
authorizations to make electronic debits against existing financial 
accounts. Payday loans often have extraordinarily high interest rates.

  Loan flipping, which is a common practice, is the renewing of loans 
at maturity by paying additional fees without any principal reduction. 
Loan flipping often leads to instances where the fees paid for a payday 
loan well exceed the principal borrowed. This situation often creates a 
cycle of debt that is very hard to break.
  There is a great need for working families to have access to 
affordable small loans. This legislation would encourage banks and 
credit unions to develop consumer-friendly, small-dollar loan 
alternatives. Consumers who apply for these loans would be provided 
with financial literacy and educational opportunities.
  One example of an innovative payday lending alternative that has been 
developed can be found at the Windward Community Federal Credit Union 
in Kailua, HI. Windward FCU has developed an affordable alternative to 
payday loans to help the U.S. marines and the other members they serve. 
This program was developed with a National Credit Union Administration, 
NCUA, grant.
  More working families need access to affordable small loans. We must 
encourage mainstream financial service providers to develop affordable 
small loan products.
  Finally, title XII will enable community development financial 
institutions to establish and maintain small-dollar loan programs. I 
appreciate all of the work done by Senator Kohl and his staff on title 
XII.
  Working families often send substantial portions of their earnings to 
family members living abroad. In my home State of Hawaii, many of my 
constituents remit money to their family members living in the 
Philippines and other nations. Consumers can have significant problems 
with their remittance transactions, such as being overcharged or not 
having their money reach the intended recipient.
  Remittances are not currently regulated under Federal law, and State 
laws provide inadequate oversight. The bill will modify the Electronic 
Fund Transfer Act to establish remittance consumer protections. It will 
require simple disclosures about the costs of sending remittances to be 
displayed in the storefront and provided to the consumer prior to and 
after the transaction. A complaint and error resolution process for 
remittance transactions would be established by the legislation.
  We must act quickly to enact this legislation that will protect, 
educate, and empower consumers and investors.
  The ACTING PRESIDENT pro tempore. The Senator from Tennessee.
  Mr. ALEXANDER. Mr. President, I ask unanimous consent to speak as in 
morning business.
  The ACTING PRESIDENT pro tempore. We are in morning business, with 
Senators recognized.
  Mr. ALEXANDER. Mr. President, I can actually speak in morning 
business, not as if I were in morning business.

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