PR Contact: Andrea Cernich
Aspen Institute Initiative on Financial Security
Aspen Institute’s Dialogue on Dodd-Frank Takes Uniquely Consumer-Focused Approach
Bringing Consumer, Industry Advocates Together Reveals Emphasis on Consumer Protection & Innovation
Washington, DC, May 15, 2014–– Last Tuesday the Aspen Institute Initiative on Financial Security (Aspen IFS) hosted a robust conversation on how American consumers are faring in the four years since the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Moderated by the Washington Post’s Lori Montgomery, prominent leaders Deputy Assistant Secretary of the Treasury for Consumer Policy Melissa Koide, Marc Morial, President of the National Urban League, Tim Pawlenty, President and CEO of the Financial Services Roundtable, and Jon Witter, President of Retail and Direct Banking at Capital One, agreed that consumer protection and trust are integral parts of helping consumers advance their financial security and rebuild family balance sheets.
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Addressing the repercussions of the financial fallout nearly a decade ago and its continuing impact on U.S. households, panelists agreed that changes to protect consumers were necessary to re-establish faith in the financial system and prevent a recurrence of the problems that lead to the crisis. Despite important progress, fundamental challenges remain. “Almost two-thirds of the American people have FICO scores lower than 750. Two-thirds cannot even meet a minimum borrowing threshold for a whole host of financial products,” said Morial. “We have to confront some of these difficult issues which are sometimes on the perimeter, but I would suggest that they are not on the perimeter – they are really underlying this whole discussion.”
One of the most important elements of Dodd-Frank was the creation of the Consumer Financial Protection Bureau (CFPB), which has become a critical catalyst for leveling the playing field for consumers. According to Koide, “[The Consumer Financial Protection Bureau] has authority not only over the banking sector but also the non-bank financial services sector, which is a really important part of making consumers are protected across products that they may be offered. It also helps us set some norms across the industry so that we have consistency in terms of rules related to the products that consumers are using.”
Industry representative Pawlenty acknowledged that while the CFPB’s oversight is in many ways an added regulatory burden for the banking industry, commercial banks in particular agree its role is vital and based on sound intentions. Pawlenty, whose organization’s members include most major U.S. financial services institutions, agreed there is opportunity for better consumer engagement and transparency, such as with product disclosures, for example, noting “a notice unread is no notice at all.” He also offered a reminder of the unintended consequences which may flow from additional regulatory burden and cautioned of “making business too difficult, too expensive, too costly, and effectively driving demand into unregulated, less desirable places. That may not be a great tradeoff for consumers in the long run.”
Given the uneven pace of economic recovery and the likely impact that technological innovations will have on financial services in the coming decade, a full assessment of major piece of legislation like Dodd-Frank may not be possible for many years. Meanwhile, there is growing recognition that the road to recovery must be built on a solid foundation – by making sure that consumers are protected, educated, and enabled to rebuild their household assets lost during the Great Recession.
“The crisis made it clear our financial system touched every American, even those who were underserved. Whether it was credit cards, student loans, or homes, Americans felt this recession and they felt the need for financial reform,” said Lisa Mensah, Founder and Executive Director of the Aspen Institute Initiative on Financial Security.
About Aspen IFS:
The Aspen Institute Initiative on Financial Security (Aspen IFS) is a leading policy program dedicated to helping bring about the policies and financial products that enable all Americans to save, invest, and own. For more information about Aspen IFS and its work, please visit www.aspenifs.org.
About the Aspen Institute
The Aspen Institute is an educational and policy studies organization based in Washington, DC. Its mission is to foster leadership based on enduring values and to provide a nonpartisan venue for dealing with critical issues. The Institute is based in Washington, DC; New York City; Aspen, Colorado; and on the Wye River on Maryland’s Eastern Shore. For more information, visit www.aspeninstitute.org.