Open for Questions: Wall Street Reform & African Americans

Mr. Ealons:
Hello, welcome to
the White House, and thank you very much for
taking the time to join us for this very special conversation
this afternoon about the implementation of
Wall Street reform. My name is Corey Ealons, and I’m
the Director of African-American Media here at the White House. And we’re going to have a good
conversation today engaging in a live chat with you, our viewers,
as well as partners who have agreed to join us today for
this very special conversation. Here with us from
the White House, to my immediate left
is Dr. Cecilia Rouse, who is with the Council
of Economic Advisors. Starting from the far end,
we have Casey Gane-McCalla, who is a contributor to Jack &
Jill Politics and from News One. We also have John Simons, who is
the personal finance director for And then finally, we have Dr.
Wilmer Leon of, who is also a professor of
political science at Howard University. Now, the way this is going to
work today is we will take questions from you all, but we
also have questions that have been submitted to us earlier
from our partners over the course of the past several days. We’ll have a series, one round
of questions from each of them, and then we’ll be taking
questions from you. Thanks again for joining
us and with that, we’ll turn it over to Dr. Rouse. Dr. Rouse:
Thank you very much, Corey. And thank you all
for joining us today. It’s really a pleasure to be
here to talk about this very important piece of legislation
which was passed into law last month. I think before we really begin
to talk about the legislation specifically, it’s important
to remember how we got here. It was not quite two years ago
when the financial system was just on the verge
of a great meltdown. This was during the end of the
Bush Administration and we had banks which had many troubled
assets on their balance sheets, largely fueled by the
subprime mortgage crisis, so largely fueled by
the housing crisis. And it really looked as though
if there was not government assistance, there would just
be massive failure within the financial system. And so the federal government
took steps which were not popular. It did not want to do it, but
were very necessary in order to stabilize the financial
system at that time, which was by setting up the
Troubled Assets Relief Program, known as TARP. So when President
Obama took office, he actually received
additional funds for TARP. He did not want to do so, but
he also understood that if we wanted to stabilize our economy,
it was important to stabilize the financial system. And this decision was actually
reaffirmed recently with a study by two economists which
suggested that the collection of actions that the federal
government took, including the stabilization
of the financial sector, with the Federal
Reserve actions, and, importantly, the American
Recovery and Reinvestment Act did, as well, really helped to
stabilize the system that we had saved 8.5 million jobs on top
of the 8 million jobs that were lost anyway. So we really avoided a
meltdown as a result. Okay, so we had the
Wall Street bailout, which we felt was an unpopular
netizen to take in order to stabilize the system. But really in the process of
going through that crisis, we really understood the ways in
which the financial system had outgrown the regulatory system
that was overseeing it. The regulatory system had roots
that went back to the Great Depression, and the reality was
that the financial instruments that were being used and the way
that financial products were being marketed, et cetera, had
just outgrown this regulatory structure. And so it was important to step
back and understand and to develop — and to improve
the regulatory structure to basically advance
to the modern world. And that is what the President
signed into law last month. So what does this new law do? For one, we understood almost
two years ago that there were financial institutions that
were just too big to fail, that we could not let them fail
without them bringing down the entire economy. And so this legislation makes it
no longer possible for financial institutions to become so big
that they cannot be undone, unwound in a way that will bring
down the rest of the economy. It also brought into the light
new financial instruments that had become so exotic that many
of the traders didn’t understand what they were investing in and
brings them out of the shadows and requires that they be traded
out in the open and with new transparency. Importantly, it also says that
banks can no longer have some money in one pocket that’s
guaranteed by the other and then they’re gambling with that
money out of the other pocket, by drawing a bright line
between those activities. And finally, and what we’re
really here to talk about today, is it brought much more
authority and oversight to help protect the consumer. So it does this primarily
by creating a new consumer financial protection bureau,
which I will refer to as the bureau today. And this bureau is there
to help you and to help, really to help all of us,
to bring more oversight to financial institutions that
are providing loans and other activities, to bring, again,
more oversight there. And also to help simplify loans
and other documents so that — I know many of you, if you’ve
ever applied for a mortgage, you know there are multiple
forms and you have to read the fine print, and you pretty much
have to have been to law school and probably have an MBA in
order to understand what you’re signing away as you
sign on the dotted line. So the purpose of the bureau is
to simplify that process and many other documents, as well,
so that you understand what you’re getting into. And it’s there to promote
financial literacy. So, again, we have — we
bring the knowledge as we are negotiating with lenders and making these financial decisions in order to make the
best decisions for us. So with that, I think this
law is really important. I’m very excited for us to talk
about many other aspects of it today. And I guess I’ll
close with that. Mr. Ealons:
Fantastic, thank you
very much, Dr. Rouse. And so we will start with the
questions that were submitted to us earlier in the week, with
Dr. Leon, from theGrio, giving us his first question. Dr. Leon:
We have a question from
Christie Robinson who asks, what does the reform mean for a
single parent like herself who’s struggling more than ever
because the economy is so bad? Working almost seems like a
waste of time if you can’t make it through until month end. Dr. Rouse:
Boy, I really do
feel Christie’s pain, and I have to say that I think
it’s actually in these economic times that this kind of reform
is more important than ever. Because you know when
you’re getting by, there are lots of ways that you
have to manage your finances, for example, if you get to the
end of the month and you’re not sure you can pay those bills,
payday lenders look very attractive and may just provide
the liquidity and the cash that you need to get
to the next month. Or maybe that you hit
the end of your check, your checking account,
and you bounce a check. So what this new
bill says is, one, it’s for the very first
time, payday lenders will be regulated. Payday lenders play a very
important role in many communities. But we also know that many of
them are engaging in abusive practices. We know that they draw customers
in and customers are trapped there. The interest rates they’re
charging are 400 to 900% on an annualized basis,
which is astronomical. And the purpose of the new
bureau will be to make sure that those lenders are available
and that they’re there, but that they’re not engaging
in these abusive practices. It also will be enforcing
the new credit card law that President Obama signed earlier
which says things like credit card companies can’t increase
interest rates on existing balances. So when you’re just getting by
and you’ve got a balance on that credit card, the credit card
company can’t increase the cost of that even further by
increasing your rates. So this bill actually,
especially with the bureau, and I might also add, by you
know, when you’re just getting by, understanding your choices
and the implications of those choices is never more important. And so the financial literacy
programs that the bureau will be instituting and
standing up, I think, will really empower all of
us to make better choices. Mr. Ealons:
Gentlemen, anything
to add to that? Any other thoughts on that? Dr. Leon:
Well, I think budgeting. Getting your credit card
statement and knowing for the first time exactly how long it’s
going to take you to pay off that balance will
help you budget. And when you can budget, the
more information you have and the better able
you are to budget, the better control you can have
over your decisions and make better decisions. Mr. Gane-McCalla:
We had a similar question which talks about payday loan sharks operate on every
corner of every town, prey on mostly poor people,
taking 400 to 700% interest on loans. So no more of those
interest on loans? Dr. Rouse:
What the bureau will be doing
is ensuring that those payday lenders aren’t engaging in
the most abusive practices. Payday lenders will always
charge higher interest rates than your credit
card, than your bank, because they’re taking
uncollateralized loans and they’re taking higher risks. However, it’s really important
that consumers have all the information and they understand
very much what they’re getting into and that they have ways
to pay off those loans in a reasonable amount of time. Mr. Gane-McCalla:
So but what about, is
there going to be a cutoff? Like, 400 is extremely high. Dr. Rouse:
I completely agree with you, currently as an individual. You know, one of the things
about this bill is it puts a lot of power in the hands of the
bureau, and bureau is, you know, still being stood up. Mr. Gane-McCalla:
Okay. Mr. Ealons:
Absolutely, and I just
want to remind everyone, go ahead and send in
your questions to us. We are eager to take those as
we engage in our conversation today, and we’ll continue on
now with John Simons from Black Enterprise. Mr. Simons:
So related to what
we just discussed, a lot of people in our Black
Enterprise audience want to know whether financial institutions
will be held to task for targeting minorities for some
— for certain subprime loan products and certain other,
you know, debt products. Are there going
to be protections, specific protections for
minorities who may feel targeted by lending institutions? Dr. Rouse:
I think the predatory lending practices with the subprime mortgages that really
precipitated and were a lot of the undercurrent of this current
financial crisis really came to light and is, I think, a large
part of the motivation for the consumer pieces of
this legislation. And so absolutely, the new
bureau will have expanded authorities to prevent the sale
of abusive products in the first place and to go after
fraudulent lenders. Will subprime
mortgages still exist? Absolutely. I think they serve a useful
purpose for those individuals that have less than
stellar credit ratings, don’t qualify for
a regular mortgage. A subprime mortgage can be a way
to actually rebuild a credit history and then convert after
a couple of years to a regular mortgage. But in the meantime, it’s
important that they not be abusive, that they
not be targeted. There were individuals who
qualified for prime mortgages who were sold subprime mortgages
and that’s absolutely — the bureau can actually stop
those sorts of practices. At the same time, it’s important
for the individual to be educated, to understand what
they’re getting into when they sign on the dotted line. So I think it’s very important
that the financial literacy piece is there, as well. Mr. Simons:
With the financial
literacy piece, is there — will there be any sort of
recommendations to maybe teach economics or
finance to children, starting in elementary school? I mean, where does
this all begin? Or is that all
being discussed now? Dr. Rouse:
I have to tell you, so that the bureau is still being designed, but I have to tell you that
financial literacy starting in kindergarten is — and in the
earliest grades — is a very high priority for Secretary Duncan, our Secretary of Education. And he is very committed to
financial literacy at the earliest grades and actually has
experienced having implemented such programs in
elementary schools. Mr. Ealons:
And this is also in addition to financial literacy programs that are already ongoing within
the federal government. Money Smart is a program that’s
been developed and designed by the FDIC that’s
currently in the works. It’s been very popular and
successful across the country. So this agency, once it stood up
will have tremendous power to inform consumers about what
their rights and abilities are. Mr. Gane-McCalla:
Will there be a
website in the making, kind of a financial
education website, where people can learn about
mortgages, credit ratings, things that will affect
them in the future? Because a lot of people make
mistakes when they’re young. They don’t know about the stuff
and then they find themselves in a credit trap by the time they’re in their early 20s. Dr. Rouse:
I completely — I certainly don’t want to speak to the Bureau which hasn’t
been stood up, but that certainly sounds like
it would be among the ideas that they would be looking at. Mr. Simons:
What is the time table for
when it will be stood up? Dr. Rouse:
So, the Secretary of — the way the legislation is structured is, the Secretary of the Treasury is to put it in process and to assume the powers, and then transfer the powers as the bureau is set up. And they are already
under way doing so. They have set very
aggressive time limits. This is a priority of
the administrations. They have 30, 60, 90 day goals they’ve already started putting in process. The whole genius behind the bureau is that the consumer protection exists in a lot of agencies, but it becomes a residual responsibility of each of these agencies as opposed to being a primary responsibility of any one of them. And so when they have
other competing demands, the consumer protection piece
kind of can fall — can lag. And so, what they will be doing
is transferring authorities, transferring staff to put
together and consolidate all of that within the bureau and
all of that is in motion. Mr. Ealons:
Absolutely. Dr. Wilmer, why don’t you
give us your next question? Dr. Leon:
We have a question from Cheryl Richardson along the same lines of what we’ve just been talking about. While the banks now have
new rules to live by, it seems as though they will
continue to stiff customers with hidden fees of some sort. How will the reform bill protect
us so that we are not being penalized now or when the banks
decide to implement new fees? Dr. Rouse:
Cheryl, that’s a really important question as well. And I think it goes to one of
the challenges in a wall like this, and when you’re doing any
kind of regulation like this, which is that right now we can
see and we know what the banks were doing, but banks and
their staff are very creative. And they will be thinking of the
next thing which we may not have thought of today. And so, one of the important
parts of consolidating the powers and the focus on consumer
protection within one agency, is they will be on the look-out
for new kinds of abusive practices, new kinds of ways of
deceiving the customer and they will have the
authority to stop that, without having to
go to Congress. They will have the authority to
stop those abusive practices right then and there. So, I think that that’s
— you know it’s that. And then also making sure
that the consumers have the information they need. Part of that is with forms where
those deceptive practices aren’t in that, you know, two — that size two font, where you need a telescope. Mr. Leon?
It’s that big? Dr. Rouse:
It’s that big, right! You need a telescope to be able to read it. And so, making sure that the
information is clear, that you understand, you know,
that the consumer understands the fees, and the conditions for
the loans and other terms for bank accounts and other financial instruments. And that they have the financial
literacy from the very beginning to be able to understand what
the implications are. Mr. Simons:
When you talk about regulation, what is the “or else” part of this? I mean, when you tell the banks
that they can’t do these things, what is the — what’s the, you know, where are the penalties? Is it sort of putting
the bank out of business? Is it telling them to cease
business for a certain amount of time? Or is that still
being worked on? Dr. Rouse:
I believe that is
still being worked out. But I do know that they will be
able to end abusive practices, which would mean just you
may not put the bank out of businesses, but you can say that
transaction cannot go through. And also to go after fraudulent
lenders with whatever authorities they
have been given. Mr. Ealons:
And we’re going to take a moment to take one of our questions from online from Gina who is writing in from South Carolina. She says that, “I’m doing well,
I’m holding on to my home, and we’re doing fine, but many
of my neighbors have lost their homes and we are struggling to
keep our neighborhood intact. Is there anything that’s
happening in this legislation or anything else going on with the
administration that is helping us with this issue?” Dr. Rouse:
Boy, this is the — a lingering problem and a lingering economic challenge as we are fighting
our way through this recovery. I think we all know that the way
this will really turn around is when Americans are back to work
and are earning an income and can stay in their homes. But in the meantime, the
administration definitely is committed to helping with folks
who are facing foreclosure and those who are in their homes at
whose neighborhoods they find that their neighborhoods were
deteriorating around them. So first of all, as part
of the Recovery Act, and even subsequently the
President has supported a continuation of this program,
there’s a neighborhood stabilization fund which
is funds that go to the neighborhood to help prop
up the property values, renovate homes and other
buildings which have been foreclosed on and
have been abandoned. So those abandoned properties
and those homes aren’t bringing down the property values
for everybody else, therefore creating
a spiral downwards. The administration also has
several programs to help individuals for
facing foreclosure. The largest and best well-known
is the Home Affordable Foreclosure Alternatives program
which we call HAFA which helps individuals refinance,
obtain modification, and even for those folks
who are willing to — who are facing foreclosure but
don’t want all of the negative consequences associated
with foreclosure. It helps them go through with a
sale of their home which may not be for the full
value of the house. And provides them with about $3,000 to help them move to more affordable housing. I should also say today that
just today the administration announced another round of the
hardest hit fund which was $600 million that goes to five
states which will again provide resources for those states to
help with individuals who are facing foreclosure. Mr. Gane-McCalla:
I think if you see in cities like Baltimore, Detroit, when you get abandoned
houses, it brings crime, deteriorates the neighborhoods,
and everyone else’s property value goes down and
they can’t loan out. And so it’s — what will
this do for cities like them? To get people back
in these houses, because it seems like
everyone’s losing out. The banks are losing out because
they’re not getting money. The people are losing out
because they don’t have a place to stay and everyone else in
the neighborhood’s losing out because their neighborhood,
which, a lot of prime neighborhoods are turning into abandoned houses, which is drugs, crime. That doesn’t reflect well in
the cities, the neighborhoods, or the people, so is there
anything that can be done to bring people back into the
houses and bring these neighborhoods back? Dr. Rouse:
Well, as I mentioned, the Neighborhood Stabilization Fund was a fund that was created to
help communities at either, you’re going to tear down some
of the buildings that have been abandoned so they don’t
become magnets for crime, or find other ways to
rehabilitate those homes which have been abandoned and those buildings that have been abandoned. You know, I think the President
is focused on jobs, jobs, jobs. He says his first, second and
third priorities are jobs, jobs, jobs. Fundamentally, we need to get
folks back to work so that they can stay in their homes or
come back and can afford the mortgages and the rents
that go with those homes. In the meantime, we have this
array of programs which do not go nearly far enough,
and I grant you that, I think the administration
completely understands that as well. But it’s a big effort because
we recognize the problem, and these are ways to help
individuals refinance, obtain modifications, and
otherwise try to stay in their homes or — Mr. Gane-McCalla:
I think in Detroit, they’re thinking of turning some of the abandoned houses into farm land which might create jobs and stuff, so is there any type of stuff in the bill that could help that out or bring job — new jobs to — Mr. Ealons:
Let me do this, because I
think we’ve exhausted that one, so we’ll come back to that. John, let’s take another one of
your reader questions that were submitted to you. Mr. Simons:
Okay. A lot of our audience
wants to know, okay. I’m a regular bank customer, I
have a checking account at the bank and I have my Roth IRA
through that institution as well. How will this bill that I hear,
it’s being portrayed as a sort of Wall Street big
institution, regulation bill, how will that affect me,
just a regular bank customer? What’s going to be different? Dr. Rouse:
So the good news is you shouldn’t notice much difference at all. You will still have your
checking account and your Roth IRA and your mortgage
through your bank. But you should see
some differences. The forms should
be easier to read, it should be no longer possible
for your bank to automatically enroll you in overdraft
protection program that you may not have wanted to do that’s
going to again result in hidden fees and hidden costs, and
when you’re renegotiating your mortgage, again the mortgage
forms should be simpler, et cetera. So I really, what you have at
your back is additional consumer protection, but for, I think for
most customers they will not notice a difference, but just
having a little more added security that our financial
system should never again bring down or at least have the threat
of bringing down the rest of the economy. Mr. Simons:
Effectively things
will be easier to use, I think is a big deal, easier
to read and understand. Dr. Rouse:
Completely. Mr. Simons:
It’s huge. Mr. Ealons:
Clarity and confidence in the system is very, very important. Absolutely. Dr. Leon, what do
you have for us? Dr. Leon:
Shea Olivera asks will the President support bills that support credit unions? Credit unions are nonprofits
that are much more consumer friendly, big banks have the
money to stop many bills that support credit unions, but
credit unions are outside of the normal banking process,
facilities that a number of people use like — as opposed to going to a standard, large bank. So how does that, how does that,
how do credit unions play into — into this process? Dr. Rouse:
So let me just, I am a
member of a credit union, and I very much appreciate the
credit union being there and the services that I obtain
from the credit union, and this Administration is
solidly behind credit unions. We understand that they play
a very special role in their communities, that they
especially help those in their field of membership, and because
of their special status and their importance they also
have tax exempt status. What I would say is this
Administration has been working very hard to find ways to
provide access to those who have, who lack access to
other financial institutions, and credit unions play
an important role, as do community development
financial institutions. Mr. Ealons:
And Casey, why don’t we
take your next question. Mr. Gane-McCalla:
Okay, we have a question
from Ronnie B. from Jack & Jill Politics. He says approximately 25% of
Americans now have a credit score that is below 600. A majority of those have
been African Americans. That means if/when the economy
comes back to life we will still be lagging in net worth and
the accumulation of wealth. Will the Wall Street reform
finally do away with the sham of consumer credit scoring? Dr. Rouse:
Well, the law itself does not
do away with credit scoring. However, the law provides a much
clearer way to help individuals build, maintain and
rebuild their credit. It does so by helping you not
get into the trouble in the first place with, again, as
we’ve said, much clearer forms, so that you understand, you
won’t get trapped by the fine print. It does so by clamping down on
unfair lending practices so that you don’t find yourself with a
mortgage with a balloon payment due at the end of the term or
where there are hidden interest rate hikes during the term of
the loan so that before you know it you can’t afford this loan
which you thought looked completely affordable
at the beginning. And then it also brings in the
financial literacy, again, to help individuals not get into
trouble in the first place and to help provide options for how
to rebuild your credit as you go along, as well. Mr. Simons:
So the, right now if a consumer has a problem with one of the credit reporting agencies,
an issue with, you know, something’s wrong on their
credit report they go to the FTC, the Federal Trade
Commission,, you file a complaint. In the future, will they go to
this future bureau or will the FTC still be the place
to file the complaint? Dr. Rouse:
My understanding would be they would go to the new bureau. Mr. Simons:
Okay. Mr. Ealons:
All right. And Dr. Leon, we’ll take a
question from online here in one second. You go ahead. Dr. Leon:
Yeah. I’m not sure who this
question came from, but it had to do
with under banking. According to a
recent FDIC study, certain racial and ethnic
minorities are more likely to be in communities that are
under banked or nonbanked. Minorities are more
likely to be under banked, blacks an estimated
31.6%, Hispanics 24%. Is there anything in the
legislation that deals with underbanking, because that in
many instances drives people to payday lenders and alternative
sources to deal with very minimal financial needs, check
cashing and those types of things. Anything that’s going to help
address under banking or nonbank communities? Dr. Rouse:
So the legislation is designed to protect consumers who are in the banking communities, at
the same time with the Bureau, with the Consumer Bureau,
Financial Protection Bureau, it was also designed to help
with some of these nonbank activities, the payday lending. I should also just mention that
for the first time remittances for immigrants, who are
sending remittances home, they’ve never been regulated. They will also be brought under
the umbrella of the bureau so that individuals will have
information and disclosure about the transactional
fees, et cetera. However, really this is through
this other effort that the Treasury Department in
particular has taken the lead and the Administration certainly
very much wants to help those who have less of — less access to the regular banking sector through CDFIs and credit unions to find ways to get individuals who don’t have a strong
enough access to bank accounts, better access to that. Mr. Ealons:
And we have a question that
has just come in to us online. Has to do with student loans,
and the question has to do with I am currently in college, going
to have crazy debt when I get out of college. What is this, what are these new
reforms doing for me and helping me prepare to pay
back those bills? Dr. Rouse:
Well, this law itself will help you pay back to the extent that those student loans are
not federal student loans, but are from the private sector,
it will ensure that you are not caught up in some sort
of deceptive, where — scheme whereby the private
lender is increasing your interest rates as you’re trying
to repay them, et cetera. So student loans are definitely
on the purview and — under the oversight of the new
Consumer Protection Bureau, but the Administration is very
aware of the burden that student loans place on individuals, and
has been looking for ways to expand. We’ve expanded Pell grants so
that students have more access to Pell grants which do
not need to be repaid. We’ve also brought in and
strengthened our income-based repayment plans where
individuals no longer have to pay more than I think currently
it’s 15 or 20% of their income. So if your student loan
comprises more than 15 or 20% of your income, then you will not
have to pay any more than that. That currently exists for
individuals going into certain fields such as nursing, certain
shortage fields such as nursing, health, and teaching. However, that will also be
broadened starting in the year 2013, 2014 to
include all students. So we’re very much aware of the
potential impact that student loans have on individuals and
I’ll just keep coming back to the other, the other thing that
we really have to keep our eye on is that it’s important that
all of us understand when we sign on to these loans,
which are just so — credit is just so much more
available today than it was 34 years ago, and it’s just
so important for us all to understand just, what are our
responsibilities with regard to these loans. Mr. Ealons:
And we’ll go back to
the online set again. This one is from Mark, who
is preparing to buy a home. He’s actually looking for a
home, and he’s asking, one, is this a good time to look? I don’t know if we could
answer that question or not. (laughter) But two — Dr. Leon:
Might want to recommend
a real estate agent. Mr. Ealons:
Right. Mr. Simons:
He’s lucky. (laughter) Mr. Ealons:
But two, when I go in to sign the final documents what should I expect under this new law? Dr. Rouse:
You’re just looking for a house now, so if you’re going in now, I think you’ll expect there has
not been all of the changes that we will see, as the law was just
passed two or three weeks ago on July 21st, and as we’ve said,
the consumer bureau has not been stood up, and when
forms are changed, it takes some time in order
to make those changes. So unfortunately I don’t think
that you’ll see major changes just today, but certainly within
the next year or two I think it will be a much easier process. Mr. Ealons:
All right. Casey, why don’t we go back and
take one of your questions. Mr. Gane-McCalla:
Okay, this question
is from Shanty, also from Jack & Jill Politics. The creation of the Office of
Minority and Women Inclusion, what does this entail? Dr. Rouse:
So, these are offices which will be required to exist in all of the agencies that currently
oversee financial — financial institutions, all
the regulatory agencies, as well as the Federal Reserve
Board here in Washington and all of the Federal Reserve — regional Federal Reserve banks. And the purpose of these
offices is to ensure that these institutions, which really have
to represent all Americans, in themselves have adequate
diversity in their staff, and that they are adequately
considering the needs of all Americans. And so that’s what these — that’s what these offices will entail. Mr. Gane-McCalla:
Okay. Mr. Ealons:
So they’ll be posted in agencies throughout the Washington area. Dr. Rouse:
Not just — the regional
banks as well, so all over the country. Mr. Ealons:
Fantastic. John, why don’t we take
another one of yours. Mr. Simons:
So at Black Enterprise, we
have a very diverse audience, and some of our readers and
viewers happen to be people in the financial industry. If I’m a — you know, I’ve heard from a lot of people in the financial industry. If I’m a person running a small
investment firm, let’s say, what do the new — what do these new financial protections mean for me? Am I going to have to hire a
bunch of lawyers and a bunch of writers who can
simplify these — these forms that I’ve
had on hand forever? What — how is life
going to be different? Dr. Rouse:
Well, the good news is, as long as you’re playing by the rules and you’re good
to your customers, your life will
change very little. However, it is true
that through this law, the SEC has broader authorities,
and so they have broader authorities to go after those
investment brokers that are not looking out for the best
interests of their clients. Mr. Ealons:
And that’s — ultimately, that’s important at the end of the day, we want to make sure that people
have the opportunity to earn a living and run a good business,
but at the same time that they’re fair to their customers
at the end of the day. So that’s a win-win for
everybody ultimately is what we’re looking for. Dr. Wil. Dr. Leon:
Elaine Robinson asks, what law or laws or legislation will be put in place to ensure that Wall
Street does not cause the American working class
to collapse again; who’s looking out for the
average working person? And let me, if I could, just
kind of tag on to that, I think one of the issues with
this whole campaign is getting people in the country to
understand exactly how this is going to impact
their daily lives, and what this is really going to
mean to them at the dinner table at the end of the day. Dr. Rouse:
You know, I think that’s —
I think that’s exactly right, and it’s one of these things where the whole purpose of the bill actually is to protect everyday workers and consumers of these financial products, everyday people with mortgages, with credit cards, with bank accounts that potentially have these hidden fees, those individuals who go to payday lenders. So it’s actually designed to
make sure that the system is working — the incentives in
the system are aligned with the incentives of the customer. And yet because that seem
— it can seem very Archean, it can feel very removed, when really that was the whole — the whole focus is
on the consumer. And so, you know, one of the
things that was a key principle for any reform, at
least for the President, was that never again could there
be financial institutions that were too big to fail, because it
was in having institutions that were too big to fail and it
was also in having regulatory agencies that were not
really watching the — watching the store. There were some — there were overlapping authorities and some banks could shop for regulators and sort of get the best deal, and so the whole purpose was to
streamline that, make it that — that there was a much clearer
understanding of these financial institutions. So let me just describe a few
of the ways in which we — this law is designed not to make
it that Wall Street brings down Main Street. One is there’s a very aggressive
advance warning system, there’s a committee which is
chaired by the Secretary of Treasury which will have
authority to be overseeing the largest banks and the largest
institutions and to be monitoring them. These institutions have to be
providing what they are calling living wills, so a way for them
to be unwound, in other words, a way to let them fail without
their requiring taxpayer dollars, but allowed in an
orderly way so that it’s not so disruptive to the
rest of the economy. It requires these banks to
have more capital and leverage requirements so that if they do
come into financial trouble and have some assets on their
balance sheets which they can’t really afford, they have
a cushion so that, again, they don’t run into trouble. So it’s like having enough money
in your savings account so that if you have a rainy day, you
don’t just have to declare bankruptcy. It updates the feds’ authority
to provide systemwide support in the event that we
do — we do need it. And again, it establishes
rigorous standards and supervision of all
these institutions. So the idea is
really to — again, we’re not going to be able to foresee the next scheme that will come down the pike
in another five years, but the point is to be able to have people with enough view into the system that we may not
have thought of the system — or of this scheme, but we can
analyze it and consider its risk and minimize any potential
adverse effects on the rest of the system. Mr. Ealons:
Absolutely. Thank you for that. And this is going to be our
final question, unfortunately. We’ll take it from one of our — from one of our viewers online. Andre Hatchet says, what are the
best ways to get funding for my small business if I have
bad personal credit, and I can create jobs? Or can I create jobs, I think, is what he meant to say. How can I get funding for this? Thank you. Dr. Rouse. Dr. Rouse:
Well, I would, if
you’re a small business, I would recommend
the small business — the SBA, the Small Business
Agency, is this — Mr. Ealons:
Small Business Administration. Dr. Rouse:
Administration! The Small Business
Administration which has a variety of loan programs and
a variety of — they have — they have counseling centers all
across the country to really help small businesses, to answer
these sorts of questions and to help you really understand what
kind of financing is available to help you. Because we very much understand
that small businesses are the engine of the
economy and they — it’s very important in
this economic recession, access to credit has been one of
the biggest barriers to growth, and so I think it’s
very important, and we do have the resources
available through the SBA and they’re there to help you. Mr. Ealons:
I want to give a pitch to
one more organization as well, that’s the Minority — Dr. Rouse:
Thank you. Mr. Ealons:
— Business Development
Agency as well, which is the part of the
Department of Commerce that specializes in dealing with
building minority businesses, and they have regional offices
all over the country that you can tap into as well. And so with that, that will
be our last question for the afternoon. I want to thank Dr. Cecilia
Rouse of the Council of Economic Advisers for joining
us this afternoon, as well as our partners
in this endeavor, Dr. Leon Wilmer with
and with Howard University, thank you for being here. Dr. Leon:
My pleasure. Mr. Ealons:
John Simons with Black Enterprise, thank you so much. Mr. Simons:
Thank you. Mr. Ealons:
And Casey, thank you
very much as well — Mr. Gane-McCalla:
You’re welcome. Mr. Ealons:
— for being with
us from Jack & Jill. All of you, this is a terribly
important issue that we will continue to work on diligently. As we’ve talked
about this afternoon, we will be working to stand
up the Consumer Protection Financial Board very soon,
and we’ll continue to work diligently on handling all of
these issues to make sure that the playing field is even and
that you have the rights and protections that you deserve. Thank you all very much
for participating today, we appreciate your time. And, Dr. Rouse, do you
have any final words? Dr. Rouse:
No, I just would like to
echo what you’ve said. This is very important
legislation, it affects us all, and I hope that this
has been helpful. Thank you. Mr. Ealons:
Thank you all,
thank you, partners, and you all enjoy the rest
of your day; take care.

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