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Posts Tagged ‘New York Times’

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Student Loan Reform Included in Health Care Vote

March 23rd, 2010 by Sally Brzozowski

This week’s headlines are all about health care reform.  The Senate is also expected to make changes to the student loan industry, which have been attached to health care reforms.

If the changes are passed, the Federal Family Education Loan (FFEL) program would be ended, saving taxpayers $61 billion over the next ten years.  All federal student loans would be made through the government’s Direct Loan program instead of through both programs.  The House approved this change back in September of 2009 as HR 3221, the Student Aid and Fiscal Responsibility Act of 2009.  Read more from the New York Times.

(Photo: bredgur)

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Volker and Luntz: Breaking Financial Reform News

February 1st, 2010 by Sally Brzozowski

The internet is buzzing with  financial reform news today.  On one side (the pro-consumer side), there’s a New York Times op-ed from Paul Volker, former chairman of the Federal Reserve and current chairman of the president’s Economic Recovery Advisory Board.  On the other side, there’s the anti-reform playbook put out by Frank Luntz and published on the Huffington Post today.

It’s important to look at both of these articles to see exactly how desperately reform is needed, and also to get an idea of what we consumer activists and advocates are up against.

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Posted in Consumer Financial Protection Agency | 2 Comments »

The Card Game

November 23rd, 2009 by Sally Brzozowski

Have you ever waded through pages and pages of credit card contracts in an attempt to figure out what your interest rate will be?  Have you overdrawn your account by a few cents, only to get slammed with a disproportionate fee?  Would you be upset if you purchased holiday gifts only to find your credit limit slashed and your interest rates dramatically increased?

Tomorrow night, tune in to Frontline on your local PBS channel to see “The Card Game,” and learn more about the sneaky ways that credit card companies and banks are taking advantage of consumers and preventing reform.  According to Frontline, consumers use plastic for more than 100,000 purchases a minute; at that rate, we deserve to know that we’re going to be protected from tricks and traps, but this show will illustrate just how far we are from that goal.

This show is in collaboration with a New York Times series with the same title, which we’ve blogged about many times in recent months.  Tomorrow’s show provides another way to absorb the massive amount of information out there regarding the need for financial reform.  You can watch a preview of the show below.

If you’re angry once you’ve seen the show, head over to our Action Center and tell your elected officials what you think!

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The Perils of Prepaid Debit Cards

October 8th, 2009 by Sally Brzozowski

Prepaid debit cards aren’t that different from gift cards, so they must be relatively harmless, right?  Wrong.

A recent NYT article helped shine a light on the many hidden fees associated with prepaid debit cards, and on the utter lack of regulation of these products.

The basic idea behind these prepaid debit cards is that the seller loads the card with money at the time of purchase, and then you can use the card and spend your balance until the money runs out.  The catch here is that the money may run out a lot sooner than you expected, thanks to a bewildering variety of hidden fees.  How big a problem is this?

  • * In 2008, customers loaded about $8.7 billion onto prepaid cards, more than double the amount in the preceding year.  This amount is projected to surge to $119 billion by 2012.
  • * The six cards that this article looked at would charge a customer between $38 and $75 dollars for two months of typical use, excluding any purchases.
  • * The Pay-O-Matic prepaid card come with more than two dozen fees.
  • * A Consumers’ Union survey of two dozen cards found that most major banks offer low-balance checking accounts for $10 or less a month, while the Wal-Mart money card costs $16.59 the first month and $21.54 the second.
  • * Prepaid debit cards (with all their tricks and traps) are being used in place of checks to dispense social security and welfare payments to people without checking accounts.

While all of these facts indicate the need to regulate prepaid debit cards, we at AFFIL are particularly concerned because the abuses fall primarily on those who can least afford them.  Users of prepaid debit cards generally fall into two categories: those who don’t trust the financial system, and those who don’t have enough assets to qualify for mainstream financial products.  As a result, college students, immigrants, and people with low-incomes tend to be the main users.

Our advice: avoid prepaid debit cards  whenever possible.  If you must use them, make sure you know the potential pitfalls and shop around for the most sensible deal.

(Photo: chego101)

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Easy Come, Easy Go?

September 22nd, 2009 by Sally Brzozowski

If it isn’t one thing, it’s another.  In this case, we’re talking about the seemingly arbitrary amount of time it takes for banks to process overdraft fees and to credit accounts for deposits.  An article in the New York Times earlier this month looked at the overdraft side of things, and an article this week deals with deposits.

The article does a good job of laying out the current rules concerning deposits, and includes an explanation of  common traps that catch many consumers off guard.

“Any deposit over $5,000 is automatically suspect.  If your account has been overdrawn at least six days in the last six months, then the bank can delay any deposits to your account.  If your account is less than 30 days old, then your bank gets the extra time there, too.

The large deposit exception ensnares plenty of people, according to Gail Hillebrand, senior attorney at Consumers Union.  They include those who are paid on commission or quarterly and those earning royalties, and a large number of others moving money around from, say, a brokerage account to their checking account to pay medical or tuition bills or buy a car or house.”

Rules are in place to change and update the deposit system, but in the meantime, deposit carefully and always keep a close eye on your available balance.

(Photo: teofilo)

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Student Loan Reform Vote Scheduled for Thursday

September 16th, 2009 by Sally Brzozowski

Care about student loan reform?  Write to your Representative today, before they vote tomorrow!

HR 3221, the Student Aid and Fiscal Responsibility Act of 2009, was up for House discussion today and is expected to be taken to a vote tomorrow.

If passed, HR 3221 will eliminate the FFEL Program, which involves government subsidies to private lenders making federally-guaranteed loans, and replace it with an expansion of the government’s Direct Loan Program.  This change is expected to generate $87 billion in savings over the next decade, the balance of which would be used to expand student grants, reduce interest rates on Direct Loans, and reduce the federal budget deficit.

For more information about the bill and its importance, look at our previous blog posts on the topic here and here.  You can also read about the issue in an editorial featured in today’s New York Times.

If you haven’t already done so, please write to your Representative today and ask them to support HR 3221.  Your words could make a huge difference in the fight for student loan reform.

(Photo: Michel Filion)

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Posted in Student Lending | 1 Comment »

One Year Later: Establishing a Fair Financial System

September 14th, 2009 by Sally Brzozowski

Today marks the first anniversary of the collapse of Lehman Brothers and the start of the worst financial crisis since the Great Depression.  The event had negative effects on our entire economy, and consumers still deal with the aftermath daily in the form of decreased retirement funds and hefty bank fees from banks desperate for the extra cash, and more.

President Obama spoke from Wall Street today about the need for financial reform, calling for accountability, responsibility, disclosure, and the creation of a Consumer Financial Protection Agency.  From the center of the financial collapse, the President mentioned the need to end regulator-shopping, close regulatory gaps, and eliminate contracts meant to be confusing, while noting the industry’s staunch opposition to regulation.

The New York Times quotes President Obama as saying, “instead of learning the lessons of Lehman and the crisis from which we are still recovering, they are choosing to ignore them…. They do so not just at their own peril, but at our nation’s.”

Today, it is vital that we all note the importance of establishing a fair financial system for the sake of consumers and for the American economy as a whole.  To write to your members of Congress and ask them to support Obama’s proposal to create a Consumer Financial Protection Agency, click here.

(Photo: stevegarfield)

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Australian Banks Lead the Way on Overdraft Issues

September 11th, 2009 by Jim Campen

The outrageous fees that banks charge for their overdraft “protection” loans are back in the news.  A front-page article in Wednesday’s New York Times provided an excellent in-depth expose of this exploitative practice that extracts $38 billion per year from consumers.   One interesting tidbit was the claim by a bank lobbyist that the proposed Consumer Overdraft Protection Fair Practices Act, sponsored by Rep. Carolyn Maloney, would cause up to 2,000 banks and credit unions to fail within two years – “because 45% of the nation’s banks and credit unions collect more from overdraft services [sic] than they make in profits.”

One day later, our friends at the Consumer Law and Policy blog reported that:

Banks in Australia are eliminating over-draft fees, after a proposed law limiting the charge to a “reasonable fee.” Similar to the US, Australian banks had been charging $30-35, for a service estimated to cost $1 or less.

Click here to read about the decision of National Australia Bank to drop its overdraft fees.   For our previous blogs on overdraft protection fees, start here.   And click here to view the trailer for Overdrawn!, Karney Hatch’s fine documentary on the subject, inspired by his own experiences with Wells Fargo Bank.

(Photo: jonnyr1)

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Student Beware: A lesson in avoiding predatory lending

September 9th, 2009 by Sally Brzozowski

September marks the beginning of a school year, and a new era of independence for many college students.  This year, AFFIL is asking for your help in reaching out to college students to help them avoid predatory lending, while also continuing to work toward a system of fair lending for all consumers.

Today, you can:

Student lending has been all over the news recently, with good reason.  A report in the Wall Street Journal notes an increase in the amount of money distributed through student loans and the way it effects a graduate’s ability to have a successful career, while an extensive article in the New York Times points out the dangers associated with debit cards, a popular product among young consumers.  By participating in the activities listed above, you can help ensure that the students in your life don’t get caught in a credit trap that ruins their chances to succeed.

(Photo: scui3asteveo)

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Credit limit cuts: one more reason we need a CFPA

September 3rd, 2009 by Sally Brzozowski

Thanks to the success of the Credit CARD Act this June, credit cards have become a little more consumer friendly and will continue to improve as aspects of the new laws come into place.  However, a recent New York Times article pointed out one of the many areas that the Credit CARD Act failed to cover: credit limit cuts.

The article says that the absence of regulation is the result of credit limits being excluded from the list of “significant terms” that now requires credit card issuers to provide consumers with advance notice of changes to interest rates and late fees.  The article goes on to quote one of AFFIL’s Partners:

One reason credit limits were left out of the law is that they were never among the terms previously regulated, says Ed Mierzwinski, director of the consumer program for advocacy group US PIRG…. “The lowering of credit limits has largely been post-meltdown,” said Mierzwinski. “It had not grabbed the attention of Congress until the bill was almost done.”

Research by the credit scoring company FICO shows that in the 12 months ended in April, 58 million people had the amount of available credit on their cards reduced.


For consumers, this sudden loss of credit not only has an impact on their buying power, but can also be extremely damaging to their credit score, which is calculated in part based on the amount of credit available versus the amount in use.

Consumers deserve to be protected from arbitrary and instant credit limit cuts, and Congress shouldn’t have to think of every little clause before passing a consumer protection law.  That’s why we need a Consumer Financial Protection Agency; to help us fill in the gaps, avoid drawn-out legislative process to fix vital, but minute, details, and be responsive to the concerns of consumers.  For more information about the Consumer Financial Protection Agency, click here.

(Photo: byoogle)

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Posted in Credit Cards, Credit Reporting and Scoring | No Comments »

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