Economic Growth, Regulatory Relief, and Consumer Protection Act--Motion

Floor Speech

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Ms. WARREN. Mr. President, this week we are considering a bill to roll back the rules on some of the biggest banks in the country. Over the course of this week, I am going to be spending a lot of time on the Senate floor talking about the problems with this bill and how it threatens working families and American taxpayers, but I want to start by looking back to 2008 and the reason we have these rules in the first place.

Ten years ago next week, Americans started holding our breaths. For years, financial institutions had been riding high, selling dangerous products to consumers, and making risky bets. All the while, Washington looked the other way, cozying up to big banks, loosening rules left and right, and shrugging off rules they couldn't get rid of. And no wonder--the revolving door was spinning like crazy. Bank officials became regulators and then went back to the banks, getting richer and richer. Bank profits were sky high and getting higher.

But business built on scams and hype can't grow forever. Ten years ago this month, Bear Stearns, an 85-year-old institution on Wall Street, went belly up because of $46 billion in scam mortgages and other questionable investments on its books. The failure gave the rest of the world a glimpse of Wall Street's addiction to risky bets. The disease spread. It turned out that a lot of other banks had invested heavily in scam mortgages too. Investors panicked, sending the markets into a nosedive.

When the American economy fell off a cliff in 2008, American families got crushed. Almost 9 million people lost their jobs. Workers lost $2.6 trillion from their retirement accounts--about 25 percent of their savings for someone who had been working for 20 years. In 2008 alone, foreclosures spiked 81 percent, and 3.1 million notices went out to homeowners across the country telling them they would lose their homes. In a single year, 1 out of 54 homes in the United States was in foreclosure.

Behind those enormous numbers were real people and real families whose lives were shaken up and turned upside down, little kids who worried about where they were going to live, and bigger kids who worried about whether they would lose their chance to go to college.

I know that feeling. I lived in Oklahoma City, and my folks had picked out our house because it was right inside the boundary line of what my mother believed was the best school district in the county. Our lives seemed to be on track right up until the day my daddy had a heart attack, and then it all started sliding sideways. He was out of work for a very long time.

My mother usually picked me up from school in our bronze, two-toned station wagon, and one day she showed up driving the old, off-white Studebaker that daddy had been driving back and forth to work. As I climbed into the car, I asked where our station wagon was.

It is gone.

Gone where?

Gone.

I just kept pushing. My mother was staring straight ahead, fingers tight on the steering wheel, and after one more ``Where?'' from me, she answered in a low voice: We couldn't pay. They took it.

The house was next in line. My family was right on the brink of foreclosure when my mom put on her best dress, walked into the Sears, and landed a minimum-wage job. But that feeling--the feeling of being on the brink, the feeling of no security, nothing under your feet--is a feeling no family in this country should have, especially not have it because Congress decided it was OK to let the big banks gamble with the economy again. Yet here we are, on the verge of making the same mistake Congress has made so many times before.

The banks don't want you to know what is in this bill because if you did know, you would fight back. It was written by Senators in back rooms and jammed through the Banking Committee, where its authors voted down every single amendment, every single idea to make the bill even one smidgen better or protect consumers just one tiny bit more. They voted against every amendment, even if they agreed with it, because Republicans and Democrats had locked arms to do the bidding of the big banks.

There is a lot of dangerous stuff in this bill. Today I want to focus on the harm it will do to America's consumers, but I will start with what is not in the bill because what is not in the bill should make Congress ashamed. Strong consumer protections--that is what is not in this bill. Banks get their wish list, but consumers get next to nothing. This bill is called the Economic Growth, Regulatory Relief, and Consumer Protection Act, but in all 148 pages, there are only a few watered-down provisions to help consumers.

Equifax loses data for nearly half of all adults in America, lies about it, and this Congress, these Senators, still can't manage to pass a bill with some teeth in it to hold the company accountable. That says it all.

This bill was written by big banks to help big banks. It is not a bill to help American families who are still getting cheated by the companies that make huge profits off them.

What is actually in this bill? Start with the first part of the bill, section 101, ``Improving Consumer Access to Mortgage Credit.'' When you get a mortgage, usually your lender spends some time combing through your financial records to make sure you can repay the loan. That is good. American families don't want to take out loans they can't afford, and banks don't want to make loans that can't be repaid.

Before the financial crisis, that whole process went haywire. Lenders were making crazy loans with balloon payments and exotic features that consumers didn't understand. Lenders didn't care if their customers could repay. Why? Because they got their fees up front and then sold the loans to distant investors, and the original lender was long gone before the homeowner got in trouble. But the families were stuck. Eventually, the payments skyrocketed, and homeowners who couldn't keep up defaulted and lost their homes.

After the crisis, Congress changed the rules. They told lenders that they had to start underwriting their loans again to protect consumers and the economy. But that takes time and money, so Congress told the Consumer Financial Protection Bureau to write a rule that says that there is no need to investigate if the lender knows that it is issuing a super-safe, boring, plain-vanilla loan. OK. That sounds reasonable. But section 101 of this bill is not reasonable. It takes the CFPB rule and stretches it in all directions, tearing open big, dangerous loopholes. This bill that is on the floor says: Banks, have some fun out there. It says: Bring back the greatest hits of the financial crisis housing scams. Scoop up profits on the front end, and leave families holding the bag on the back end.

I understand breaks for banks that make straightforward loans, but these loans in this bill are too risky and they come at a bad time. Rising interest rates mean that exotic products like adjustable rate mortgages are starting to make a comeback. Bank lobbyists are dragging us back to the bad old days when banks had free reign to scam their customers.

Here is another section. Section 104 makes it harder to enforce anti- discrimination laws by telling loads of institutions that they don't have to comply with a law called the Home Mortgage Disclosure Act, or HMDA. HMDA requires most financial institutions to tell the public and the CFPB who they are lending to and at what rates and what terms. Regulators and law enforcement then use that data to make sure that American families don't have a harder time getting one of those loans because of who they are or where they come from.

This bill takes a sledgehammer to HMDA by exempting 85 percent of banks from reporting HMDA data. If this bill passes, there will be entire communities in America where there will be no data whatsoever, which means there will be no ability to monitor whether people are getting cheated because of their race or their gender.

Once again, this couldn't come at a worse time. Lending discrimination is real. A new, comprehensive report that looked at housing markets all across the country just came out from the Center for Investigative Reporting and Reveal, and its findings should make us all sick to our stomachs.

In 2015 and 2016, nearly two-thirds of mortgage lenders denied loans to people of color at higher rates than for White people. According to Reveal, in the Washington metro area, ``in 2016, Native American applicants were 2.3 times as likely to be denied a conventional home mortgage as white applicants. For black applicants, it was 2.2 times as likely. For Latino applicants, it was 1.9 times as likely. For Asian applicants, it was 1.6 times as likely.

The Reveal report showed that this problem happens in giant banks and also in small banks.

Here is the thing: None of that analysis--none of it--would have been possible without HMDA data from big institutions and small ones. Without the data, we would all be sitting in the dark, wondering if maybe some mortgage lenders discriminated against African Americans or women or Native Americans, but we wouldn't have any way to know. That means we wouldn't have any way to change it if it was happening. Gutting HMDA allows us--actually forces us--to look the other way when discrimination happens, and that is disgraceful.

There is one more section in this bill that really hurts consumers; that is, section 107, ``Protecting Access to Manufactured Homes.'' Eighteen million Americans live in manufactured homes. Many are low- income, elderly, or disabled. It is a good option for many Americans, especially in rural areas, but it is very important to make sure buyers don't get scammed.

Under today's law, mortgage lenders cannot steer a borrower toward a higher cost loan so the lender can get a kickback. That is the law today but not if this bill passes. Instead, the rules for mobile home lenders will be weaker rules, and that means it will be much easier to cheat buyers of mobile homes.

Congress imposed strict requirements on loan originators because Congress knew most of us don't buy a lot of homes in our lifetime, and we rely on the people helping us through the process to tell it straight. Owners of mobile homes deserve the same protection as people who buy brick-and-mortar homes. They need that protection.

Abusive lending practices are rampant in the manufactured housing industry. In 2015, the Seattle Times wrote about Kirk and Patricia Ackley in Ephrata, WA. Kirk worked construction, and Patricia worked at Walmart. They had already bought the foundation for their new mobile home when they sat down to close on their mortgage. What happened at closing? Surprise. The interest rate was higher than they had been told, and the payments were larger than they could afford. The mortgage broker then convinced them to go ahead and sign up anyway, promising that they could refinance that loan later on.

You can probably guess the end of the story. The Ackleys signed, the lender wouldn't refinance, they lost all the money they had put in up front, and they lost their home. It turns out that the homebuilder, the dealer, and the mortgage lender--all three of them--were owned by one company, Clayton Homes. All the incentives were to push the Ackleys into a loan they couldn't afford because Clayton got the purchase price, the commissions, and the fees, and they got the mobile home back again. No one was looking out for the Ackleys.

The backers of this bill say that this provision will help small lenders, but the truth is that manufactured home lending is mostly done by giant lenders like Clayton. In fact, in 2013, Clayton alone--one company--provided 39 percent of mobile home loans. Savings from rolling back these consumer protections would go right out of the pockets of working families like the Ackleys and right into the pockets of dealers like Clayton.

The Ackleys' story is not unique. I wish it were. These same problems happen all over the country, and they are exacerbated by the special characteristics of mobile homes. The lifespan of a manufactured home is shorter than a traditional home. That means the purchaser may not be able to take out equity by reselling it.

A woman from Oklahoma told the CFPB:

I was given a loan for a single width mobile home through [a mortgage company]. They switched it to Green Tree and next to Ditech. The home started deteriorating in 10 years and is now unsafe to live in, as I have had electrical problems and many of the pipes are broken where the bathtub and faucets in the master bathroom are not functioning. The floor under the shower has completely caved in, windows are crooked and allow flies to get into the house in warm weather. Most of the floors have buckled under the legs of furniture, and the rain has caused the areas around the windows to buckle. Walls are little more than cardboard. I believe the flooring is waferboard and unfit for floor foundation.

When I tried to trade this [model], the dealer [] told me he couldn't because the house is worth much less than what I owe and that this sounded like a Predatory Mortgage Loan. He said that mobile homes do not have 30 year mortgages because they don't last that long. He said my loan should have been a 15 year loan at the most. Also, right before Ditech took the predatory loan over, they added about {$100.00} to my monthly payments, which went from {$360.00} to {$460.00} a month. Ditech claims the {$100.00} is for insurance; however, as of yet they have repaired nothing, although I have made several claims.

I was also told I should complain because when they put the mobile home on my property, they did not put it on a cement foundation and instead put it on the ground, which has caused the home to sink.

This bill is designed to make it easier for the lender/dealer to squeeze people like this woman from Oklahoma.

This bill is a punch in the gut to American consumers. If it passes, it will be harder to police banks that sell abusive mortgages, harder to police lenders who discriminate against their customers, and harder to police giant monopolies that build, sell, and offer financing to mobile home buyers. Only a bunch of bank lobbyists and their friends in Washington would call this a consumer protection bill.

American families weren't in the back room when this bill was written. They don't have millions of dollars in campaign cash to get Senators' attention. They don't keep an army of lobbyists on their payroll. No. American families are busy going to work, helping the kids with homework, and trying to catch up on a thousand things. They are trying to pay off student loans or maybe save a little for their own kids to go to college. Some are trying to put aside a few bucks for a mortgage so they can buy a home. They trust us to stand up for them and make sure they have a fair shot at home ownership, at the American dream. They trust us to make sure we are not turning over the keys to our economy to the same people who crashed it 10 years ago and ran over a bunch of American families on the way.

I know we are outnumbered, but this fight isn't over. Make no mistake--I am going to do whatever I can to convince enough other Senators that this is a bad deal for American families and a dangerous one. I will push and I will tug and I will talk to anyone who will listen about how this bill will hurt the people we were sent here to represent. And maybe, just maybe, for once, the Senate will start listening to voters instead of donors.

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