Background On the Presidents Meeting And Events On Regulatory Reform Today

The President will meet in the Roosevelt Room with five Americans who represent the millions from across the country who have been hurt by the outdated rules regulating the financial sector. He will deliver brief prepared remarks in the East Room calling on Americans to stand up to the opponents of a new Consumer Financial Protection Agency (CFPA) and urging Congress to act quickly in passing a regulatory reform package by the end of the year. The audience will be composed of approximately 150 members of Congress, state attorneys general, business leaders, regulators, representatives from consumer agencies and community leaders.

Below are the bios of the five Americans the President will meet with before the event.  Patricia Nelson will introduce the President in the East Room.

Karen Cappuccio (age 31) is a Transportation Security Association supervisor at Lehigh Valley Airport.  When she refinanced in November 2006, the broker promised her a low fixed rate loan but instead gave her two more expensive loans-a large adjustable rate first loan and a second smaller loan.  Her lender altered her asset and income information.  These techniques were often used by brokers to qualify borrowers for higher loan amounts than they could otherwise qualify for.

The broker subjected her to a late-night closing and did not give her the closing documents at the time of closing.  She sued and won a jury verdict for violations of Pennsylvania's Unfair Trade Practices Act. 

The CFPA would have the mandate to design clear and simple mortgage disclosures so that borrowers can know exactly what loans they are getting.  The CFPA could also restrict coercive sales tactics.

Susan Chapman (age 52) had an excellent payment history until she was contacted by a mortgage broker who promised to lower her monthly payments by $400 by refinancing.  Though she explicitly told him that she did not want an interest-only loan, she nonetheless received an Option ARM that has raised her principal balance by $20,000.

The CFPA would have the mandate to require mortgage disclosures that are clear and simple and highlight key risks so people have the information they need to make sound financial decisions.  The Agency could also require mortgage brokers take reasonable care with the advice they give and the loans they offer and for the lender make sure the borrower can afford the higher Option ARM payments when the loan starts paying down the increased principal balance.

Andrew Giordano (age 61) is a retired Baltimore police officer and Vietnam veteran who manages a fitness center for seniors. As a wounded veteran, he receives a monthly government check of $123, which he keeps in a separate "veteran's account"-not his primary checking account.    Last summer, he lost the ATM card for the veteran’s account and called his bank to cancel it and order a new one.
To avoid mixing up his cards, he had used a card with a special logo on it and he requested the same logo on his replacement card.  Instead, the bank sent him a plain bank debit card, which he thought was for his primary account.  For the next two weeks, he used the plain card for regular expenses and quickly overdrew the small amount that was typically in his veteran's account. 

The bank had automatically enrolled him in "overdraft protection" even though he had never asked for this service on his veteran’s account. Further, he did not learn about the overdrafts until his next statement, so the account ended up $1,400 in the red, with $814 of that due to 22 overdraft fees of $37 each.  When he discovered the bank's error and explained the situation, the bank was only willing to refund part of the fees. 

The CFPA would be able to set clear rules on disclosure of overdraft fees and give consumers a real choice as to whether to join expensive overdraft programs.
 
4) Maxine Given (Baltimore, MD)

Maxine Given (age 44) was charged $148 in overdraft fees in April 2008.  Most of the fees resulted from her bank's reordering of her withdrawals that took place on the same day from largest to smallest (instead of chronological order).  The overdraft was caused by a mortgage check that the bank rejected the very next day.  This caused a cascade of $37 overdraft fees on three purchases from the same day, including a $37 fee based on $12.08 debit charge for lunch.  She even tried to transfer money from savings, but the transfer was counted too late.

The CFPA would be able to give consumers a real choice as to whether to join expensive overdraft programs.

Patricia Nelson (age 64) is a retired nursing home aid. Her only income is a $783 monthly disability check.  In December 2007, because she had developed health problems, she borrowed $550 from payday lenders to pay to move closer to her daughters.  She could barely afford the monthly interest payments and rolled the loans over 22 times.  She had paid over $2,700 in interest and not one penny towards the principal when a "good Samaritan" paid off the loans.

The CFPA would be able to design clear disclosures of the costs of payday loans and stop abusive payday practices.