In the years since the collapse of the housing market and the Great Recession, many families have continued to struggle. Although most financial and housing markets have recovered, many older Americans still are unemployed or underemployed. For those who have found employment, their salary is often below what they had been making before their job loss. It is often more difficult for older Americans to recover from financial setbacks because they have less time to make up losses in income, savings, and retirement accounts.
One way families address income shortfalls is to increase their use of debt. Over the past 25 years, both the number of households led by older people who carry debt and the amount of that debt has increased sharply. This may pose a threat to families’ long-term financial security. According to data compiled by the Federal Reserve Bank of New York (FRBNY), mortgage debt accounts for approximately 72 percent of outstanding consumer debt; student loan debt accounts for 10 percent; auto loans account for 9 percent; and credit cards account for 6 percent. In 2012, 41 percent of households headed by someone 75 or older had debt, compared with 21 percent of such families in 1989. This represents the sharpest increase in the incidence of debt of any age group. Mortgage and credit card debt balances have increased sharply. Another area of increasing debt for older consumers is student loan debt. According the FRBNY Consumer Credit Panel, as of 2015 eight million Americans age 50 and older owed student loan debt. Although student loan debt is increasingly burdensome for pre-retirees, it is also increasing for people age 65 and older.
The Consumer Financial Protection Bureau (CFPB), which was created as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), enacted in 2010, is charged with ensuring that all consumers have access to markets for consumer financial products and services that are fair, transparent, and competitive. Since its creation, the CFPB has promulgated regulations in many areas, including mortgage lending, loan disclosures (“Know Before You Owe”), appraisals, debt collection, prepaid cards, and student loan servicing. To date, the CFPB has collected over one million complaints through its consumer complaint system and sought responses from the companies involved. Through its enforcement actions, the CFPB has collected $11.7 billion in fines, and over 27 million consumers have received relief.
Despite these major advances for consumers, many in the financial services industry along with their allies in Congress are attempting to roll back Dodd-Frank reforms, a number of which were designed to avert future financial crises. Many of their attacks are focused on the CFPB. By protecting the consumer, the CFPB and other federal agencies, such as the Securities and Exchange Commission and the Federal Trade Commission, seek to establish fair markets that will not only benefit consumers but also provide a secure foundation for a profitable and sustainable financial services industry.
All consumers need to be protected when they borrow, invest, or do business with a financial services company. Effective consumer protection is vital to ensuring the safety and soundness of financial markets and ultimately the US economy. Americans of all ages benefit from stable financial and housing markets as they seek to build financial security.