One senator's plan for helping consumers weather coronavirus pandemic

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WASHINGTON — As Congress continues to debate another round of stimulus in the midst of the coronavirus pandemic, Sen. Sherrod Brown of Ohio says he is still fighting to expand financial relief for consumers.

After Congress passed the $2 trillion stimulus package known as the Coronavirus Aid, Relief, and Economic Security Act, Republicans last week attempted to push through an additional $250 billion in aid for small businesses. But their proposal didn’t include certain consumer protection measures backed by Democrats.

But Brown, the top Democrat on the Senate Banking Committee, said in an American Banker interview that he thinks Republicans could come around to supporting some of his ideas as they hear from constituents who are struggling to make ends meet during the pandemic.

Brown said people shouldn’t lose their homes during the crisis, and that they also shouldn't see their credit scores drop because they are unable to make mortgage payments.

Among the legislative proposals that Brown has introduced are a bill to prohibit lenders from reporting missed payments to credit agencies during the pandemic, a bill to temporarily ban overdraft fees and a bill to temporarily cap interest rates on consumer loans at 36%.

"I will support anything that I think can help people and help businesses stay in business," said Sen. Sherrod Brown, D-Ohio, the top Democrat on the Senate Banking Committee.

He has also proposed legislation to give all consumers a free digital wallet to receive stimulus payments, and to create a $75 billion Housing Assistance Fund to aid state-level housing finance agencies.

Brown did not rule out supporting additional measures to help financial institutions, either. The senator in the past has criticized banks for seeking regulatory relief in order to lend to consumers. But he said he “will support anything that I think can help people and help businesses stay in business.”

Below is an edited transcript of a discussion with Brown about his proposals to help consumers amid the pandemic.

What more should Congress do to protect both consumers’ credit reports and their scores as the coronavirus continues to take a heavy economic toll?

SHERROD BROWN: So all kinds of people are going to miss rent payments … delay their mortgage, pay only half their mortgage. ... They should not be dinged on their credit scores. I've talked to a number of banks who are not going to turn that information over to the credit companies. But I want to make sure that the law simply says that, that nobody gets their credit dinged to protect all of us. And that includes small business. … Everybody should be protected from the credit companies' being able to do that.

The CARES Act offers 180 days of forbearance for federally backed mortgages, and prohibits foreclosures on federally backed mortgages for 60 days. Do you think this is enough to support struggling homeowners?

It falls short, because it only applies to people that have a relationship, if you will, with the federal government in their mortgage or in their rental situation. Meaning that those people who have a … Fannie- and Freddie-backed mortgage, they're protected. But that's only about 60% of people who have mortgages.

The other situation is it only delays these payments. So if you can't be evicted or can't be foreclosed on in the next three months, but on month No. 4, when we hope the coronavirus is in the rear-view mirror … our economic problems are still with us. … So it means that we need to get direct help. [Sen. Jack Reed, D-R.I.] and I are working to get $100 billion for emergency rental assistance and $75 billion for emergency mortgage assistance for those people who have lost jobs and are facing foreclosure or eviction.

I've talked to the Republican governor of my state, I talked to him regularly. He's done a really good job on this. It really shows what experience and character mean and in a chief executive. … We need to make sure that we help those people, not just during the crisis stay in their homes, but they're prepared for later. … If we can put tens of billions of dollars in the airlines, we can put some money in to help people with what they're going to face with potential eviction or foreclosure.

Have any Republicans said they would be willing to support your legislative proposals?

I think when my Republican colleagues hear more and more from veterans, and from soldiers, and many of my Republican colleagues have major military bases in their states, I think they’re going to hear that we shouldn't be evicting people who are struggling in the military. … So I think that we will see some Republican interest in this.

I'm listening to people that are affiliated with Wright Patterson Air Force Base in Dayton — which, by the way, is home to one of the great credit unions in the country. … It makes me hopeful that we can get some real substantive help for people, including the garnishing of wages, and not being dinged with various fees and services or overdraft fees and all of that.

Some banks are hesitant to take on new customers in the Small Business Administration’s Paycheck Protection Program because they say that could trigger anti-money-laundering requirements. Would you support regulators' providing some temporary exemptions from those rules?

I will support anything that I think can help people and help businesses stay in business. I think this program was hastily put together. Of course, we had about a week or two to do all of this and to write a package. We know already there have been a lot of issues with this program. SBA and Treasury need to work with small businesses and lenders so that the relief gets out as fast as possible. ... They've not done particularly well scaling up PPP and the other small-business programs, but I will do whatever it takes to get this money out the door. I don't want lenders to put themselves out at great risk.

You have introduced legislation to create free FedAccount digital wallets for consumers. But some analysts have said that there probably isn't enough time to launch something like this. Is this something that you’re pushing over the long term?

It costs money to be poor. It costs money if you're low-income. You may not have a checking or savings account. … One of the things underpinning all that is people are unbanked. … It probably won't happen during the pandemic, but I'm hopeful that this is one of the things that comes out of this, this national tragedy of this pandemic, where thousands and thousands and thousands of Americans are dying. I'm hopeful one of the things we can do is help the unbanked get back in the way that can protect their incomes and their way of life as much as possible.

Why do you think deregulation for banks is a bad idea even during a pandemic?

Think how awful it would be if the banks, first of all … did the stock buybacks enriching the executives. Next, they do stock dividends, which, you know, help their shareholders, I understand that. Then, a month or two from now, the banks aren't quite well enough capitalized. You may come to Congress for help. Imagine if we get in that situation, what the public uproar is going to be that the banks who have been immensely profitable the last 10 years, whose executives have done very well, who did huge stock buybacks, issue dividends and then aren't ready for economic catastrophe. And that would be a sad commentary on our regulators, most of whom are Trump nominees, most of whom are, frankly, way too close to Wall Street. And that would be a disaster for our country.

How would you grade the financial regulators' overall response to the pandemic?

I think it's too early to give anybody a grade on this. The only grade I would give is the administration has been way too slow getting money out. … I'm very disappointed in [Treasury Secretary Steven Mnuchin], in the president for essentially firing … the inspector general. … We are giving trillions to the secretary of the Treasury, essentially, to put out into the economy, put out into businesses, something we all wanted to do. There is a level of mistrust.

This president more than most, has a proclivity to help his friends, to enrich his friends, enrich his family. … We had a special provision of this bill — the president may put none of this into any family businesses. … But we know that's the inclination of this president, in this secretary of the Treasury, in this government. And we need to be extremely careful in oversight and transparency, because much of America doesn't really trust this government right now. … Too often [President Trump has] betrayed Main Street. He's undermined small community bankers. He's undermined, in some cases, some of the regional banks. He's undermined workers. He's betrayed them when he continues to help his friends at the expense of other small businesses that really, really, really need help.

This article originally appeared in American Banker.
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Consumer lending Overdrafts Foreclosures Housing finance reform Coronavirus Sherrod Brown Interest rates