A new survey finds broad bipartisan support for strong financial reform among senior citizens.
The survey, commissioned by AARP and released on Monday, asked 815 people above age 50 a variety of questions related to consumer financial protection.
More than 90 percent of all respondents "strongly" favored requiring banks to explain the terms and conditions of loans -- including mortgage and credit cards -- in plain language people can understand; and two-thirds favored allowing states to enact consumer protection measures that are stronger than federal rules. Although this last point is strongly opposed by Republicans and the big banks, 68 percent of Republican seniors support it, the survey says.
"Older Americans, whose retirement nest eggs were decimated by the failure of an outdated and compromised financial regulatory system, overwhelmingly say they want reform," Nancy LeaMond, executive vice president at AARP, said in a statement. Older Americans "want clear information so they can make better, more informed decisions and greater transparency about the financial products available to them."
Among the reform measures AARP has called for is an independent consumer-focused financial protection agency to protect consumers from predatory lenders. The House of Representatives passed a bill in December creating such an agency, though its fate in the Senate is up in the air.
"This survey further shows that Americans 50+, hit hardest by the economic downturn and facing depleted retirement accounts, are looking to the Senate to pass financial reforms that will protect their retirement security," AARP said in a statement.
Americans for Financial Reform, a coalition of consumer, labor, civil rights and liberal advocacy groups that's fighting for strong financial reform, welcomed the results of the survey.
"It's similar to a lot of the polling we've seen in that this issue has nothing to do with right or left," the group's spokesman, Lauren Weiner, wrote in an e-mail. "This is particularly true with seniors who witnessed first-hand what it's like to see their savings, which they had long depended on providing a cushion for retirement, just slip away because of reckless behavior from the big banks."
"Additionally, we see that clarity of financial products -- clearly explaining fees and disclosing risking in plain English -- was especially popular with those over 50, which comes as no surprise. Many are on a budget and can scarcely afford to put their money anywhere that could be especially risky.
"Of course, none of this was a consideration of those on Wall Street who were all too willing to gamble with our money and savings."
Scott E. Talbott, senior vice president of government affairs for the Financial Services Roundtable, an advocacy group for the nation's biggest financial services firms, said he agrees with some of the survey's results.
Regarding seniors' desire for "plain language" disclosures, Talbott said the group "absolutely" supports "simple, clear, concise and understandable disclosures...for all the products we sell."
"Here's the reality," Talbott said. "The fate of the institutions and the fate of the customers are inextricably linked. There's a joint responsibility between lenders and consumers to understand the terms of agreement they're entering into. Anything we can do to strengthen that agreement, to fulfill our end of the responsibility, we're for."
The hang-up, said Talbott, lies with federal laws and regulations.
Lenders support plain language disclosures "as much as the law would allow," Talbott said. The problem is current law requires certain disclosures that often are complicated, he said.
According to Talbott, if lenders were to simply state the terms of their loans using plain language, they "might be in violation of the law" due to required federal disclosures.
"But we're willing to work with regulators and lawmakers," Talbott said.
As for lenders selling credit products that aren't suitable for borrowers, Talbott said that financial services firms are looking to improve their image in that regard by moving towards a model that calls for lenders to determine a borrower's ability to repay the debt before approving the loan, so that fewer borrowers would be duped into taking out loans they're not qualified for.
That was largely missing during the boom years, as banks and other lenders often made loans without verifying a borrower's income, for instance, or in some cases outright falsified borrowers' income.
"There were times in the past that products were not suitable" for borrowers, Talbott said. "Yes, we agree" with the survey's results, he said, though Talbott added that "any group that you ask would probably have a similar response rate."