REMARKS
Julie Menin, Chair of the Committee on Consumer and Worker Protection, on access to credit and consumer protection
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3 min
Council Member Julie Menin emphasizes the critical role of access to credit in achieving economic opportunity and wealth building, while warning against predatory lending practices.
- Menin details how loans, like mortgages and business loans, can be beneficial for New Yorkers building assets and pursuing dreams.
- She highlights the dangers of predatory lending and discriminatory practices that trap low-income and marginalized individuals in debt.
- The council member points to legislation aimed at ensuring equal access to credit and protecting consumers, yet acknowledges ongoing challenges.
- Menin stresses the importance of action against deceptive practices in lending and calls for further efforts to educate and protect consumers.
- The statement concludes with gratitude towards her team for organizing the hearing and a handover to Public Advocate Jumaane Williams.
Julie Menin
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Thank you so much, Chair Williams, it's a pleasure to cochair this here with you.
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Welcome, everyone.
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I'm Julie Menon, Chair of the Committee on Consumer And Worker Protection.
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Access to credit is a very important vehicle for individuals to access both economic opportunity and to build wealth.
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By taking on a mortgage to purchase a home, families build equity in an asset and maintain stable housing.
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By taking out a business loan, New Yorkers without deep pockets or connections can realize their dream of starting a business.
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And by securing an auto loan to buy a car, workers can expand the jobs that are available to them.
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While loans can be engines of Trinity, deceptive and unfair practices can turn them into debt traps for low income New Yorkers.
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Predatory lenders target vulnerable individuals with loans that have high interest rates and hidden fees, making it difficult for borrowers to pay them back, and debt collectors may harass borrowers or make false claims to coerce them and to making payments.
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In response to these dynamics, the city council has enacted legislation to ensure equal access to credit and protect consumers from unfair practices in lending and debt collection.
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The New York City Human Rights Law prohibits discrimination in mortgages and loans, and the consumer protection law forbids all deceptive or unconscionable trade practices around both lending and debt collection.
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However, marginalized groups in New York City still face discriminatory practices when trying to access credit.
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As counsel member Williams mentioned, an analysis published by the New York State Attorney General's Office in October found that applicants of color are denied mortgages at higher rates than white applicants even when controlling for factors such as credit score, income, and size of the loan.
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The report also found that people of color who are approved for home mortgage loans are given worse terms than their white counterparts with higher interest costs and fees.
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And there remain bad actors at prey on financially vulnerable consumers to get them into loans.
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Just last month, DCWP announced an agreement that will deliver $1,500,000 in relief to New Yorkers harm by 6 used car dealerships.
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Deceptive sales practices, including forcing consumers into financing deals and providing false information to financial organization to secure loans.
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And back in 2014 when I served as commissioner of DCWP, we heard reports of New Yorkers receiving predatory auto loans from used car dealerships.
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People will be pushed into new products that would drive up the cost of the loan.
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As a result as commissioner, I oversaw a program that would have reputable banks and credit unions provide direct loans consumers, particularly low income consumers.
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There were several requirements to this, including interest rates that were lower than the usury rate of 16%.
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And no required add ons.
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The agency played a key role in ensuring consumers had a fair and safe loan to excess.
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After decades of exclusion from my financial institutions, it's critical that people of color, immigrants, and low income New Yorkers are able to access credit.
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But not under conditions that jeopardize the benefits of access.
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I look forward to hearing from the administration regarding their efforts to educate consumers about their rights and enforce the city's human rights and consumer protection law around lending and debt collection.
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I want to thank committee staff Sarah Swain, Natalie Meltster, for their work in putting this hearing together as well as my chief of staff, Jonathan Shut, and my legislative director, Brandon Jordan, for their assistance.
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And now I'm going to turn it over to the public advocate, Jamani Williams, for his statement.