The Center for Responsible Lending (CRL) is a nonprofit organization that fights what has been described as “predatory” consumer lending practices. CRL won a 2012 MacArthur Award for Creative and Effective Institutions. CRL is part of the consumer financial protection movement. Newly-elected Massachusetts Senator Elizabeth Warren, a Harvard Law School professor and expert in bankruptcy law, is a leader in this movement. Warren championed the creation of the Consumer Financial Protection Bureau, established by the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama in July 2010.
Advocates for reform in consumer lending—typically with regard to mortgages, payday loans, credit cards, bank overdrafts and auto loans—often employ moral and associative logics. The moral arguments relate to notions of justice and fairness. The associative arguments focus on how predatory lending by financial institutions leads to greater financial instability in the U.S. economy as a whole.
For example, in their 2009 Overdraft Explosion report, CRL compared U.S. annual expenditures on overdraft fees with expenditures on food—fresh vegetables, fresh fruit, and cereal—and books. In doing so, they made an implicit moral argument—that working families were spending about the same amount of money or more on overdraft fees as they were on necessities such as healthy foods and books. A chart like the one above has moral and associative logics embedded in it. It is intended to make a not-so-subtle argument: American families have less to spend on healthy food and education because they’re spending so much on overdraft fees. The associative extrapolation of that argument is that Americans might be healthier as a whole if such fees were eliminated or reduced.
The consumer financial protection movement has gained momentum and recently recorded some notable victories. Many leading banks, such as Bank of America and U.S. Bank, have agreed to settlements from class action lawsuits relating to the industry practice of reordering debit card transactions to boost fees.
Check out this brief video from CRL that explains how banks boost their fees by reordering transactions in their daily account balancing: