Elizabeth Warren calls out banks
Elizabeth Warren showed her disgust with banks in the manner in which they handle student loan issues with those afflicted with financial problems. She provided the following story reported by CNN Money.
When his 27-year old daughter Lisa died suddenly of liver failure five years ago, Steve Mason was as devastated as any father would be.
He and his wife Darnelle immediately took in Lisa’s three children — ages 4, 7 and 9 at the time — even though they knew it would be a huge struggle to support them. Steve earns less than $75,000 per year as a pastor, while Darnelleearns even less as a directorat the same church.
Then the student loan bills started coming.
Mason had co-signed on the $100,000 in private student loans that his daughter took out for nursing school, and the lenders wanted their money.
Unable to keep up with the monthly payments on top of all of the other mounting expenses, the $100,000 balance ballooned into $200,000 as a result of late penalties and interest rates of as high as 12%.
“It’s just impossible on a pastor’s salary raising three kids to pay $2,000 a month on loans,” said Mason, who has been searching for a second job.
Elizabeth Warren grilled Richard Hunt, President and CEO of Consumer Bankers Association about the banks being inflexible in working with situations like Mr. Mason. When he attempted to use smoke and mirrors to make it appear that banks were doing something about it, Warren would have none of it.
“They have not provided adequate relief,” said Elizabeth Warren. “… And I don’t know how many other families are in these circumstances. … So far what that bank has said is no, “The banks have not forgiven those loans. They have not provided adequate relief to this family and I don’t know how many other families are in those circumstances. … There really is no substitute for bankruptcy protection. But banks went out and lobby to make sure that they were going to be exempt from the bankruptcy laws. And now they won’t even provide the modest relief that is provided on federal loans for people who end up in terrible financial circumstances. I think this is wrong.”
Full Elizabeth Warren video grilling banker here.