It's well known that seniors are easy prey for scam artists of every kind. What is less well-known is how big this problem is and how many of the scam artists wear suits and work for major financial service firms. Seniors were major targets of mortgage brokers seeking to push homeowners into subprime loans and win higher commissions. Seniors also get exploited by investment advisors pushing lousy annuity policies and other dubious financial products.
That is why it is great to see the new Office of Older Americans at the Consumer Financial Protection Bureau up and running. Early this summer, the CFPB put out a study on reverse mortgages, a major way that seniors get screwed financially. (And can screw themselves, according to the CFPB.)
The Office of Older Americans also recently put out a call for proposals to further study senior financial abuse and help the CFPB figure out ways to protect these vulnerable Americans.
Protecting seniors is not just a regulatory issue, it's a law enforcement issue. Like many financial crimes, scams involving seniors often don't result in punishment -- whether it's an abusive reverse mortgage or something more clearly criminal, like a fraudulent sweepstakes scam. That's because, as I have often noted, our criminal justice system tends to focus disproportionate resources on street crimes, particularly drugs, and ends up giving white-collar crooks -- who are harder to catch -- a free pass.
We're not talking about a small problem here. A recent MetLife study estimated that seniors lost $2.9 billion to financial abuses in 2010 -- and that's just the most flagrant kinds of abuses.
One reason that seniors are so vulnerable is that their cognitive abilities decline with aging, making them less able to smell what's fishy.
A test of humane society is how much protection it offers to its most vulnerable citizens. The United States has generally flunked this test when it comes to seniors. Millions of seniors still live in or near poverty, and their financial vulnerabilities are compounded by exploitation. Now the CFPB wants to change that.
When Governor Romney promises to repeal Dodd-Frank, and dismantle the CFPB, one question he should answer is whether he really wants to leave seniors with a big bullseye on their backs.