On One-Year Anniversary of Payday Rule, Congress Hard at Work Protecting Payday Lenders
Meanwhile, Hoosiers continue to see $70 million in fees drained by payday stores
FOR IMMEDIATE RELEASE:
June 2, 2017
Contact: Kelsey Clayton, Indiana Assets & Opportunity Network Manager
June 2, 2017 – One year ago today, the Consumer Financial Protection Bureau (CFPB) issued a draft rule aimed at reining in the worst abuses of payday, car title and other high-cost debt trap lending schemes. While these protections are sorely needed in Indiana, where such loans carry APRs reaching 391 percent and many borrowers become trapped in a cycle of debt, Congress is actively working to protect payday lenders.
Specifically, the U.S. House of Representatives will soon vote on the so-called Financial CHOICE Act, which would essentially undo all of the consumer protections put in place after the Great Recession and bank bailout.
This bill, among other things, specifically bars the CFPB from regulating payday and car title lenders. This means the draft payday rule – which requires lenders to assess a borrower’s ability to repay a loan before making one – would never go into effect, and the Bureau would be barred from enforcing existing laws.
“We are actively working to make sure Hoosiers have access to safe and affordable products that help them build wealth, not drain it,” said Kelsey Clayton, Manager of the Indiana Assets & Opportunity Network. “This bill undermines those efforts by blocking common sense safeguards and barring any enforcement actions.”
Since its inception, the CFPB has used its authority to enforce existing laws to return to 29 million consumers, $11.8 billion from financial companies that broke to the law. Most recently, it helped Hoosiers who were harmed by online payday lenders.
In addition to special protections for payday lenders, the House bill removes the Consumer Bureau’s authority to stop other financial services businesses, like credit card companies and mortgage brokers, from pushing abusive products on their customers or tricking them into paying for things they can’t use, don’t want and don’t need.
Among the other distressing components of the House bill are its repeal of the fiduciary rule to require investment advisers to act in the best interest of their clients which would help Hoosiers save an additional $259 billion a year for retirement, and its increase to loan fees allowed for manufactured home purchases.