Release: CFPB Payday Proposal Takes Major Step Toward Protecting Families
CFPB Payday Proposal Takes Major Step Toward Protecting Families Says National People's Action
But Loopholes Dangerously Undermine Portions of the Proposal
Today, the Consumer Financial Protection Bureau (CFPB) will hold a field hearing on payday lending in Richmond, VA. At the hearing, Director Richard Cordray will unveil a new proposal to regulate the industry.
Statement from Liz Ryan Murray, policy director at National People’s Action:
“This proposal takes a major step toward protecting families and their hard-earned money,” said Liz Ryan Murray. “We are pleased to see that the CFPB’s proposed rules cover predatory lending practices in the auto title, installment and payday industries. For years, the payday lending industry has shown blatant disregard for common sense practices, including basic underwriting, and driven millions of Americans into an endless cycle of debt. Payday lenders need to follow the same standards as all other lenders and our government has a responsibility to ensure that everyday Americans have access to good credit.”
“But while the CFPB’s proposal includes several necessary provisions for short and longer term small dollar credit, it’s riddled with loopholes. One major set of loopholes for short-term payday loans would allow predatory lenders, who have a track record of abuse and evasion, to essentially choose how to be regulated. This combined with an option that allows up to three back-to-back triple-digit interest, no underwriting standard loans, are loopholes more than large enough for predators to waltz through."
"On the longer-term, installment loan portion, once again the CFPB proposal to leaves too much to the discretion of lenders who evade and abuse. The CFPB must demand lenders ensure a true ability to repay at all stages of the process -- both with strong underwriting standards before originating the loan and with fair terms for the loan itself. The rule should not rely on a random income percentage, which may not reflect the reality of any individual’s actual financial needs, as a key metric for repayment."
“The CFPB must remove these loopholes and require that every lender both prevent and protect borrowers from abusive lending practices and do so from the first loan originated.”
To talk with National People’s action about the proposed payday lending regulations, contact Alec Saslow at Alec@FitzGibbonmedia.com or 720.319.4948.
National People’s Action is a network of 27 grassroots organizations in 18 states, with 85,000 individual members working together to advance a racial and economic justice agenda for a new economy and true democracy.