In Rule Reversal, CFPB Gives Predatory Lenders a Pass
Below is the statement of Christine Hines, Legislative Director, National Association of Consumer Advocates
Note: The Consumer Financial Protection Bureau today released a final rule on payday, vehicle title and other high-cost loans, replacing its 2017 regulation.
In its action today the CFPB makes clear that serving payday lenders’ interests is more important than safeguarding American families from the harms of predatory payday and car-title loans. In 2017 when it released the first payday rule, the CFPB understood that high-cost loans drive borrowers into financial distress by trapping them in long-term debt at triple-digit interest rates. The rule included a common-sense requirement that lenders verify their borrowers’ ability to repay their loans. By reversing this policy, the CFPB invites and emboldens more high-cost lending and abusive collection, which often accompanies it.
There was no better time for the bureau to step up for consumers than in the middle of a global health and economic crisis, when thousands of families are vulnerable to job losses and the fragile financial situations triggered by the crisis. Unfortunately, the bureau decided instead to follow through on a dangerous plan to gut critical financial protections that these families will need. The debt trap cycle spurred by these high-cost loans likely will continue on until interest-rate caps are implemented.