WASHINGTON, D.C. - Congressional Review Act (CRA) resolutions—S.J. Res 56 and H.J. Res 122—to repeal the Consumer Financial Protection Bureau’s (CFPB or consumer bureau) payday and car title lending rule will not advance in Congress, as their legislative clock has expired. The CFPB rule, finalized in October, establishes basic consumer protections on these 300% or more interest loans, including the common sense standard that lenders should have to verify a borrower’s ability to repay before making the loan. Consumer and civil rights advocates are urging the consumer bureau to keep intact the rule, which is set to go into effect summer 2019, and to fulfill the bureau’s responsibility to enforce the law.
As written, the payday lending rule will result in fewer families falling into financial ruin. At the heart of the rule is the common sense principle of ability to repay based on a borrower’s income and expenses—which means that lenders will be required to determine whether a loan is affordable to the borrower before making it. An affordable loan is one a borrower can reasonably be expected to pay back without re-borrowing or going without the basic necessities of life – like food or rent money. In a 2017 poll of likely voters, more than 70% of Republicans, Independents, and Democrats support this idea. (PDF)
Center for Responsible Lending Senior Legislative Counsel Yana Miles released the following statement:
This is welcome news for people across the country and for constituents who reached out to their members of Congress urging them to support this important consumer protection. Payday loans trap people in a vicious cycle of debt with loans costing more than 300% annual interest. The debt trap is their business model, with 75% of loan fees going to people trapped in more than 10 loans a year. This often leads to overdraft fees, involuntary bank account closures, delayed medical care, and even bankruptcy. The consumer bureau should now focus on enforcing this rule as written and defend it against the payday lenders, who are desperately trying to block the rule from moving forward.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Ricardo Quinto at ricardo.quinto@responsiblelending.org.