CRL in the News
Even without Cordray at the helm, the problem that confronts Hunt and his frenemies running other financial industry trade associations is that the CFPB is simply too popular to eliminate. A 2017 poll by Americans for Financial Reform and the Center for Responsible Lending showed that 78 percent of likely voters believe we need tough rules and enforcement to prevent another financial crisis.
While taxes and Russia were dominating the headlines, President Trump quietly signed a bill into law that severely weakens America’s consumers—all 325 million of us. This law lets financial companies block consumers from going to court when those companies illegally take money away from them. Instead, consumers are forced into arbitration, a process rigged against them with little chance for compensation. Big banks, credit card companies, and payday lenders received a “get-out-of-jail-free” card.
Warner’s bill has drawn opposition from consumer groups including Americans for Financial Reform, the Center for Responsible Lending and the Consumer Federation of America, along with civil rights organizations including the NAACP and the Southern Poverty Law Center.
“Payday loans are debt traps by design with interest rates averaging 300 percent,” Standaert said. “These small loans cause big problems for low-income people all across the country.” The CFSAA did not immediately respond to a request for comment. A Trump Organization spokeswoman did not immediately respond to a request for comment.
With deceitful practices like opening unauthorized bank accounts, reordering debit card transitions to maximize overdraft fees and forced arbitrations clauses, what we need now more than ever are safeguards in place that stop banks from taking advantage of those who entrust banks with their hard-earned money. The OCC announcement to roll back the bank payday guidance moves us backward instead of forward.
On the other side, Center for Responsible Lending Senior Policy Counsel Melissa Stegman said, “President Trump just handed a get-out-of-jail-free card to financial fraudsters. This unjust law enables companies to block group lawsuits by consumers, thus removing an indispensable check on corporate misconduct. Instead, this law lets companies force consumers into a secret arbitration system rigged against them – discouraging claims and allowing companies like Wells Fargo and Equifax to hide widespread consumer abuse,” said Stegman.
If the CFPB’s rules had gone into effect, companies like Wells Fargo, JPMorgan Chase, Citigroup and Equifax would have been exposed to billions of dollars in lawsuits for future bad behavior. The Center for Responsible Lending estimates the U.S. banking customers paid $14 billion dollars in overdraft fee last year, and the industry has gotten in trouble in the past for shady tactics like transaction reordering, where a bank would reorder a day’s debits and withdrawals to extract the most overdraft fee income from its customers that day.
"Senators who voted in favor of this resolution just handed a gift to bad financial actors," said Melissa Stegman, senior policy counsel at the Center for Responsible Lending. "Companies, like Wells Fargo and Equifax, frequently bury forced arbitration clauses in the fine print of agreements, giving them the ability to cheat consumers with impunity. These rip-off clauses deny Americans the freedom to seek justice through our court system – a right embodied by the Constitution's Seventh Amendment."
“Companies, like Wells Fargo and Equifax, frequently bury forced arbitration clauses in the fine print of agreements, giving them the ability to cheat consumers with impunity,” said Melissa Stegman, Center for Responsible Lending senior policy counsel. “These rip-off clauses deny Americans the freedom to seek justice through our court system – a right embodied by the Constitution's Seventh Amendment.”
“These are exploding loans that are really causing a lot of damage,” Michael Calhoun of the Center for Responsible Lending. Michael Calhoun with the Center for Responsible lending says the loans target people with poor credit and snare them in an endless cycle of interest payments.