CRL in the News
“Subterfuge is as core to the payday lenders’ business model as is trapping borrowers in a cycle of debt,” said Diane Standaert, director of state policy at the Center for Responsible Lending. In late September, American Banker sent screenshots of payday ads found on Google to the Mountain View, Calif.-based company. After an internal review, a Google spokeswoman said that the ads in question violated the company’s policy.
Mike Calhoun, the president of the Center for Responsible Lending, said he was skeptical of claims that regulations stifle the economy, pointing to high profits and substantial share buybacks by banks as evidence that the institutions are “awash in cash these days.”
The new rules proposed by the Consumer Finance Protection Bureau are expected to require lenders to verify key information from prospective borrowers, such as their income, borrowing history and whether they can afford the loan payments. The bureau released a draft of the rules last year for comment and is expected to release the final version this month.
“Payday lenders depend on keeping people trapped in loans charging 400 percent interest. Congress just voted to give payday lenders a free pass, showing how out of touch they are with their constituents,” Center for Responsible Lending executive vice president Diane Standaert said. “This vote came despite the fact that 73 percent of likely voters support protections against the harm of the payday debt trap. While these Congress members are failing their constituents, the Consumer Financial Protection Bureau is working to stop the harmful debt trap of payday loans.”
Advocates at a forum hosted by the Center for Responsible Lending spoke of challenges that minority borrowers face. While fintech has some promise, there is no easy solution.
On the other hand, when someone is released from prison and given a prepaid card, that person’s identity is already established. Forcing that person to sit on hold or go to a website to register the card makes no sense, and we pointed this out in comments we filed this week with the CFPB. Our concerns were echoed in a comment submitted jointly by the Americans for Financial Reform, the Center for Responsible Lending, the Center for Digital Democracy, Consumers Union, the policy and mobilization arm of Consumer Reports, the National Consumer Law Center, U.S.
“The CFPB was making tremendous progress catching up on several decades of neglect for consumer protections and it was improving financial markets in important ways,” said Michael Calhoun, president of the Center for Responsible Lending. “There’s certainly a large risk that parts of that will be rolled back and that progress will be slowed or stopped — and that’s a huge loss.”
The American Dream offers each new generation the opportunity to build on the successes of previous ones. However, if you are African-American, the nation’s history of enslavement and legal bigotry consistently requires each generation to start anew. Inclusive admissions in our nation’s colleges and universities level the playing field for those who would otherwise be denied a point of entry.
Until 2013, a handful of banks were siphoning millions of dollars annually from customer accounts through “direct deposit advance” — products that carried average annualized interest rates of up to 300%. Like storefront payday loans, deposit advance was marketed as an occasional bridge to a consumer’s next payday. But also like storefront payday loans, these bank products trapped borrowers in long-term, debilitating debt.
Financial institutions charge large fees when a customer’s checking account doesn’t have enough money for a purchase but the bank pays the transaction anyway. Instead of declining the transaction, as many customers expect banks would, the bank often “covers” the amount and adds a fee, typically as high as $35. This practice is particularly egregious on debit card transactions, which the bank could easily decline at the point of sale, which would result in the consumer’s paying no fee at all.