CRL in the News

One clear lesson from the financial crisis is that common-sense rules of the road in our financial markets would have prevented the damage. It may seem amazing now that banking regulators would have to pass rules requiring lenders to make sure borrowers could actually repay mortgage loans, but that was the case only seven years ago.

The non-partisan Center for Responsible Lending says the debt burden falls on low-income, female and minority students who disproportionately enroll at Maine for-profit schools. About 75 percent of students at such institutions take on student loans, compared with 66 percent and 41 percent, respectively, at private and public institutions.

Maine students attending private, for-profit colleges are quicker to borrow and slower to repay their student loans when compared to the their counterparts across the country, according to the Center for Responsible Lending.

Diane Standaert is with the Center for Responsible Lending. That group has heard from borrowers that title pawn employees often don't offer up details about the length or cost of the loans. Standaert said federal regulators have been working to change that.

Yet banks are very much involved in the lives of the unbankable. They securitize and sell payday loan and car title loan debt. Title loans take the borrower’s car as collateral—when the note comes due the borrower can either re-borrow, pay fees or lose the car. Combined, these two loan types drain over $8 billion a year from consumers, said Diane Standaert, executive vice president and director of state policy at the Center for Responsible Lending. The average costs hit a 300 percent annual percentage rate. “Both types of loans are structured to keep borrowers stuck in long-term debt. The trap

For Wells Fargo to truly fix itself, it needs to step up oversight of all of its businesses, said Michael Calhoun, president of the Center for Responsible Lending in Washington. “The test for the company is whether they can create products that benefits consumers and helps the bottom line,” Calhoun said.

“We are concerned with models that result in higher pricing for moderate-income families and worse pricing for small lenders like community banks,” Mr. Calhoun said. The critical issues in any reform of Fannie and Freddie, he added, were “who pays, and how much.”

Mike Calhoun, the president of the Center for Responsible Lending, told BuzzFeed News that the record levels of credit card debt shows that financial regulations introduced after the 2008 crisis did not kill the market for consumer lending, as the industry and some government officials believed they would.

You may have finally found the perfect automobile. It is the make and model you want, with the right options, and even the right color. Now comes closing the deal on it. If you’re not flush with cash—in other words, you seek a loan—it’s important to know what you’re up against.

On March 28, the House Subcommittee on Financial Institutions and Consumer Credit held a hearing that examined recent trends in lending and how the current regulatory climate impacts the availability of credit for consumers and small businesses.