Representatives and Senators Repeatedly Grilled the Director on Proposal that would Keep Consumers Trapped in Debt
WASHINGTON, D.C. – Today, in her second hearing before Congress, Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger struggled in explaining why she issued a plan that would gut a rule designed to protect Americans from debt trap payday and car title loans.
Center for Responsible Lending (CRL) Senior Policy Counsel Rebecca Borné issued the following statement:
Director Kraninger continues to wear blinders, looking only at protecting the profits of exploitative payday lenders.
As several Members of Congress made clear, Director Kraninger refuses to see how payday lenders intentionally trap Americans in debt; she ignores the cascade of consequences these loans often cause, including overdraft, loss of a vehicle, and bankruptcy; and, she has moved to gut the rule while both dismissing extensive research collected over several years documenting the harm of payday loans and stating the CFPB would not conduct additional research – essentially putting its ‘head in the sand.’
This experience should cause Director Kraninger to reconsider.
Members of Congress who, in the hearings, challenged Director Kraninger over the CFPB’s move to repeal the heart of the payday rule – the ability-to-repay standard – included Representatives Maloney, Velázquez, Porter, and Wexton and Senators Brown, Van-Hollen, Warner, and Jones.
The Consumer Financial Protection Bureau research found that “[m]ore than four out of five payday loans are re-borrowed within a month, usually right when the loan is due or shortly thereafter” – clear evidence that consumers are caught in an unaffordable debt trap.
Comments on the current CFPB proposal to delay the payday rule are due by Monday, March 18, and on the proposal to repeal the rule by May 15.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Matthew Kravitz at firstname.lastname@example.org or 202-349-1859.