WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB), under the direction of Trump-appointed Director Kathy Kraninger, released its plan to roll back the central protections of the agency’s 2017 payday and car-title lending rule. Kraninger’s plan is to eliminate the rule’s underwriting standards — the widely supported heart of the rule – which require lenders to verify a borrower’s ability to repay their loan. This proposed rollback would result in more Americans falling into devastating debt traps.
The predatory, payday lending business model relies heavily on a borrower’s inability to repay their loans, which leads to a cascade of financial consequences that include bank penalty fees, delinquency on other bills, and even bankruptcy.
Consumer and civil rights organizations released the following statements:
“Kathy Kraninger is siding with the payday loan sharks instead of the American people. The CFPB, under a previous director, spent five years developing these consumer safeguards, taking input from lenders, faith leaders, veteran and military organizations, civil rights groups, consumer advocates, and consumers from across the country. But over the past year, payday lenders have spearheaded an effort, with Mick Mulvaney and now Kraninger’s help, to take consumer protections away from financially vulnerable Americans. We urge Director Kraninger to reconsider, as her current plan will keep families trapped in predatory, unaffordable debt,” said Rebecca Borné, Senior Policy Counsel at the Center for Responsible Lending.
“Stripping the key protections of this rule is a disservice to the public. With little accountability for their actions, payday lenders have long preyed upon communities of color and drained them of their hard-earned savings. We strongly urge Kathy Kraninger to reconsider her decision to weaken the payday lending rule and allow it to move forward as planned without delay. Every day that goes by without this crucial rule only threatens the financial security of American families throughout our country,” said Hilary O. Shelton, NAACP Washington Bureau Director and Senior Vice President for Policy and Advocacy.
“The CFPB’s decision to undo payday and car-title lending protections is a slap in the face to consumers—especially people of color—who have been victims of predatory business practices and abusive lenders,” said Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights. “This decision will put already struggling families in a cycle of debt and leave them in an even worse financial position. This administration has moved the CFPB away from protecting consumers to protecting the very companies abusing them.”
“UniodosUS, along with the thousands of Latinos who participated in a national campaign calling for a strong payday rule, have supported efforts to help protect vulnerable consumers and stop the abuse in the payday lending industry. Doing away with the critical ability-to-repay provision, as is currently proposed, will open the floodgates once more to unscrupulous lenders. Removing this critical protection will place working families in a position where they are once again easy targets for those seeking to increase their profits without care as to the devastation they are causing for so many Americans trying to make ends meet," said Marisabel Torres, Senior Policy Analyst at UnidosUS.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Ricardo Quinto at firstname.lastname@example.org.