Report Calls for Repeal of CFPB’s Payday Rule and Override of State Laws
WASHINGTON, D.C. – Today, the U.S. Department of Treasury issued a new report calling for broad deregulation of nonbank lenders, including financial technology (fintech) firms. Specifically, the report endorses the repeal of the Consumer Financial Protection Bureau’s (CFPB) Payday Rule, the creation of special federal bank charters for fintech firms, regulatory “sandboxes” that exempt startups from certain consumer protection laws, and federal preemption of state consumer protection laws. These recommendations fly in the face of a poll released today showing the majority of voters in all political camps want strong consumer protections for payday loans and other financial products.
Center for Responsible Lending (CRL) Federal Advocacy Director, Scott Astrada, issued the following statement:
The Administration’s report is reminiscent of the run-up to the 2008 Financial Crisis when claims of ‘financial innovation’ were used as a trojan horse to bypass consumer protections and expose Americans to rampant predatory lending.
This report calls for expanding debt traps and ripping up consumer protections at the state and federal levels. If its recommendations are adopted, more Americans would be pulled into deceptive, 100%+ APR loans with high-default rates. These products allow lender profits to soar as the borrower is pulled down into a financial free fall often resulting in involuntary bank account closure, a ruined credit score, and bankruptcy.
Consumer protection laws are critical to safeguarding Americans’ wallets. They should be upheld, and this report should be roundly rejected.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Matthew Kravitz at email@example.com or 202-349-1859.