The staffers who will now enforce fair-lending laws will be generalists who have their hands full with numerous other consumer issues, said Deborah Goldstein, executive vice president of the Center for Responsible Lending, a Washington, D.C., nonprofit focused on fighting predatory lending. “Fair lending will not have an advocate in that division,” she said.
The case could have broader implications over arguments of agencies and individuals that Congress grants a degree of independence from the executive branch as well. “The important thing to keep in mind here is it’s about preserving the institution, the long-term independence of the bureau,” said Melissa Stegman, senior policy counsel for the Center for Responsible Lending, during a press call Wednesday afternoon.
Melissa Stegman, senior policy counsel on the federal policy team of Center for Responsible Lending, a nonprofit, nonpartisan organization based in Washington, D.C., said she thinks legislative action to get rid of the CFPB is “extremely unlikely. My impression is that there isn’t even much of an appetite to do that legislatively, because Mulvaney is already doing it through the administrative process,” she said. “They don’t even really need to purse anything externally. It’s like a self-sabotage as opposed to having the sabotage coming from the Congress.”
Earlier this week, Bank of America (BoA) announced that it is discontinuing its free checking product for customers with low balances and switching them to BoA Core Checking accounts that charge an upfront $12 monthly fee. The fee can be waived if the customer maintains a daily minimum balance of $1,500 or has a monthly direct deposit of $250. Further, if you are a student under the age of 24, the fee is also waived. If a BoA customer wants a more affordable option with some penalty protection, the bank does offer their lowest-fee option—a Safe Checking account, which charges a monthly fee of
“This report is disheartening but not surprising. Years of data show that unfair, racially discriminatory treatment of consumers is a growing problem in the auto lending industry. This is especially true for low-income families of color, where a car is often one of the biggest purchases made by a household,” said Mike Calhoun, president of the Center for Responsible Lending.
The “checks cashed” storefronts that line the main drags of poor communities across the country are largely linked to large banking monopolies, sucking assets from poor communities to pad multinational capital flows. According to the Center for Responsible Lending (CRL), average interest rates for payday loans are nearly 400 percent APR. The CFPB’s rule was long overdue, after five years of deliberations in rulemaking, during which the financial-industry lobbyists complained that it would ruin a system that was the only pathway to credit for 30 million consumers. But activists say that
Mike Calhoun, president of the Center for Responsible Lending, is among consumer watchdogs who are upset that Trump recently chose Mulvaney, a former Republican congressman and current White House budget director, to run the consumer bureau.
The Center for Responsible Lending estimates that payday and car-title lenders rake in about $8 billion a year in combined fees from beleaguered borrowers. Clearly there’s a role for short-term loans in uncertain economic times. The CFPB’s rules were intended to prevent people from falling into inescapable debt traps.
Debbie Goldstein, executive vice president at the Center for Responsible Lending: So I think this is shocking and disappointing but maybe not surprising…. However, what the CFPB's intent was was to set up a reasonable cushion for reserves for unexpected expenses, just like any of us might do to make sure we have enough for our expenses. In the CFPB's case, that cushion is to make sure it has enough funds to pay its personnel but also for important things like the Consumer Complaint Database, handling direct contact from consumers, who the CFPB is supposed to help, and for important enforcement
Rebecca Borné, Senior Policy Counsel at the Center for Responsible Lending (CRL) blasted the move, saying payday loans with triple digit interest rates need stronger regulation. "For more than five years, the Consumer Financial Protection Bureau studied the issue, welcomed public input, and crafted a rule to help stop the payday loan debt trap," Borné said in a statement to ConsumerAffairs.