The National Consumer Law Center filed the request along with Public Citizen, the Center for Responsible Lending, the Consumer Federation of America, Public Knowledge, and Higher Ed, Not Debt. The F.C.C. declined to comment.
"The bill even specifically exempts payday and vehicle title lenders - notorious for springing devastating debt traps for their already vulnerable customers - from any regulation", added Yana Miles, senior legislative counsel for the Center for Responsible Lending.
Yana Miles, senior legislative counsel for the Center for Responsible Lending, said, “The bill even specifically exempts payday and car title lenders — notorious for springing devastating debt traps for their already vulnerable customers — from any regulation.” The bill passed the House (233-186) with only Republican support; all Democrats and Republican Rep. Walter Jones (NC) voted no. It is not expected to be taken up in the Senate, where it would need 60 votes to pass but does not have any Democratic support.
Seventeen states plus the District of Columbia either cap interest rates so low that lenders don’t set up shop there or bar the use of a vehicle title as a collateral for a loan, said Lisa Stifler, deputy director of state policy for the Center for Responsible Lending. The center is a North Carolina nonprofit that aims to protect low-income communities from predatory lending.
"The bill even specifically exempts payday and car title lenders — notorious for springing devastating debt traps for their already vulnerable customers — from any regulation," added Yana Miles, senior legislative counsel for the Center for Responsible Lending.
“The director of an agency would be moving with the political wind,” Miles said. “If there is a law on the books that already says if there are big problems with how someone handles an agency, there is process for removing them, why make it at-will? That just politicizes the agency.”
The CHOICE Act would eliminate the CFPB’s power to regulate “small-dollar credit,” including “payday loans, vehicle title loans, or other similar loans” with extremely high interest rates that are used by more than 19 million mostly lower income US households to make ends meet when they’re lacking other options. Given the interest, these loans can lead to a cycle of ever-growing debt—the majority of borrowers end up having to take out a second loan to cover the first.
The U.S. House is expected to vote Thursday on the so-called Financial CHOICE Act, a bill that would eliminate consumer protections and destroy safeguards in place to avert financial crises like the one California just survived. The bill should be called the “Wrong Choice Act,” because it will turn back the clock to 2007, when toxic and manipulative financial products brought down the entire economy.
Department of Consumer Affairs Launches Public Awareness Campaign to Help Consumers Avoid Predatory Lending in the Used Car Industry
“The Center for Responsible Lending believes that addressing predatory lending practices requires effective regulation, enforcement and strategies to make consumers aware of how to combat abuses,” said Chris Kukla, Executive Vice President with the Center for Responsible Lending. “DCA’s announcement today, as part of an overall effort to make the car buying market safer for New York City consumers, is another helpful step in the right direction.”
As also noted by House Republicans, the CFPB has used that jurisdiction to propose a federal regulation on payday, vehicle title and certain other high-cost installment loans. But the sentence on page 403 of the Financial Choice Act could change that. As Diane Standaert, director of state policy for the nonprofit Center for Responsible Lending, tellsConsumerist, "It's a shocking provision. Payday lenders charge triple-digit interest rates, and Congress is proposing to give them a free pass.”