Research & Policy

Testimony of Keith S. Ernst, Center for Responsible Lending Before the Joint Economic Committee of the U.S. Congress In testimony before the Joint Economic Committee, Director of Research Keith Ernst testified that foreclosures continue to soar and the mortgage market continues to suffer. He also presented testimony showing that risky loans, not risky borrowers, lie at the heart of the...

Definitions and Notes Video of Sonia Press Release In a hearing on " Current Trends in Foreclosure and What More Can Be Done to Prevent Them," CRL urged Congress to take several actions to address the flood of foreclosures and fix the broken mortgage market: Create the Consumer Financial Protection Agency; pass or encourage sensible lending rules in the future...

Indiana prohibits car title loans to its residents with an annual interest rate above 36%. In 2006, the car title lending industry lost a fight in the Indiana legislature to have that interest cap removed. But now the industry's lawyers believe they have found a loophole in the restriction by drawing Indiana residents across the border into car title lender's...

Read a condensed version of this report (PDF) Introduction For too long the responsibility for protecting consumers has been fragmented among various federal regulators whose primary focus was the safety and soundness of the banking system. Consumer protection often went neglected, if anything, an afterthought or a box to check. Federal regulators' failure to restrain abuses that led to today's...

Download the complete report >> (PDF, 31 pp.) Download the executive summary >> (PDF 4 pp.) Watch our 2 minute video press release on Phantom Demand Leslie Parrish discusses the findings in this 9 minute webinar A full three quarters of loan volume of the payday lending industry is generated by borrowers who, after meeting the short-term due date of...

The following are some of the highlights of the report conducted by the Tennessee Department of Financial Institutions on the $73 million title lending industry in Tennessee: High Interest Rates Remain. Annual rates for car title loans are still 264%. Still a Lemon for Borrowers. According to the report, half of the new loans made in 2006 were for $500...

Consumer Financial Protection Agency (CFPA) In recent years, federal bank regulators looked the other way as tricky financial products with hidden costs and fees crowded out responsible loans. Dangerous products have stifled true innovation, depriving consumers of meaningful choices and leading the nation into today's financial crisis. We don't always need more regulation, but rather more effective regulation that is...

Consumer Financial Protection Agency (CFPA) In recent years, federal bank regulators looked the other way as tricky financial products with hidden costs and fees crowded out responsible loans. Dangerous products have stifled true innovation, depriving consumers of meaningful choices and leading the nation into today's financial crisis. We don't always need more regulation, but rather more effective regulation that is...

Reckless lending practices that became rampant in recent years have devastated the economy, costing Americans billions of dollars in lost wealth and resulting in the weakest economy since the great Depression. Unfortunately, the regulators overseeing bank safety and consumer protections fell down on the job. Congress has taken a number of actions to investigate the causes of the financial meltdown...

A proposal for improving our financial system An essential component of the Obama Administration's proposal for improving oversight of our financial system would correct the current lack of adequate consumer protection standards that has plagued our financial system, and imperiled our economy. A new Consumer Financial Products Agency ("CFPA") would implement sensible protections and make sure that companies follow them...

Industry arguments in support of payday lending hinge on one highly-flawed paper. Not only are there significant questions about the accuracy of that research, but it runs counter to the findings of many other studies. Paige Marta Skiba (Vanderbilt) and Jeremy Tobacman (U. of Pennsylvania), Do Payday Loans Cause Bankruptcy? http://tinyurl.com/skiba-tobacman-BK Using a database of 145,000 payday loan applicants from...

EXCERPT Mr. Chairman, Ranking Member Bachus, members of the Committee: Thank you for inviting the Center for Responsible Lending to discuss consumer financial products reform – a fundamental component of the effort to modernize and repair our financial regulatory system. Over the past decade, federal bank regulators looked the other way as responsible loans were crowded out of the market...

Loan terms are often complex and may include a number of extra fees that make the real cost to the borrower difficult to decipher and difficult to compare across credit options. Congress developed the APR, or Annual Percentage Rate of Interest, as a standard measure that calculates the simple interest rate on an annual basis (including most fees), accounts for...

Quick Facts on Payday Loan Amounts Nearly 80 percent of payday borrowers report that the amount they received was the amount they needed 90 percent of payday borrowers whose loan was insufficient didn't take out a new payday loan Borrowers whose loans were insufficient typically postponed purchases, did without and borrowed from friends and family A key provision of AB...

"Stacked Deck" is a statistical analysis of outcomes in forced arbitration, also called mandatory arbitration or binding mandatory arbitration, that finds: Individual arbitrators have a strong incentive to favor the firms that provide them with repeat business over an individual consumer they may never see again. Companies win a favorable ruling in arbitration far more often than consumers. Companies involved...

Payday lending—the provision of 459% APR loans to cash-strapped borrowers—drains more than $450 million from California's pockets every year. Payday lending requires borrowers to supply a post-dated check as collateral and typically only their identification and proof of income to obtain a loan at nearly 459% APR. These loans are marketed as "emergency" loans for borrowers who are having a...

In this testimony, we first discuss why we support eliminating what is functionally discrimination in the law against the FTC in its rule-making authority, compared to other agencies. Section I. We also support the Congressional guidance to the FTC to use the APA rule-making in the area of consumer credit and debt, which we recognize to be central to the...

A Comparison of House (Credit Cardholders Bill of Rights) and the Senate Amendment (formerly known as the Credit CARD Act) Legislation by the Congressional Research Service.

Too often in the recent past, discussions over consumer protection regulation have been portrayed as a zero-sum game, where consumer protections are assumed to be a drag on the market, and must come at the expense of business. But that is a false dichotomy. Businesses have a symbiotic relationship with their customers. In the end, the health of the business...

CRL Offers Quick Snapshot of Recent Issuer Activity We took a quick sampling of credit card issuers' recent activities to see how they have responded to the Federal Reserve rule changes that were announced in December, 2008 but won't take effect until July, 2010. We found the top eight issuers, who account for 80 percent of credit card balances, are...

Cost Climbs to $1.9 trillion during 2009-2012, with 92 million homeowners losing $20,300 on average This is CRL's third report on the spillover impact of mortgage foreclosures. This new report is based on new CRL projections of 2.4 million foreclosures for all loans (not just subprime) in 2009, and 9.0 million during 2009-2012. This report also reflects a somewhat more...

The Earned Income Tax Credit (EITC), which supplements the earnings of low-to-moderate income working families, returns over $44 billion each year to these households and their communities and lifts approximately five million people above the poverty line. Unfortunately, paid tax preparers have weakened the economic impact of the EITC by over $600 million a year by offering Refund Anticipation Loans...