Policy & Legislation

Ten years after the Great Recession, the current economic contraction is again hitting Black and Brown communities and lower-wage workers the hardest – many of whom have never recovered. This crisis is worsening long-standing and growing racial and economic inequities at the very moment of national reckoning with the historic need for their redress. Too often, predatory financial services and products prevent families and small businesses from accessing opportunities and instead impede their ability to reduce poverty and close the racial wealth gap. Bold action to curb predatory lending and...

Opportunity in America has never been evenly distributed, but the gains made over the last 100 years are at risk if a conservative Justice is added to the Supreme Court. Just like the many social issues already being covered in the wake of President Trump’s Supreme Court nomination, the nine justices who fill the seats of America’s highest court will profoundly impact the daily financial lives and futures of hardworking families. In addition to healthcare access, reproductive rights, and many other issues, over the next several years the Supreme Court will make important and lasting decisions...

Prior to the COVID-19 crisis, court fines and fees, and other monetary sanctions overly burdened young people and adults involved in the criminal legal system with debt from pre-trial through post-release and beyond. A few months into the crisis, we are seeing that Black and Brown communities are disproportionately facing economic challenges. This is reflected in national unemployment data, where May 2020 unemployment rates were 24.3% and 25% for Black and Hispanic workers, respectively, compared to 16.1% for White workers. Due to over-policing and over-incarceration, these same communities...

The Consumer Financial Protection Bureau (CFPB), under Director Kathy Kraninger, gutted a 2017 CFPB rule aimed at stopping the debt trap caused by payday and car title loans. This action will have a harmful impact on American consumers and their families, including a disproportionate number of people of color. Download the one-pager to learn more.

For years, predatory lenders have sought ways to avoid state interest rate limits. One scheme has been the “rent-a-bank” scheme. Under this scheme, a non-bank lender finds a bank willing to be the nominal originator of the non-bank lender’s high-cost loan, because banks are generally exempted from complying with state interest rate laws. State regulators, state attorneys general, and consumers have had success in the courts stopping these schemes based on a legal doctrine referred to as the “true lender” doctrine, and there are only a handful of rent-abank schemes underway today. But the OCC...

Industrial loan companies (ILCs) or industrial banks (IBs) (together, “ ILCs”) typically enjoy the privileges of traditional banks but pose two significant risk factors unique to ILCs: They are not subject to the Federal Reserve’s supervision, which occurs at the consolidated level (i.e., the ILC’s parent company, the ILC, and their affiliates); and They permit the intermingling of commercial and financial activity, prohibited for traditional banks. In light of these concerns, the FDIC did not permit any new ILCs for over a decade, until March of this year, when it approved two. Now, the FDIC...

In the 1990s payday lenders partnered with banks to create a practice known as Rent-a-Bank. This practice, which has now moved online, exploits a provision of federal law that allows banks to export their interest rates across the country, ignoring state laws meant to protect borrowers from abusive high-rate lending that can lead to a debt trap. Rent-a-Bank arrangements allow online lenders to exceed state limits on loans used to finance the purchase of everything from puppies to car repairs, including expensive debt consolidation loans made to people already struggling to meet their monthly...

On May 20, 2020, the Office of the Comptroller of the Currency (OCC) acted alone in issuing a structurally flawed final rule on the Community Reinvestment Act (CRA) that weakens the CRA and will harm low- and moderate-income (LMI) communities and communities of color. Rather than postpone rulemaking to focus on the devastating economic crisis caused by the COVID-19 health pandemic, the OCC issued the rule a mere six weeks after the closing of the comment period on its proposed rule despite broad requests for delay from community groups, civil rights and consumer organizations, and industry...

The Paycheck Protection Program (PPP) is a revenue replacement program designed to sustain small business jobs during the ongoing public health and economic crisis. The effect of the crisis on small businesses has been profound—over half of small businesses said the crisis has had a large negative effect on their businesses and 74% of small businesses said they have had a decrease in operating revenues. Temporary closings have impacted 41.5% of small businesses, and 11.5% of small businesses said they had missed a loan payment since the beginning of the crisis. These impacts were far worse for...

The COVID-19 crisis is having profound financial impacts on families across the country and on the economy overall. With businesses shuttered, and over 22 million unemployment claims filed in the first month of the crisis alone, it is hard to overstate the financial instability and hardship the crisis has produced. These impacts will worsen over time, as immediate income shortfalls result in missed or late bill payments, adding late fees and related penalties to swelling debt burdens. Some families will lose their homes to eviction or foreclosure, either now, or when protections available to...