-
The compliance costs associated with the CFPB's proposed reforms to the payday lending would force many small businesses to close shop, reducing access to short-term credit for many Americans.
April 30 -
The Consumer Financial Protection Bureau's plans for revamping payday lending set off a fierce debate Thursday over whether the agency had gone too far or not far enough, proving that this is likely to be one the trickiest rulemakings the agency will ever attempt.
March 26 -
While the CFPB's proposed rules may force payday lenders to adjust their business models, well-meaning ones should be able to operate in this new framework.
April 9 -
The CFPB's proposed reforms for payday and other high-cost loans are both welcome and long overdue. But there are two ways the agency can further improve future requirements.
March 30
Dennis Shaul's recent
The CFPB's proposed outline for small-dollar lending rules is not perfect. There are too many loopholes that might allow payday lenders to get around the ability-to-pay standard and not enough protections against abusive and deceptive lending practices. But they do offer common-sense protections that would help prevent the worst consumer abuses. While Shaul claims that the effect of the rules on the short-term credit market would be "catastrophic," in reality these rules would only be catastrophic to lenders whose business model is dependent on trapping consumers in an endless cycle of debt and charging usurious interest rates.
Unfortunately, abusive lenders are all too common in our communities today. Take Candice, a fellow member of Illinois People's Action, a faith-based community organization of which I am board president. Candice took out a payday loan when her income hit a bump. But when the loan was due two weeks later, the lender took most of Candice's paycheck leaving her with nothing left over to buy food or pay bills. So she took out a car title loan and online loans to try keep up with the debt. Candice lost her car, is deeply in debt and a bulk of her budget goes to paying fees on her loans. She is trapped deep in debt with no hope of paying off the loans.
As a minister, I take the Bible's condemnation of usury and abusive lending to heart. And as the leader of a congregation in an underserved area, I've seen that abusive lending is alive and well today. There are
What starts as a fast loan quickly becomes a financial nightmare. A
There will always be a need for small-dollar loans. But loans that trap people in debt, burden borrowers with triple-digit interest rates and confuse them with deceptive practices are simply abusive.
Shaul also claims that the CFPB needs to listen to the industry more. This is absurd. The payday loan industry has bought itself a huge megaphone in Washington with the billions of dollars that it wrings out of our distressed communities. In just the last two years,
Shaul also says that payday lending can help Americans impacted by income inequality. But when payday lenders continue to strip billions of dollars from our poorest communities, they only widen the growing imbalance of wealth.
Helping the nearly
However, all too often, abusive lenders have
The Rev. Tony Pierce is co-pastor of Heaven's View Christian Fellowship in Peoria, Ill., and board president of Illinois People's Action, a member of National People's Action.