Payday Loans Update

by Ed Sawicki - December 27, 2016

Back in 2015, the Consumer Financial Protection Bureau (CFRB), encouraged by numerous States Attorneys General, showed interest in fixing the serious consumer problem of payday loans. These loans tend to trap the working poor into a never-ending cycle of debt at interest rates that average 300 percent.

The payday loan industry reacted in November 2015 by having a Republican Congressional Representative introduce a bill (HR 4018) that would allow State law to take precedence over any CFRB rules. States like Florida have very lax payday lending laws that were put in place by their own governments bought off by the industry. You'll recall that Democratic Congressional Representative Debbie Wasserman-Schulz (DWS) from Florida, a friend of the payday loan industry, is a co-sponsor of the bill.

The press coverage of HR 4018 drew significant criticism from Democrats at a time when DWS was running the DNC and its 2016 campaign. The bill never moved out of the House Financial Services committee. It's dead for now. The CFRB published proposed payday loan rules changes 1 in June 2016. However, the rules were so lax that in October 2016, twelve State Attorneys General, led by New York's Eric Schneiderman, wrote the CFRB 2 asking them to add stronger wording to the rules so that their own tougher state laws are not put in jeopardy. In other words, they don't want the CFRB (federal) rules neutering their tougher state laws.

Now we're waiting for the CFRB to finalize their rules - perhaps just in time for the Trump administration to gut the CFRB. Trump ran on a popular platform of eliminating government regulation. The working poor, many of whom are Trump voters, will continue to be screwed by payday loans, but I doubt they'll have the sense to see it as the good kind of government regulation - the kind that helps them.

 

1. CFRB Proposed Rules Changes: Payday, Vehicle Title, and Certain High-Cost Installment Loans

2. Letter from State Attorneys General to the CFRB over Payday Loan Rules Changes