Last week, the Consumer Financial Protection Bureau released their final rule regarding payday lending. This rule is the culmination of years of work by local and state advocate who fought each and every day to help Stop The Debt Trap. Here is a recap of the this past week’s highlights.
Taking the Media by Storm
Consumer advocates were quoted in scores of stories across the national news media, including in the Washington Post, the Chicago Tribune, Buzzfeed, and CBS News. Newspapers have published fifteen editorials expressing strong support for the CFPB’s rule and pro-consumer policies in general, including in the Tuscaloosa News, the Los Angeles Times, the Tulsa World, Missouri’s Herald Whig, and Arkansas’ Harrison Daily.
Advocates have raised their voices in further coverage in many states, in states like Arizona, Indiana, Nebraska, Pennsylvania, Texas, Washington, Wisconsin, and many others, along with helping columnists to take up the issue in newspapers, as Roger Chesley did for the Virginia Pilot:
I come today to praise Richard Cordray and his campaign to assist desperate people in their battles against “legal” loan sharks.
Elected Officials Speak Out
Several key legislators issued statements immediately after the rule including Senators Sherrod Brown, Jeff Merkley, and Elizabeth Warren, and Representatives Maxine Waters and Luis Gutierrez. California Attorney General Xavier Becerra issued a statement as well. Others have declared their support on social media.
The real victims of payday lenders
It should not be lost on any of us that all of these efforts are to protect real people. The New York Times and Philadelphia Inquirer included the voices of borrowers that get at the disastrous effects of the payday lending industry in our communities.
Stephany Morales, a member of People’s Action, spoke at a national press conference of how the horrors of payday lending have followed her since a 2014 loan she took out in Nevada:
I was putting myself through nursing school, when my six year older daughter came down with a chest infection. The doctor told us she needed nebulizer treatments, but my insurance wouldn’t cover the $400 cost of the equipment.
I turned to a payday lender to get the money. But between food, rent, and tuition, I couldn’t pay back the loan just two weeks later when it was due. Before long, I was drowning in debt. In the end, I had to drop out of school just one quarter short of receiving my Licensed Practical Nurse degree. I lost my car and we almost lost our apartment.
Dozens of consumer groups at the front lines of supporting consumers have issued their own statements in support of these new protections, as well as strong enforcement and continued reform to stop the debt trap, including Tennessee Citizen Action:
“The CFPB rule’s ability-to-repay requirements and limits on back-to-back lending will help protect Tennessee families from losing millions of dollars each year to payday predators,” said Tennessee Citizen Action Executive Director Andy Spears.
“We are pleased to see the CFPB put safeguards in place for Maine families, like requiring payday lenders to determine whether a borrower can afford to repay the loan—a routine practice already required of banks, credit unions, and credit card companies,” said Jody Harris, associate director at the Maine Center for Economic Policy.
And a coalition of Arizona groups:
“Payday loans often masquerade as “lifesavers” for those in need, but they do not provide a realistic lifeline for many consumers. These predatory lending practices drown too many people in an endless cycle of debt. We are pleased that the CFPB’s rule offers protections that will disrupt the payday lending business model. We urge Arizona lawmakers to protect this rule, and to fight back against legislative and regulatory efforts to preempt or undermine the will of Arizona voters,” said Cynthia Zwick, Executive Director of the Arizona Community Action Association.
A Top Twitter Trend
Hundreds of consumers took to social media in celebration of the rule. Check out how advocates responded:
The only segment in tv I ever refused to host was one pushing a payday loan advertiser #StopTheDebtTrap
But this is not the end of the fight, it’s another beginning.
With this progress, the Consumer Bureau will help disrupt a predatory lending model with another tool for state law enforcement to crack down on unfair lending practices. Now, we should be prepared as payday lenders throw everything they have to stop this rule in the courts and in Congress.