Communities across the country have been fighting for years against the impact of payday lending, urging their state officials to stop the debt trap in its tracks. On the federal front, the Consumer Financial Protection Bureau (CFPB) has clamped down on payday lenders who have broken state laws, resulting in relief for thousands of Americans who were stuck in a cycle of debt.
But Congress is taking aim at undermining this progress. Last week, the House of Representatives passed the deceptively-named Financial CHOICE Act in a nearly party line vote – with one Republican joining the Democrats against it – which would effectively prevent the Consumer Bureau from enforcing the law, as well as from issuing protections like its proposed payday rule.
Simply put, the Financial CHOICE Act is the Wrong CHOICE Act for Americans.
Under the Wrong CHOICE Act it would be impossible for the Consumer Bureau to hold predatory payday lenders accountable for breaking the law.
Regardless of party, people recognize the need for the Consumer Bureau’s efforts to rein in abuses by payday lenders. In the weeks leading up to the vote on the Wrong CHOICE Act, groups protested at their Representatives’ offices and local churches, unions, veterans’ organizations, and other groups voiced their opposition to the bill.
From Reverend Willie Gable Jr. of New Orleans, LA, speaking in front of the House Financial Services Committee on May 4th:
It is imperative, I believe, that we support the CFPB’s efforts to put an end to this predatory practice on poverty. Just be sharp — be true about it, it’s no more than legalized loan sharking, and it’s a way of pimping the poor for profit. In my home state of Louisiana, payday lending makes loans to 57,000 Louisianans each year and in my community we often encounter — we often encounter elderly individuals who have taken out payday loans.
Texas Organizing Project took the fight straight to the home-district office of Texas Rep. Jeb Hensarling, the main architect of the Wrong CHOICE Act, where they called the congress member a friend of payday lenders and an enemy of consumers.
New Jersey Citizen Action offered a check to co-sponsor MacArthur at his office to try to buy him back for the same amount he has been paid by industries to deregulate the financial sector. A northern Wisconsin Indivisible group delivered a check to the Hudson office of bill co-sponsor Sean Duffy, and Michigan United took one to their own Rep. Tim Walberg. All of this opposition played a key role in making sure the bill didn’t pass under the radar.
During congressional debates for the bill California Rep. Maxine Waters led the fight against the Republican supporters, whose testimonies never addressed the bill’s payday provisions.
California Rep. Barragán:
Payday lenders are like loan sharks, charging upwards of 400 percent interest on loans. It is outrageous. They prey on vulnerable, low-income borrowers who are already struggling to get by. That is how Yesenia from California got trapped in a cycle of debt. Her mother was diagnosed with breast cancer and lost her job, so Yesenia had to take out a loan just to buy food. The payday lender garnished her wages and charged sky-high interest rates and fees. She ended up paying back thousands more than she borrowed, all because she needed food for her and her mother.
Oregon Rep. Bonamici:
I worked as a consumer protection attorney, and I worked with too many families there who lost their homes, too many seniors who were harassed by debt collectors, too many people who were victims of predatory payday lending and got into the quicksand and were not able to get out. We cannot allow this shortsighted bill to stop the good work of the CFPB.
Advocates watched the debate intently, with hundreds adding their voice to the hashtag #WrongCHOICEAct, which trended on Twitter and garnered over 15 million views the week of the vote.
While the progress of the Consumer Bureau is under attack, a national movement continues to push the bureau to issue strong protections, and will continue to defend its efforts. As the Wrong Choice Act and its assault on the Consumer Bureau moves to the Senate, Americans from every corner of the country will continue to fight to stop the debt trap.