The Consumer Financial Protection Bureau is cracking down on some of the payday lending industry’s most abusive practices, and boy are payday lenders getting whiny about it. So very whiny—and all kinds of poutraged.
“The CFPB has made eminently clear that it cares little for preserving consumers’ ability to access credit, or conducting a rulemaking process grounded in sound data,” said Jamie Fulmer, the spokesperson for lender Advance America, in a statement Wednesday.
Fulmer called the rules “a direct threat to millions of Americans’ access to affordable, transparent and reliable credit” and said that for smaller lenders, “they are a death sentence.”
Ha ha ha ha. “Affordable” credit being threatened by rules targeting payday lenders. Tell me another one! What’s the CFPB proposing that’s so awful?
The first measure requires lenders to assess if the borrower has the income to fully repay the loan when it is due without reborrowing. This idea, known as “ability to repay,” targets at the cycle of debt that unaffordable payday loans can trap people in.
The proposed rule also prohibits lenders from making more than two unsuccessful attempts to withdraw money from borrowers bank accounts. Repeated debit attempts cause consumers to be hit with overdraft fees from their banks. Such fees hit half of all online borrowers, costing an average of $185.
Additionally, there would be limits on how often the borrower could go back to the well for another loan if their financial situation hadn’t improved, which would further help prevent situations where people take out one loan after another to repay earlier loans, leading to giant pile of interest and fees after giant pile of interest and fees.
In contrast to the payday lending industry’s whines, consumer advocates called on the CFPB to go further, with the National Consumer Law Center calling it “a strong start” but saying that “the proposal has worrisome loopholes.” Allied Progress executive director Karl Frisch, meanwhile, called on members of Congress “to speak up and let us know where they stand”—a relevant question given that not only do Republicans love to go after any advance proposed by the Obama administration, but even Democratic National Committee Chair Debbie Wasserman Schultz co-sponsored a bill to gut the CFBP proposal before it was even released.
This blog originally appeared in dailykos.com on June 2, 2016. Reprinted with permission.
Laura Clawson has been a Daily Kos contributing editor since December 2006 and Labor editor since 2011.