Advocates Fight For Protection On Predatory Payday And Car-Title Loans

Advocates Across The Country Fight To Preserve Strong Consumer Protections On Predatory Payday And Car-Title Loans

Predatory Payday And Car-Title Loans

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For the last 90 days, we have been fighting to retain the protections afforded by the 2017 payday rule which required lenders to assess a borrower’s ability to repay prior to granting a loan. Now, the Consumer Financial Protection Bureau (CFPB) is proposing to overturn his common-sense provision under the administration’s new Bureau director, Kathy Kraninger.

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Keeping Up the Drumbeat and Public Comments by the Numbers

Organizations across the country went beyond the traditional organizing toolbox to generate comments and public support. Faith organizations went to farmers markets and economic equality groups held pizza parties and letter-writing parties to get signed comment cards. Public interest groups held showings of a South Dakota documentary on payday loans to educate the public on the harms of payday loans, and they garnered the support of local lawmakers to oppose the CFPB’s proposal. When the payday lenders partied at Donald Trump’s Doral Resort, faith groups and consumer advocates made their presence felt at the pay-to-play event. You can read more about advocate’s response here. Percy the Payday Loan Shark followed the CFPB over the course of the campaign to highlight the fact that the CFPB is taking the side of predatory lenders. And in May, consumer advocates from across the country joined in the nation’s capital for Consumer Lobby Day 2019 to advocate to lawmakers on consumer-focused policies and legislation, including opposing the CFPB’s plan to repeal crucial consumer protections against payday and car-title loan abuses.

Advocates and activists ensured the issues with payday lending were echoed across the nation with robust engagement on social media. Stop the Debt Trap coalition organized more than 10 tweetstorms over the course of the comment period, including in three focused constituent weeks: car-title borrowers, communities of color, and veterans and servicemembers. Organizations tweeted using the #ProtectConsumers and #StopTheDebtTrap hashtags, garnering even more retweets and likes. And we pushed powerful stories from former borrowers, including these videos from Alabama residents, who personally understand the harm of these predatory loans.

Over 420 groups from 46 states joined a comment letter to the Bureau arguing forcefully against the proposal to repeal the payday rule, more than 500 comment post cards were submitted to the CFPB, along with almost 20,000 grassroots electronic comments. 25 State Attorneys General and 47 US Senators also wrote to oppose gutting payday protections. Thank you to all who  spoke up in favor of stopping the debt trap, and who engaged your members, partners, and allies in doing so. We are not done fighting, and have a lot of tools still in our tool box to keep up the work to end payday and car-title abuses for good.

Shaping Media Coverage of the CFPB Proposal

Immediately after the CFPB proposal was announced, consumer advocacy, civil rights, labor, veterans, community, state, and local organizations sounded off in opposition to the rule repeal. Following the outcry from advocates, several prominent news publications voiced their opinion on the matter. The New York Times said the proposal was “based on a legally dubious rationale,” the Los Angeles Times called the rule repeal “a reprehensible move” and the St. Louis Post-Dispatch encapsulated our argument against predatory payday lenders, stating that stripping the rule would “make exploiting the poor easier.” After years of education, engagement and advocacy, the public and press alike now understand the real dangers and harms associated with these predatory loans and acknowledge the need for strong consumer protections.

Helped by advocates expertise, the press dug up a powerful set of stories focused on the payday industry’s influence advancing policy to enable their lucrative debt trap business model to continue. Among the highlights, the New York Times Magazine  delved into former acting director of the CFPB and current acting White House chief of staff Mick Mulvaney’s support from and for the payday loan industry throughout his career, dating back to his time in the South Carolina Legislature. The New York Post and Washington Post separately found that the CFPB had sought and received guidance from the payday industry on how to undermine the  rule to industry’s benefit. Finally, during a House Oversight subcommittee hearing , the CFPB plainly stated that they had conducted no new research to justify reconsidering the payday rule, underlining and confirming an important argument in our comments on the rule.

Read our Compendium of Outrage, covering the initial reaction to the CFPB’s proposal from advocates, lawmakers, and editorial boards.

Congress: Holding Kraninger and the Bureau Accountable

Stop the Debt Trap worked with Congress to not only shine a light on the terrible impacts payday loans have on American consumers, but also hold Kathy Kraninger and this CFPB accountable. In March, the House Financial Services Committee and the Senate Banking Committee both held their first oversight hearings on the CFPB since Kraninger took the reigns. In a viral moment, Rep. Katie Porter (D-CA) exposed that Kraninger did not understand how a basic lending term – Annual Percentage Rate (APR) – is calculated. The video was picked up by NowThis Politics and Late Night with Seth Meyers. You can read our hearing recap here.

In April, the House Financial Services subcommittee on Financial Institutions and Consumer Protection held a hearing on predatory lending its effects on consumers. From comparisons to crime mob loan sharks to highlighting the inconceivable amount of money fees drain from families, the hearing brought to light the far reaching effects of a predatory industry. Rep. Ayanna Pressley (D-MA) mentioned that her state saves around $5 billion a year due to their ban on payday lending. Chairwoman Maxine Waters (D-CA) looked to the future and suggested that we expand the Military Lending Act to protect all consumers, regardless of their enlistment status.

In May, the House Oversight subcommittee on Economic and Consumer Policy reviewed the  CFPB’s reasoning for their proposal to render the payday rule toothless. Short answer, there was little basis for their proposal, evidenced by the fact Tom Pahl admitted that the Bureau conducted no new research and explicitly relied on industry-pushed reinterpretation of existing data.




About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver