U.S. SENATE News:
WASHINGTON, D.C. ― U.S. Senators Tom Udall and Martin Heinrich sent a letter to Consumer Financial Protection Bureau (CFPB) Acting Director Leandra English and Office of Management and Budget (OMB) Director Mick Mulvaney urging them to end any efforts to undermine and repeal the CFPB’s payday lending rule, which would help rein in predatory business practices by payday lenders nationwide that are designed to exploit the financial hardships facing millions of hardworking families.
“We understand that the CFPB is delaying the rule by granting waivers to companies who would otherwise be taking steps to begin complying with the rule, and that the Bureau may be offering the payday loan industry an opportunity to undermine the rule entirely. We view these actions as further efforts to undermine the implementation of this important consumer protection rule,” the Senators wrote.
Congress created the CFPB to protect Americans from unfair, deceptive and abusive lending practices. Predatory lenders often target hardworking borrowers who find themselves in need of quick cash—often for things like necessary car repairs or medical emergencies—by charging them excessive interest rates and hidden fees that trap them in long-term cycles of debt.
Nearly 12 million Americans use payday loans each year, incurring more than $9 billion annually in fees. In 2015, before New Mexico enacted a new state law capping interest rates, New Mexicans took on hundreds of millions of dollars of hard-to-pay-back debt through more than 300,000 high interest loans. The vast majority of payday loans are renewed so many times that borrowers end up paying more in fees than the amount they originally borrowed. This predatory business model exploits the financial hardship facing millions of hardworking American families. The CFPB developed the payday lending rule over the course of five years and reviewed more than 1 million public comments.
“The CFPB’s role in serving as a watchdog for American consumers while making our financial markets safe, fair, and transparent continues to be of critical importance. To this end, we urge you to end any efforts to undermine and repeal this critical consumer protection,” the Senators continued.
The letter also called into question efforts at the CFPB to dismiss ongoing enforcement actions against predatory lenders, calling such actions antithetical to the CFPB’s mission of serving as a watchdog for American consumers.
Udall and Heinrich are cosponsors of the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act to crack down on some of the worst abuses of the payday lending industry, particularly in online payday lending, and protect consumers from deceptive and predatory practices that strip wealth from working families.
Full text of the letter is available here.