Congress: Consumer Bureau’s payday rule aligns with Montana values

By: 
Katie Sutton

gnoring the voices of families and communities who have worked for many years for relief from the harms of predatory payday lending, a handful of members of Congress have introduced a bill that would nullify an essential rule finalized by the Consumer Financial Protection Bureau last month.

A bill introduced by Rep. Dennis Ross (R-Fla.) and co-sponsored by Rep. Alcee Hastings (D-Fla.), Tom Graves (R-Ga.), Henry Cuellar (D-Texas), Steve Stivers (R-Ohio), and Collin Peterson (D-Minn.), would kill a long-awaited rule that requires payday and car title lenders to make loans only after they have assessed whether the borrower can afford to pay them back. This is a commonsense measure that is designed to protect people from being trapped in the high-cost loans that characterize the payday and car title industries.

“Our Congressional delegates are going to have to decide whether they stand with predatory lenders or if they stand for Montana values,” said Katie Sutton, Director of Montana Organizing Project. “We have worked long and hard to see this rule come into being. Montana already has a state interest rate cap at 36 percent. This rule would create strong nationwide protections to protect borrowers from falling prey to the payday lending debt trap; families across the country deserve the protection it affords. The Consumer Bureau’s rule simply requires lenders to determine that borrowers have the ability to repay their loan. We will fight to defend this common sense protection.”

A coalition of 700 civil rights, consumer, labor, faith, veterans, seniors and community organizations from all 50 states energized a years-long effort to push the Consumer Bureau for strong protections from predatory payday and car title lending. The business model relies on repeat borrowing of unaffordable loans; 75 percent of all payday loan fees are generated from borrowers stuck in more than 10 loans a year.

Payday and car title lending leaves people without funds to pay bills, strips them of their bank accounts, and increases their likelihood of bankruptcy. Across the country, payday and car title lending costs families $8 billion per year.

The Final Rule balances the need to protect consumers from the debt trap while addressing concerns raised by institutions like credit unions by excluding less risky products like payday-alternative loans from the rule. Montanans voted, and they agreed, protections are necessary to keep people out of the debt trap. Our elected officials need to support the Consumer Bureau’s common sense protections, and represent Montana values.

The Consumer Bureau’s rule is supported by more than 70 percent of Republicans, Independents and Democrats. Read the CFPB press release and factsheet summarizing the rule on payday loans, or read the full CFPB rule on payday loans.

 

Katie Sutton, of Billings, writes on behalf of Montana Organizing Project.

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