In what progressive lawmakers and advocacy groups dubbed the Trump administration’s recent “shameful” attack on vulnerable families, the Consumer Financial Protection Bureau (CFPB) on Feb. 8 unveiled a plan that would lift regulations to protect consumers from predatory payday lenders .
Vanita Gupta, President and CEO of the Leadership Conference on Civil and Human Rights, condemned the CFPB’s plan as a “slap in the face of consumers – especially blacks – who have become victims of predatory business practices and abusive lenders.”
“This decision will put already troubled families into a debt cycle and put them in an even worse financial position,” added Gupta. “This government has shifted the CFPB away from protecting consumers to protecting the companies that abuse it.”
Detailed in a statement by Trump-appointed CFPB director Kathy Kraninger, the agency’s proposal would dramatically weaken an Obama-era rule that would have required payday lenders to verify that borrowers have the financial ability to maintain their loans repay – an attempt to help vulnerable people avoid falling into debt.
In its statement of the rule change, the CFPB said it wanted consumers to have even more access to payday lenders despite their longstanding exploitation of the poor.
“Kraninger is on the side of the payday loan sharks rather than the American people,” said Rebecca Borné, senior policy counsel at the Center for Responsible Lending, in a statement. “We urge Director Kraninger to reconsider, as her current plan will keep families trapped in predatory, unaffordable debt.”
The original rule was originally supposed to go into effect in January, but the Trump administration has postponed implementation until August.
In a tweet in response to the agency’s proposed rollback, former CFPB boss Richard Cordray described the plan as “a bad move that will hurt the most affected consumers” and predicted it would face “a tough legal challenge” will.
“Removing these safeguards would be a grave mistake and expose the 12 million Americans who use payday loans each year to prohibitive payments at interest rates averaging nearly 400 percent,” concluded Alex Horowitz, senior research officer at Pew Charitable Trusts’ Consumer Finance. Project. “This proposal is not a change to the existing rule; Instead, it is a complete dismantling of the consumer protection that was concluded in 2017. “