We congratulate the Consumer Financial Protection Bureau (CFPB) for unveiling a blueprint of its payday lending rule today. New Economy Project wholeheartedly agrees with the agency’s stated goal of ending the payday lending debt trap.
Our organization has consistently urged the CFPB to set a high national bar for addressing predatory and exploitative payday lending. The CFPB’s blueprint indicates, however, that the agency is considering including glaring loopholes in its final payday lending rule, which would allow payday lenders continued latitude to make unaffordable high-cost loans. This approach is simply unacceptable.
We are deeply concerned that the agency, under tremendous industry pressure, will issue a weak final rule, and we emphatically urge the CFPB to use its full authority to end abusive payday lending.
Payday lenders exploit the fact that so many people don’t earn a living wage, and must struggle to get from check to check. People should have fair access to credit, but we reject the notion that credit is the way to address people’s income shortfalls.
Thanks to New York’s longstanding usury law, payday lending has always been illegal in our state. New Yorkers have been spared the plague of these toxic loans, which notoriously lead borrowers into financial and emotional distress.
New Economy Project will continue to urge the CFPB to issue a strong final rule that builds upon, rather than weakens, the protections in New York and the 14 other states that ban payday lending.
The CFPB was created precisely to address unfair, abusive, and predatory lending, and the agency should use its full authority to end this scourge.