New York Groups and Elected Officials Call on CFPB to End Payday Loan Debt Traps
For immediate release:
For more information:
New York City and State elected officials and groups call on the federal Consumer Financial Protection Bureau to end payday loan debt traps
In joint letter, 131 elected officials and groups warn that a weak CFPB rule could jeopardize New York’s strong state laws
Prominent New York City and State elected officials joined with labor, grassroots, civil rights, faith-based and legal services groups, as well as community development financial institutions, to send a strongly-worded letter on Friday to Consumer Financial Protection Bureau Director, Richard Cordray, calling on the federal watchdog agency to crack down on predatory payday lending.
The New York officials and groups submitted the letter in response to rules the CFPB has proposed to address payday lending. They warn that the CFPB’s proposed rules are far too weak, and could jeopardize New York’s strong state laws.
New York is one of 14 states that, along with D.C., ban usurious payday loans. New York’s 25% criminal usury cap has effectively kept payday lending out — saving New Yorkers more than $790 million each year, according to a Center for Responsible Lending study. Payday loans typically carry interest rates of 300% and up.
The New York letter outlines how a weak CFPB rule could harm New Yorkers — and the more than one-third of Americans who live in states where payday lending is illegal:
Payday lenders have for many years attempted to crack open our usury law and make predatory high-cost lending legal in our state…Time and again, these efforts have pitted the public interest against predatory lending interests, leading to ugly battles between community groups and industry, and draining massive public resources in the process. Fortunately, we have successfully beat back these attempts to gut our usury law.
We are deeply concerned that weaknesses in the proposed rule will inevitably be seen as sanctioning high-cost loans that are illegal in New York. A rule that undercuts laws that protect tens of millions of Americans in payday loan-free states does not, in our view, constitute sound public policy-making, even if the rule mitigates some of the harms caused by payday lending in states where it is now legal.
Read the full New York letter here.