FOR IMMEDIATE RELEASE
Tuesday, July 7, 2020
Contact: Pamela Russell at 202-618-6433 or prussell@bettermarkets.com
Washington, D.C. – Dennis M. Kelleher, President and Chief Executive Officer of Better Markets, issued the following statement in response to the Consumer Financial Protection Bureau’s (CFPB) announcement today of a new payday lending rule:
“No one in his or her right mind would lend someone money knowing that this person could not pay it back, unless you were a predatory payday lender. That’s actually their business model. Two-thirds of payday lender borrowers could not afford to repay their payday loans when they received the loans, according to a study by the CFPB. That’s how payday lenders get rich: they trap consumers into taking out loans they cannot repay so that they will take out more loans to repay the prior loan that they could not afford in the first place. That debt trap is little more than a debtors’ prison without bars.
“That predatory behavior is why the Obama administration’s CFPB enacted a rule that, among other things, required payday lenders to determine if a borrower could repay the loan at the time the loan was made. This so-called ‘mandatory underwriting’ was to stop the debt cycle that buried people under a mountain of unpayable and growing debt. Today, the Trump administration’s CFPB eliminated that provision of the rule and weakened other important consumer protection provisions. As a result, predatory payday lenders will once again be making most of their loans to borrowers who will not be able to repay their loans on the day they receive them.
“That’s not consumer protection; that’s predator protection and that’s why Trump’s CFPB should be called the ‘Financial Predators Protection Bureau’ (FPPB).”
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.
