The greatest president to ever set his Stacy Adams inside the Oval Office did something monumental during his time in office. Former President Barack Obama changed payday loans to make it so that the lenders had to be sure the borrower could actually repay the loan. Meaning, the lender couldn’t just give cash to any old body and then use borrowers’ inability to repay the loan to take all their stuff.
Well, because the current president, the worst president to ever rest his uncoastered Diet Coke on the Oval Office desk, doesn’t give a fuck about the people or what they lose, the Consumer Financial Protection Bureau on Tuesday issued the final rule on payday lending, and I bet you can’t guess what the decision was? Well, it removed Obama’s restrictions, which now makes it legal for predatory lending.
To help ensure borrowers were not getting sucked into so-called debt traps, the CFPB released a new, multi-part payday loan regulation in 2017 that, among other things, required payday lenders to check that borrowers could afford to pay back their loan on time by verifying information like incomes, rent and even student loan payments.
But the Trump administration blocked those rules from going into effect and called for a review. On Tuesday, the CFPB — under new leadership — released a finalized rule that doesn’t require lenders to check that borrowers can afford to pay.
CFPB claims that lifting restrictions “ensures that consumers have access to credit and competition in states that have decided to allow their residents to use such products, subject to state law limitations,” the agency said in a statement viewed by CBC. Additionally, CFPB noted that there was “insufficient legal and evidentiary bases” in requiring lenders to verify consumers’ ability to repay loans.
The CFPB did keep one restriction in place:
They don’t allow bruisers to show up at your workplace carrying a bat and wanting to know where the fuck the money is They will continue to “bar payday lenders from repeatedly trying to directly withdraw payments from a person’s bank account.” Some payday lenders would ask for access to the borrowers’ checking accounts and then take monthly payments directly from the borrower’s account. But if the money wasn’t there, the lender would continue to charge the account, drawing overdraft fees and ruining the borrower’s credit score, CNBC reports.
“By eliminating the ability-to-repay protections, the CFPB is making a grave error that leaves the 12 million Americans who use payday loans every year exposed to unaffordable payments at annual interest rates that average nearly 400%,” Alex Horowitz, senior research officer with Pew Charitable Trusts’ consumer finance project, told CNBC.
“Last October we learned that, in exchange for contributions to the Trump campaign, payday lenders were bragging about being able to ‘pick up the phone and...get the president’s attention’ to fend off regulation,” Sen. Sherrod Brown (D-Ohio) said in a statement Tuesday, CNBC reports.
“Today, the CFPB gave payday lenders exactly what they paid for by gutting a rule that would have protected American families from predatory loans that trap them in cycles of debt.”