Make the world safe for loan sharks

The payday loan industry trade group, which benefits from interest rates as high as 950% a year tax on the poorest among us, plans to celebrate its annual conference this year at the Trump golf course near Miami.

The industry will have much to celebrate in the four day conference in april of the Community Financial Services Association of America, which spent $460,000 on federal lobbying in 2017. the Consumer Financial Protection Bureau, our nation’s independent agency that is supposed to be a consumer watchdog, recently announced that the bureau reconsider a rule that could be cut industry revenue by two-thirds.

the office too completed an investigation on an installment lender whose PAC gave at least $4,500 in campaign donations to mick mulvaney, the former congressman from South Carolina who is now the acting bureau chief. the office too dropped lawsuit in Kansas against four payday loan companies which charged interest rates from 440% to 950%.

“Mulvaney is inviting financial predators to help him dismantle consumer guarantees,” said Bart Naylor of Public Citizen.

A lot of payday loan rule was supposed to go into effect in August 2019. It required payday lenders to determine whether the borrower could actually repay the loan with interest within 30 days as long as you keep paying basic living expenses such as rent and car expenses. the loans are often due within two weeks and have annual interest rates of around 390%.

our nation has more payday loan stores than McDonald’s restaurants — almost 18,000. They make about $46 billion in loans each year and collect more than $7 billion in fees. Researchers estimate that about 12 million people, many of whom cannot obtain other types of credit, borrow from payday lenders each year.

Big banks like Wells Fargo finance eight major payday lenders. Banks can borrow money at 0.5% from the Fed and then lend it to payday lenders.

the rule too it limited the number of times a borrower could refinance a loan. Payday loans are often structured with balloon payments. Borrowers who cannot pay the full amount can renew the loan, racking up hundreds of dollars in fees while still owing the original loan amount.

“A payday loan often leads to another payday loan and so on in a debt trap,” said Christopher Peterson, a University of Utah law professor who advised the office on the payday loan rule. “…The average borrower is taking out eight of these loans a year.”

Trump named Mulvaney as interim bureau chief, replacing richard cordray who resigned in November. Appointed Cordray Leandra English as acting director. She has sued Trump and Mulvaney to try to stop Mulvaney from running the agency. The lawsuit is pending.

mulvaney has did not ask for money to finance the agency in the second half of 2018 and has told office staff that show “humility and prudence” and not “push the limits”.

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