New CFPB Chief Guts Payday Lending Rules
The Consumer Financial Protection Bureau took steps this week under its new director, Kathy Kraninger, to significantly curtail a pending rule limiting the worst practices of the payday lending industry. The rule, which was to take effect in August 2019, would have required payday lenders to take meaningful efforts to ensure that borrowers could afford the loans on offer.
“In proposing to undo the rule against abuses in payday and car title lending that the CFPB crafted after five years of careful study and an open process, the new CFPB director Kathy Kraninger is allowing the payday lenders to drive policy at the agency, just as Mick Mulvaney did,” said Linda Jun, senior policy counsel at Americans for Financial Reform.“This puts a vital consumer protection on the chopping block at the behest of predatory payday lenders, inviting them to continue profiting from trapping borrowers in a cycle of debt. We urge the Director to change course and not finalize such a rule.”
The attacks on the CFPB’s consumer protections demonstrate the country’s need for an alternative financial service with a real public option – like postal banking.