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AFR Statement: Mulvaney Plan to Gut Payday Lending Rule Defies Common Sense

Submitted by on October 26, 2018 – 1:14 pm

FOR IMMEDIATE RELEASE

Oct 26, 2018

CONTACT:
Carter Dougherty

carter@ourfinancialsecurity.org

(202) 251-6700

Statement on Mulvaney Plan to Gut Payday Lending Rule

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau under acting director Mick Mulvaney and deputy director Brian Johnson announced it plans to gut the core provisions of its 2017 rule on small-dollar loans, the first effort at the federal level to rein in the abuses of payday lenders by regulation.

The rule, which was years in the making, created vital protections for consumers of payday, car title, and some longer-term loans to ensure that predatory lenders don’t trap customers in unaffordable loans. Underlying the rule is the common-sense principle that lenders should consider whether borrowers have the ability to repay a loan before they risk their financial well-being.

“The consumer bureau used to be a great agency dedicated to enforcing the law and protecting consumers, is now to putting predatory lenders ahead of the law and its mission with this attempt to gut consumer protections,” said José Alcoff, payday campaign manager at Americans for Financial Reform. “Mulvaney’s CFPB now wants to wipe out a simple, common-sense requirement that lenders ought to examine a borrower’s creditworthiness before making a loan that too often becomes a debt trap for the most vulnerable consumers.”

“We have already seen that Mick Mulvaney’s bureau has little to no interest in enforcing the law against predatory lenders,” Alcoff said. “Under Mulvaney, the consumer bureau has dropped cases against predatory lenders that illegally charged up to 950 percent annual interest rates, dropped an investigation into a case against a lender that had contributed to Mulvaney’s congressional campaigns, and just this week settled a suit against payday lender Cash Express for a paltry sum, far less than the originally planned amount which would have gone to refunding the consumers that they had wronged.”

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