Private equity has pushed into the high-priced consumer loan industry, offering payday and other consumer loans that profit off trapping borrowers in a cycle of debt. Private equity firms own over 5,000 storefront payday and online lenders that often make loans at 300% annual percentage
The Proposal—a plainly outcome-driven, 47-page exercise in grasping for straws—has offered no reasonable basis to rescind that Rule. Based on a distorted focus on the Rule’s “dramatic impacts” on lenders’ ability to engage in a predatory practice, rather than on the need to protect consumers, the Proposal claims that the evidence must somehow be “more robust.” If the Rule requires significant changes for payday and vehicle title lenders, it is because the harm to consumers is dramatic. The Bureau’s new approach would ignore its consumer protection mandate and require the agency to hesitate when consumer harm is the most severe.
“Congress has done the right thing in allowing the rule to stand. Now the spotlight is on Mick Mulvaney. Will he move ahead on his plans to unravel it, and continue to cater to the payday lenders who gave generously to his campaigns?” said Lisa Donner, executive director at AFR.
Trump’s unlawfully appointed Acting Director of the Consumer Financial Protection Bureau Mick Mulvaney is giving predatory payday lenders a free pass. Specifically, National Credit Adjusters, a debt collector for payday loan companies with 685 complaints against it, confirmed that a pending case against the company is “dead.”
Private equity moguls have invested heavily in the payday and installment lending. The development puts private equity firms in the position to profit from efforts by payday lenders to roll back an important new rule by the Consumer Financial Protection Bureau.
New report offers details on over 20 cases of private equity investment in payday lending, and how the new owners or investors seek greater rewards from this predatory business.
“Attempts to roll back this protection for consumers are nothing more than a sellout to the predatory payday lenders who want to continue to enrich themselves by trapping people in a painful cycle of debt. Congress should reject this and other attempts by payday lenders to undo a common sense rule based on the common sense principle of ability to repay.”
CFPB issued a final regulation ensuring that consumers can join together to challenge financial fraud and scams in court. The rule limits the use of forced arbitration, a process Wall Street banks and predatory lenders use to evade accountability and keep their misconduct out of the public eye.
“VICE has obtained exclusive transcripts of this year’s annual meeting of the Community Financial Services Association of America… at the Atlantis Paradise Island Resort. That’s where lenders were taught exactly what it might take to beat back an existential threat to their business. Trapping people in unaffordable debt is ‘their business model,’ said Gynnie Robnett [of] Americans for Financial Reform… ‘And they seem determined to preserve it, any weasel-y way they can.'”