Today, Mick Mulvaney, who was unlawfully appointed as acting director of the Consumer Financial Protection Bureau (CFPB) in November, announced his plan to reopen the consumer bureau’s rule on payday and car title loans, which are usually 300% annual interest or higher.
The rule was scheduled to go into effect summer 2019, 21 months after being published in the federal register—a more than ample implementation period. Released in October of last year, the payday lending rule will result in fewer families falling into financial ruin.
At the heart of the rule is the common-sense ability-to- repay principle based on a borrower’s income and expenses, which means that lenders will be required to determine whether a loan is affordable to the borrower before making it. An affordable loan is one a borrower can reasonably be expected to pay back without re-borrowing or going without the basic necessities of life like food or rent money.
The rule release was years in the making, and it wouldn’t have been possible without the tireless effort of community and faith leaders, consumer and civil rights advocates, and countless people across the country who organized and spoke out against the devastating payday loan debt trap.
The Stop the Debt Trap campaign, made up of more than 700 organizations from across the country, released the following statement:
“This move shows the level of influence that payday lenders have over Mick Mulvaney, who for years received campaign contributions while a member of Congress. With today’s announcement, Mulvaney is sending an unmistakable signal that he wants to kill this common-sense regulation.
“The payday rule was issued after years of research and extensive stakeholder input; the evidence is overwhelming that these 300 percent annual interest loans trap borrowers in an unaffordable cycle of debt, causing severe financial harm such as bank penalty fees, delinquency on other bills, or even bankruptcy. There is no reason to reopen the rule, and doing so shows disdain for consumer protection and low-income communities that are targeted by these debt trap loans.”