Why the USCCB speaks out against rescinding payday loan rules
Washington DC, Feb 19 2019 / 16:43
The Consumer Financial Protection Bureau on February 14 oofficially proposed Repeal a rule designed to protect borrowers from predatory lending, sparking concern from Christian groups nationwide that the CFPB could weaken existing protections against loan sharks.
Catholic Charities USA and the United States Conference of Catholic Bishops have joined a coalition of Christian groups to sign a letter last week fearing that the repeal of the so-called “dollar lending rule” could hurt low-income borrowers.
“We encourage you to take this opportunity to strengthen, not weaken, the rule,” read the letter, written by the Faith for Just Lending group.
“The rule as finalized aims to protect vulnerable individuals and families in times of financial crisis from debt traps designed around their inability – as opposed to their ability – to repay their loan … We believe the rule was a step in the right direction. direction, but more needs to be done. “
The “little dollar loan” rule, which the financial agency announced in October 2017, was designed to protect financially vulnerable consumers from annual interest rates of up to 300% on payday loans and loans. auto title loans. The bureau announced on February 6 that it was seeking to delay implementation of the rule until 2020 and remove key requirements on lenders.
Although about 12 million clients use small loans each year, the agency has long chronicled the risks these loans pose to vulnerable people. Faced with having to repay a loan with high interest and high fees, borrowers risk “defaulting, re-borrowing, or skipping other financial obligations like rent or running expenses like buying food or getting money.” of medical care ”, according to the CFPB.