Congressional reps rebuke delay of payday loan rule

Charlene Crowell
Charlene Crowell

Anyone who struggles with the rising costs of living knows all too well how hard it is to try stretching dollars when there’s more month than money in the household. Predatory lending, like payday and car title loans, worsen financial stress with triple-digit interest rates that deepen the debt owed with each renewal. The irony is that many payday loan borrowers who needed just a few hundred dollars wind up owing thousands. And any loan whose accrued interest exceeds the principal borrowed is truly predatory.

In recent days, more than 100 members of Congress stood in support of consumer protections against these debt-trap loans. The effort, led by U.S. Rep. Maxine Waters of California, chair of the House Financial Services Committee, called upon the Consumer Financial Protection Bureau to do two things: stop delaying the current rule from taking effect and preserve the existing rule’s requirement that lenders make loans only to consumers who can afford repayment.

The Aug. 23 letter to CFPB minced no words.

“Experts have noted that payday loans often target communities of color, military service members and seniors,” the Congress members wrote, “charging billions of dollars a year in unaffordable loans to borrowers with an average annual income of $25,000 to $30,000.”

“The Consumer Bureau’s proposal represents a betrayal of its statutory purpose and objectives to put consumers, rather than lenders, first,” continued the members. “Moreover, the Bureau has offered no new evidence and no rational basis to remove the ability to repay provisions. We think you should immediately rescind the harmful proposal to roll back the 2017 payday rule.”

These direct rebukes were reactions to CFPB’s 15-month delay of a long-awaited consumer-friendly rule that was scheduled to take effect on Aug. 19.

In today’s contentious Washington, getting strong support for any pro-consumer issue seems particularly difficult. Even so, the August letter to CFPB Director Kathleen Kraninger included representatives from 31 states, including those with some of the highest annual percentage rates on loans found across the country. For example, the typical payday loan in California comes with 460% interest and the largest number of state signatories also came from California: 15.

Although no other state’s signatories were as numerous, the clear expression of genuine consumer protection against this heinous predatory loan in other areas with rates near or exceeding 400% is noteworthy: Texas, 661%; Wisconsin, 574%; Missouri, 462%; and Illinois, 404%.

Yet a closer examination of the signatories reveals that despite sizeable support expressed in the letter, it represents only about 23% of the entire House of Representatives.

New research on the nation’s wealth gap by McKinsey & Company found that 65% of Black America lives in one of 16 states – Alabama, Arkansas, Delaware, Florida, Georgia, Illinois, Louisiana, Maryland, Michigan, Mississippi, New Jersey, New York, North Carolina, South Carolina, Tennessee and Virginia.

Among these 16 states, only Arkansas, Georgia and North Carolina have enacted 36% or less payday loan rate caps. The remaining 13 states have typical triple-digit payday loan interest rates that range from a low of 304% in Florida to a high of 521% in Mississippi. Multiple CBC members also represent districts in these states.

Speaking at a House Financial Services subcommittee hearing held on April 30, Diane Standaert, an executive vice president and director of state policy with the Center for Responsible Lending, testified of the rippling reasons that payday loans need regulation.

“Allowing the 2017 rule to go into effect as planned is the bare minimum that the CFPB should do,” said Ms. Standaert. “It is absurd that we should even have to make such a straightforward request of an agency whose charge is to protect consumers from unfair, deceptive and abusive financial practices.”


Charlene Crowell is the communications deputy director with the Center for Responsible Lending. She can be reached at


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