Stephen Reeves, CBF’s associate coordinator for advocacy and partnerships, testified Tuesday at a hearing on predatory lending of the Consumer Financial Protection Bureau.
The Tennessean wrote about this public hearing in a helpful article titled “The battle to reform payday lending.” Below is a snippet:
Federal regulators are preparing to tackle an overhaul of the payday lending industry, but based on feedback at a recent public hearing in Nashville, the industry already is changing.
The federal Consumer Financial Protection Bureau shared new data illustrating the dangers of payday lending at Tuesday’s event and was met with a chorus of opposition from the cash advance industry.
Hundreds turned out for the hearing in Nashville, many of whom represented the payday industry and wore yellow stickers reading “My Credit, My Decision.” During public comments, industry workers shared stories of helping consumers and emphasized consumers’ abilities to make sound financial decisions without government interference.
“We explain everything to the customer,” said Sonya Jones, a manager at Advance Financial in Nashville. “We are helping someone when no one else would.”
However, the CFPB held the hearing to gather insights from both consumer groups and payday lenders as it writes new guidelines. The bureau says many payday lenders can trap consumers in cycles of debt.
The article goes on to report that several large banks – most notably U.S. Bank and Wells Fargo – announced back in January their decision to abandon certain predatory lending practices. Be sure to read the entire article here.
Here is an excerpt from the remarks of CFPB Director Richard Cordray:
Our study also looked at payday borrowers who are paid on a monthly basis. It found that many payday borrowers fall into this category, such as elderly Americans or disability recipients on fixed incomes. A fair number of them remained in debt for the entire year of our study, living for all practical purposes with a high-cost lien against their everyday life.
Indeed, of the payday borrowers who were receiving monthly payments, one out of five borrowed money in every single month of the year. These borrowers, which includes those who receive Supplemental Security Income and Social Security Disability or retirement benefits, are thus in serious danger of ensnaring themselves in a debt trap when they take out a payday loan. This fact is of great concern to us.
Evelyn, an 81-year-old woman from Texas, had to deal with this very situation. Evelyn told us she had never taken out a payday loan in her life until she needed to pay for her dying daughter’s cancer medicine. She saw an ad on TV and on a Saturday morning went down to her local payday storefront to take out $380. She was hoping her daughter would get well and pay back the money herself. But the cancer took away her daughter just six months later. Evelyn, on a fixed income that combined her widow’s pension and Social Security checks, tried to pay back the loan bit by bit. But every time she hit her due date at the beginning of the month, she had to renew the loan because she did not have the full amount plus the new fees. As the many months passed, Evelyn’s outstanding balance grew to be more than $700.
During the public hearing, CBF Communications joined up with other faith-based organizations as well as consumer protection groups to tweet about the usurious practices of the payday loan industry. You can check out that digital #paydayloans conversation here. Below you’ll see a few of our tweets with links to payday resources.
— CBF (@cbfinfo) March 25, 2014
— CBF (@cbfinfo) March 25, 2014
CBF resources on predatory lending: