Rep. Grijalva Slams Deregulation of Payday Lending Industry from Trump Administration
TUCSON— This week, the Consumer Financial Protection Bureau rescinded a series of rules and regulations that oversaw the payday lending industry, making it easier for predatory short-term loan agencies to issues quick, high-interest loans to vulnerable consumers. The previous rule required short-term lenders to issue loans based off the ability of consumers to repay the loan within two weeks.
“Payday lenders are notorious for deceptive practices that prey on vulnerable individuals and trap them in cycles of debt that few recover from,” said Rep. Raúl M. Grijalva. “The previous rule helped prevent this deception, but once again the Trump Administration has elected to roll back progress and endanger consumers who need the protection the most, all for the benefit of his friends in the payday lending industry. This will only lead to more low-income families being saddled with debilitating debt that they will be unable to repay.”
Research clearly indicates that these predatory loan products trap people in a cycle of debt and leave them in a significantly worse position than they were in prior to taking out the loan. According to CFPB data, 75 percent of payday loan fees are from borrowers stuck in more than 10 loans a year. Payday and car-title loans are estimated to carry an annual percentage rate (APR) of 391 percent on average.
“The middle of a public health and economic crisis is the worst time to loosen regulations on predatory industries like payday lending,” continued Rep. Grijalva. “The Senate must act on the HEROES Act to provide Arizonans in need with the help they deserve. I will continue to work with my colleagues in Congress on legislation to rein in the payday lending industry and enact strong consumer protections that protect Americans from these unscrupulous companies, especially during this time of crisis.”