In a move Democratic Sen. Ron Wyden calls “cruel,” the Consumer Financial Protection Bureau is further eating itself alive by weakening Obama-era rules that prevent payday lenders from extending loans that people can’t afford to pay back.
Trump’s CFPB has proposed both delaying implementation of the rule that is currently set to go into effect in August until sometime next year, as well as nixing a requirement that lenders verify borrowers’ income and that they can afford the loans they’re applying for. That rule came about because payday lenders can charge interest rates of 390 percent or more, according to analysis the CFPB completed in 2013. A follow-up report the next year found that as many as 80 percent of loans roll over into new loans within two weeks. Low-income borrowers get trapped, and often take out as many as eight or even more loans in a single year.
It’s not a huge surprise that the agency’s chief Kathy Kraninger is continuing what her mentor, Mick Mulvaney, started in his stint as the moonlighting acting director. Mulvaney, you might remember, dropped the agency’s investigation into a predatory lender’s practices. It was no coincidence that that lender was also a political donor of Mulvaney’s. He followed that up by dropping more payday lending cases, denying defrauded consumers more that $60 million in compensation.
Between this and the massive tax breaks the banks got, the financial industry has a best friend in Trump, the guy they wouldn’t even loan money to before he was in the White House because he was such a risk. Now all that risk has been spread to the rest of us.
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