Payday loans – short-term loans that typically carry triple-digit annual percentage rates (APR’s) – often trap the most vulnerable consumers in a devastating cycle of debt. In June 2016, the Consumer Financial Protection Bureau (CFPB) proposed rules that put important limits on these risky loans, as well as on other high-cost products like auto title and installment loans. Crucially, the rules generally require lenders to evaluate the consumer’s ability to repay the loan, and limits loan renewals or rollovers, which is how lenders profit the most.
But the CFPB has yet to finalize the payday loan rule. Meanwhile, Wall Street interests have the CFPB in their crosshairs, and their friends in Congress have introduced bills threatening the agency’s ability to do its work. For example, the Financial CHOICE Act would entirely remove the CFPB’s ability to regulate payday and other high-cost lenders. We strongly oppose any changes to the CFPB, which has returned almost $12 billion in refunds and relief to consumers.