WASHINGTON, D.C. – Oregon’s Senator Jeff Merkley released the following statement after the Consumer Financial Protection Bureau (CFPB) released a long-awaited proposed rule on small dollar lending. The rule will crack down on predatory lending models that are based on trapping consumers in unaffordable and escalating cycles of debt.
“I will never forget my first visit to a food bank after we passed the Oregon law banning high-interest payday loans. The director of the food bank came up to me and immediately began thanking me for getting rid of these predatory loans. She told me that up until the passage of that law, she had frequently seen families coming into the food bank because they no longer had money for their basic living expenses after their finances had been destroyed by unaffordable, high-interest payday loans.
“As that food bank director attested, the lives of thousands of families are better because we got rid of those predatory loans in Oregon—and now the lives of millions will be better because of the CFPB’s action to take them on nationally. It is common sense that someone scraping by paycheck-to-paycheck simply cannot afford to repay a loan with 500% interest. This rule will help hardworking Americans keep more of their own money and finally create national protections to prevent families from being trapped in this inescapable vortex of debt.”
As Speaker of the Oregon House in 2007, Merkley led the successful effort to cap interest and fees on payday loans at 36% in the state of Oregon. In the U.S. Senate, he has remained a champion in taking on predatory payday lending, and has pressed the CFPB to use their power to protect consumers from predatory small dollar loans. Last year, he led a group of 33 Senators in calling on the CFPB to issue the strongest possible small-dollar lending rules. He recently introduced the SAFE Lending Act, legislation to end abuses in the online payday lending industry.