WASHINGTON, D.C. – Oregon’s Senator Jeff Merkley released the following statement after the Consumer Financial Protection Bureau (CFPB) announced, on the same day that the CFPB’s new payday lending rules officially go on the books, that the bureau plans to rewrite the rules and will give waivers for lenders that want to ignore the rules and continue issuing predatory loans.
The CFPB’s abrupt reversal on the issue comes shortly after OMB Director Mick Mulvaney was installed by President Trump as Acting Director. As a Congressman, Mulvaney called the CFPB a “sick, sad joke,” and routinely allied with payday lenders against consumer protections.
“Even for an administration that has spent the last twelve months consistently favoring the privileged and powerful over working Americans, this is a new low. Payday lenders prey on cash-strapped families during their toughest times, often issuing loans with annual interest rates as high as 500% and sucking families into an inescapable vortex of debt.
“The CFPB’s own research that led to these rules concluded that these predatory loans are ‘debt traps’; that four out of five payday loans are rolled over or renewed because the recipient cannot afford the loan; and that the majority of loans are made to borrowers who have to renew so many times that their fees end up exceeding the original amount of the loan.
“Today’s rules had one simple premise: that lenders should not issue loans they know their borrowers cannot repay. There is no reason to defend payday lenders’ ability to issue loans that are, by definition, unaffordable, unless your goal is to prop up a predatory industry at the expense of consumers. This payday predator protection plan is a huge mistake and the clearest indication yet of the danger that Mick Mulvaney poses to consumers while he runs the CFPB.”
Merkley has been a strong proponent of ending predatory lending since his time in the Oregon legislature. As Speaker of the Oregon House, he led the successful fight to cap exorbitant interest and fees on payday loans in Oregon. In the Senate, he wrote provisions of the Wall Street reform act to end predatory mortgage loans and has been a leader in fighting to end predatory behavior in online lending and to institute a national cap on interest and fees for payday loans.