CFPB payday lending rules a good start for reform in Utah
Inside Subprime: October 23, 2017
By Caroline Thompson
As we reported earlier this month, the Consumer Financial Protection Bureau has issued a new rule, which, if enacted, would help credit-poor consumers from falling into costly payday lending debt traps. The rule seeks to force lenders to increase their lending standards, and stop rolling over short-term loans when borrowers fail to pay them off in time.
While the payday lending industry is fighting back against the proposed regulations, many Utah residents – whose state boasts four times as many payday lenders as it does McDonald’s restaurants – are calling for additional reform on top of the new CFPB rules.
“Even if the CFPB’s rules go into effect,” wrote lawyers Christopher Peterson and Josh Kanter in an op-ed for Deseret News, “without action at the state level, here in Utah most payday lenders will likely restructure their payday loans as longer duration installment loans that carry the same crushing interest rates.”
Peterson and Kanter look to the actions of South Dakota and Montana, two states which recently put this issue on the ballot, and had citizens vote overwhelmingly to limit short-term interest rates to 36 percent.
“In both states, re-establishing the traditional usury limits that were the norm through most of American history is working just fine,” wrote Peterson and Kanter. “The public still has access to credit cards, personal loans, home mortgages and even pawnshop credit. And banks and credit unions were hardly affected at all. The Utah Legislature should not wait for Washington to protect struggling families from usurious credit. And if the Utah Legislature will not act, then maybe the public should.”
For more information about payday lending in Utah and beyond, check out these related pages and articles:
- A Guide to Payday and Title Loans in Utah
- Utah Payday Lending Fact Sheet
- The CFPB’s New Payday Lending Rule is a Big Win for Socially Responsible Lending
- Payday Loans: The Most Dangerous Debt Trap