Faith leaders protest payday lending at industry’s annual conference
Inside Subprime: April 22, 2018
By Lindsay Frankel
The Community Financial Services Association of America, a payday loan industry trade group, held its annual conference at Trump National Doral Golf Club in Florida this week. Executives convened for receptions and breakout sessions, but outside the gates of the resort, a small group of protesters rallied.
One of the protestors, Steven Reeves, with the Cooperative Baptist Fellowship in Georgia, explained that he did not think the decision to hold the conference at the Trump resort was coincidental. “We’ve seen this industry is incredibly creative and responsive in the ways it influences — whether it’s through lobbyists or campaign contributions,” he said. But Dennis Shaul, head of the Community Financial Services Association of America, insisted that the decision was not political. He explained that the Trump resort was chosen as an optimal location for the industry’s golf tournament.
There’s no doubt that the payday loan industry has been on the upswing since Mick Mulvaney, the Trump-appointed acting director of the Consumer Financial Protection Bureau, put a hold on the payday loan regulations published by his predecessor. The previous rules would have required payday lenders to verify a borrower’s ability to pay back the loan and would have placed limits on the number of payday loans a lender could issue.
Mulvaney explained in a Senate hearing last week that he is reevaluating payday industry restrictions because he questions whether his agency has the authority to regulate the industry. The hold on the CFPB’s rules was cause for celebration among payday lenders since the proposed rules would have significantly curbed the industry’s profits. Stocks for payday lenders have jumped up since Mulvaney’s decision. Jamie Fulmer, with Advance America, a major payday lender, explained that the hold on the previously published rules was a positive sign that “the bureau will be more judicious in their approach.”
However, faith leaders protesting outside the conference maintained that the industry causes financial harm to low-income families, trapping individuals with bad credit in a cycle of debt. Payday lenders argue they are filling a need for short-term loans for individuals not served by traditional banks, but protesters say their services are predatory. Cassandra Gould, an African Methodist Episcopal pastor from Missouri, agreed that there was a need for small dollar loans, but said the typical high interest rates on payday loans pushed borrowers into “a worse financial situation than they started off in.”
Most payday loans come with interest rates of up to 300 percent, creating a trap for families when they can’t cover their expenses. But the political environment in Washington has steadily moved towards deregulating the industry, and payday lenders intend to keep it moving in that direction. Two payday lending trade groups sued the CFPB earlier this month in an attempt to keep the proposed rules from going into effect in August 2019. And as Mick Mulvaney attends to revising the rules, it’s not likely that payday lenders will face tighter restrictions. As such, consumers need to educate themselves about their options and be aware of predatory practices among payday lenders to ensure their own financial well-being.
To learn more about the dangers of payday lending, check out these related pages and articles from OppLoans:
- Payday Lending in Florida: A Dangerous Debt Trap
- Why Cash Advance Loans are so Low-Value
- Payday Loans Online: What You Need to Know