Policy analyst fears CFPB chaos may spell disaster for Oklahomans
Inside Subprime: February 2, 2018
By Alex Huntsberger
In a recent opinion piece for Tulsa World, Tax Policy Institute analyst Courtney Cullins came out against the new direction of the Consumer Financial Protection Bureau (CFPB) under acting director Mick Mulvaney, stating that it was “bad news for Oklahomans.”
After original CFPB director Richard Cordray stepped down last fall, Trump appointee Mulvaney has taken the bureau in a radically new, and worrying, direction. The Bureau was put in place by the Obama administration as a bulwark against the kind of predatory financial practices that led to the 2008 financial crisis.
And yet, the Bureau’s new director seems to have a completely different idea of the bureau’s role in consumer affairs.
“Soon after stepping in as acting director, Mulvaney informed staff in an agency-wide email that the agency’s goals would be changing. In Mulvaney’s words “… we work for the people. And that means everyone; those who use credit cards, and those who provide those cards; those who take loans, and those who make them …” That’s right: consumers are no longer the primary focus of the Consumer Financial Protection Bureau.”
Last October, after years of careful fact-finding and deliberation, the CFPB announced a new set of rules aimed at reining in predatory payday lenders. At the heart of these new rules is a requirement that lenders check a borrower’s ability to repay the loan they are requesting. Without such a rule in place, it is all too easy for borrowers to go from a single, short-term loan to an ever-spiralling cycle of debt.
However, the bureau announced the other week that it would be reconsidering the rule. According to Cullin, “The announcement that the CFPB is backtracking tells predatory lenders that they needn’t put a lot of effort into bringing their business practices into compliance before enforcement begins in 2019, allowing them to continue taking advantage of hardworking families.”
It’s clear that the agency’s heel turn is not great news for low-income Americans the country over, but is it particularly bad for Oklahomans? According to Cullin, it is. She writes:
“Lax regulation, a high poverty rate, and few other sources of cash assistance for low-income families struggling to put food on the table mean that a greater share of Oklahomans fall victim to these high-interest loans than residents of any other state.”
If Cullins fears about CFPB bear out over the coming months and years, it looks as though the future of payday lending in Oklahoma will be a very dark one for borrowers.
To learn more about the dangers of payday lending in Oklahoma, check out these related pages and articles from OppLoans:
- Payday Loans: The Most Dangerous Debt Trap
- Title and Payday Loans in Oklahoma: A Fact Sheet
- Money Now: The Case Against ‘Bad Credit’ Loans