Via Electronic Submission
The Honorable Richard CordrayConsumer Financial Protection Bureau1700 G Street NWWashington
Re: Proposed rulemaking on payday, car title, and particular high-cost installment loans, Docket No.
Dear Director Cordray:
We, the 131 signatories for this page, represent a diverse cross-section of elected officials, federal federal government, work, grassroots organizing, civil rights, appropriate solutions, faith-based as well as other community businesses, along with community development banking institutions. We respectfully request that the CFPB count this page as 131 remarks.
Together, we urge one to issue a powerful payday lending rule that ends the loan debt trap that is payday. Once the CFPB makes to issue a last guideline to deal with payday financing nationwide, we urge you not to ever undermine our state’s longstanding civil and criminal usury guidelines. Certainly, we urge you to definitely issue a guideline that improves our protections that are existing.
Because the CFPB truly acknowledges, a summary of signatories for this magnitude and breadth just isn’t you need to take lightly. This page reflects the positioning greater than 38 state and regional elected officials, the NYC Department of Consumer Affairs, the Progressive Caucus for the NYC Council – also as 92 businesses that represent a spectrum that is broad of, views, and constituents. We have been worried that the CFPB is poised to issue a poor guideline that wouldn’t normally only set a reduced bar for the whole country, but that will additionally straight undermine our state’s longstanding ban on payday financing.
As New Yorkers, we think we now have a specially appropriate perspective to share. Significantly more than 90 million Americans – nearly a 3rd for the country – real time in states like ny where payday financing is unlawful. Our experience clearly demonstrates that: (1) individuals are means best off without payday financing; and (2) the way that is best to address abusive payday lending, along with other types of predatory high-cost financing, would be to place a finish to it for good.
As proposed, the CFPB’s payday financing guideline is full of loopholes and would effortlessly sanction high-cost loans which are unlawful within our state and several other jurisdictions in the united states. We turn to the CFPB to issue a very good rule that is final does perhaps maybe maybe not undermine brand brand brand New York’s longstanding usury as well as other customer security rules. We urge you to definitely set a bar that is high the whole country and issue a rule that enhances, and will not undermine, our current defenses. We ask the CFPB to make use of its full authority to issue the strongest feasible rule that is final will really end the cash advance debt trap.
The payday financing industry has thrived because a lot of people within our nation would not have enough income to pay for their fundamental cost of living. The thing that is last people need are predatory, high-cost loans that dig them into a straight much deeper hole — just what happens now in states that allow payday financing. Certainly, numerous New Yorkers have been in financial stress, struggling in order to make ends fulfill from paycheck to paycheck (or federal federal government benefits check to federal government advantages check), therefore the undeniable fact that we try not to allow lending that is payday has proven crucial to protecting a massive section regarding the populace from monetary exploitation. Where payday lending is legitimately allowed, the industry has targeted black colored and Latino communities, draining vast sums of dollars and perpetuating the racial wide range space into the U.S.
In a nutshell, we think about ourselves exceedingly lucky to reside and operate in a situation that bans payday financing. Our centuries-old law that is usury it a felony to charge a lot more than 25 % interest on financing. Maintaining payday financing out of New York has furnished vast advantages to New Yorkers, neighborhood communities in addition to state economy in particular. Each year, for instance, our state’s law that is usury New Yorkers around $790 million which they would otherwise devote to charges for unaffordable payday and automobile name loans.1
Despite these clear benefits, payday lenders have actually for several years tried to crack open our usury legislation and also make predatory lending that is high-cost in our state. Seeing an untapped, profitable market they are able to exploit in nyc, the payday financing and look cashing trade teams have over and over over and over repeatedly pressed our state legislature to legalize high-cost payday along with other kinds of harmful financing. Over and over, these efforts have actually pitted the general public interest against predatory financing passions, resulting in unsightly battles between community teams and industry, and draining massive general public resources in the act. Luckily, we now have successfully beat straight straight back these tries to gut our usury legislation, thanks in large measure to advocacy that is effective a broad coalition of community, work, and civil liberties teams, that has ensured that payday lending stays unlawful within our state.
Our company is well mindful that the CFPB may not set interest levels, nevertheless the agency can and really should make use of its complete authority to simply take action that is strong. Missing strong action that is federal stopping payday lending, including payday installment financing, will still be a casino game of whack-a-mole.
We have been extremely concerned that the poor CFPB guideline will play directly into the fingers of this lending that is payday, supplying it with ammo had a need to defeat strong legislation like we now have in brand new York. Certainly, in Pennsylvania and Georgia, the lending that is payday has apparently utilized the CFPB’s 2015 blueprint for the guideline, suggesting to mention legislators that the CFPB has provided its stamp of approval to high-cost payday and payday-like loans.
The proposed guideline has a list that is long of and exceptions that raise major issues for the organization. We highly urge the CFPB, at the very least, to:
- Require a significant “ability to repay” standard that is applicable to all the loans, without exceptions in accordance with no safe harbors or appropriate immunity for poorly underwritten loans. The “ability to repay” supply should need consideration of both earnings and costs, and suggest that loans which do not meet a significant capability to repay standard are per se unjust, unsafe, and unsound. a poor CFPB guideline that enables loan providers to help make unaffordable loans or that features a safe harbor would not merely enable for continued exploitation of people struggling to create ends fulfill. It could additionally provide payday loan providers unwarranted ammunition to knock down current state defenses, while they have already been aggressively trying to do for a long time.
- Fortify the enforceability of strong state customer protection rules, by giving that providing, making, facilitating, servicing, or gathering loans that violate state usury or other consumer security rules can be an unjust, misleading, and act that is abusive practice (UDAAP) under federal legislation. The CFPB’s success in deploying its UDAAP authority against payday loan providers such as for example CashCall – which a court that is federal discovered had involved with UDAAPs by servicing and gathering on loans which were void or uncollectible under state law, and that your borrowers consequently would not owe – as well as against loan companies cash central, re re re payment processors, and lead generators, provides a good appropriate foundation for including this explicit dedication with its payday lending rule. In that way, the CFPB can help make sure the viability and enforceability for the rules that presently protect people in payday states that are loan-free unlawful financing. At the least, the CFPB should offer, prior to the court’s choice against CashCall, that servicing or gathering on loans which are void or uncollectible under state law are UDAAPs under federal legislation.
We have been profoundly concerned that weaknesses within the proposed guideline will inevitably be observed as sanctioning high-cost loans which can be unlawful in ny. a guideline that undercuts rules that protect tens of an incredible number of Americans in payday loan-free states cannot, inside our view, constitute sound public policy-making, even though the rule mitigates a number of the harms brought on by payday financing in states where it is currently appropriate. Numerous teams are talking about the proposed rule as addressing the worst abuses of payday financing. Because of the agency’s clear mandate, and provided all we all know about payday financing, exactly why isn’t the CFPB seeking to handle every one of the abuses of payday financing?
Families within our state — and everywhere — are best off without these high-cost, unaffordable loans. We urge the CFPB to issue the strongest rule that is possible without loopholes.