In the last few years, fast loans, also known as payday loans, have become a very fast and convenient way to borrow money for a variety of needs. These loans give consumers the opportunity to borrow money online, meaning you can get money in your bank account from anywhere in the world without having to go to the bank or the private creditor’s office and wait in line. In recent days, news is being circulated in the media, namely:
Table of Contents
- 1 Under Trump Appointee, Consumer Protection Agency Seen Helping Payday Lenders
- 2 Christopher Peterson, a law professor at the University of Utah
- 3 Mike Calhoun, president of the Center for Responsible Lending
- 4 The Trump Administration Is Trying To Bring Back Payday Loans Since Putting Crack Directly Into Urban Water Would Be Too Complicated
Payday lenders appear to have a powerful friend in Washington. Former Republican Rep. Mick Mulvaney is the interim head of the Consumer Financial Protection Bureau. He was appointed by President Trump amid an ongoing a power struggle for control of the bureau. Watchdog groups are up in arms because, under Mulvaney, the CFPB has put on hold a rule that would restrict payday lenders and their high-interest-rate loans. The agency has also dropped a lawsuit against online lenders charging 900 percent interest rates. Critics say these moves are payback for campaign contributions to Mulvaney when he was a congressman representing South Carolina.
Payday lenders say that if you need some money fast, they provide a valuable service. And that is how some customers feel at the Advance America storefront in a little strip mall in Pawtucket, R.I. One of those customers is auto mechanic Rafael Mercedes, who says he first came to the branch when he needed some parts to fix his own car. “My car broke down, and I needed money right then and there,” he says.
Christopher Peterson, a law professor at the University of Utah
He says the problem is that “one payday loan often leads to another payday loan and so on into a debt trap. The average borrower is taking out eight of these loans per year,” he says. “Some are taking out nine, 10, 15 or more loans per year. These costs can really add up.”
Some people at the Advance America branch were clearly regular customers. Peterson says that by getting payday loans paycheck after paycheck, you’re paying an annual interest rate of 200 percent to 300 percent — sometimes even higher depending on state regulations. And, he says, lenders taking money directly from people’s checking accounts can trigger overdraft fees and other costs and problems. Peterson worked for the Defense Department helping to draft regulations under the Military Lending Act, which banned these high-interest payday loans for service members.These loans have been found by Congress to be so dangerous that they have been prohibited for the military, and it was George W. Bush that signed that into law, Click To Tweet
Peterson was also an adviser to the Consumer Financial Protection Bureau when it crafted its payday loan rule for the rest of the country. The rule doesn’t go as far as the military version. But it does require lenders to make sure people can afford to pay the loans back. And it was just about to start being phased into effect this month.
Mike Calhoun, president of the Center for Responsible Lending
He is among consumer watchdogs who are upset that Trump recently chose Mulvaney, a former Republican congressman and current White House budget director, to run the consumer bureau. Mulvaney once introduced legislation to abolish the bureau and called the CFPB a “sick, sad” joke. He also accepted money from payday lenders. And now that he is running the agency, the CFPB put this rule on hold, saying it will take steps to reconsider the measure. The CFPB has also dropped a lawsuit against online lenders charging 900 percent interest rates. And it just dropped an investigation into a lender that contributed directly to Mulvaney’s campaign.
The Trump Administration Is Trying To Bring Back Payday Loans Since Putting Crack Directly Into Urban Water Would Be Too Complicated
The Consumer Financial Protection Bureau — an institution Republicans almost comically hate — sued that Kansas company, and was promulgating payday lending regulations to stamp out the practice. But then Donald Trump took office and, since his only animating principle is to undo whatever Obama tried to do, he is trying to make the world safe for payday lenders. From Bloomberg:
The Consumer Financial Protection Bureau is dropping a lawsuit against a group of payday lenders associated with an American Indian tribe in a sign the regulator is changing direction under Mick Mulvaney, the acting director appointed by the Trump administration…“It’s an earth-shattering change,” said Christopher Peterson, a former CFPB employee who left the agency in 2016 and is a law professor at the University of Utah. “This is signaling that the CFPB is going to stand down on the online payday lenders who refuse to comply with state interest-rate caps.”