WASHINGTON, D.C. (May 24, 2017) — President Trump’s proposed budget request for Fiscal year 2018 will make it more difficult than ever for struggling Americans to protect their hard-earned wages from predatory lenders, leaders of the Stop the Debt Trap campaign said Wednesday.
The budget for, all practical purposes, eliminates the Consumer Financial Protection Bureau and Community Development Financial Institutions (CFFI).
“Payday and car title lenders drain over $8 billion a year by charging people rates as higher 300 percent APR, and then trapping them in a cycle of debt. As we speak, the CFPB is advancing ways to stop the harms of these unaffordable debt trap loans, both through proposed rulemaking and its enforcement actions. The budget proposal mirrors efforts by payday lenders, big banks, and their allies in Congress to roll back protections designed to stop the payday loan debt trap,” said Diane Standaert, executive vice president and director of state policy at the Center for Responsible Lending.
“The Trump budget sets up a perfect storm of opportunity for payday lenders by slashing away at vital services while gutting community financial institutions that offered the only safe loans available to many people. It also seeks to eliminate the cops on the beat who can keep these loan sharks from coming up with even more ways to trap families in a cycle of debt,” said José Alcoff, Campaign Organizer at Americans for Financial Reform. “With a cabinet made up of Wall Street millionaires, it’s no surprise that this Administration would do everything possible to ensure that banks and payday lenders get to make the rules for our economy. This is exactly the kind of special interest, pay-to-play decision-making that helped bring the economy to its knees less than a decade ago.”
“Addressing high-cost predatory lending is a bipartisan issue, as South Dakota voters showed in November by voting by 75 percent to eliminate payday loans,” said Lauren Saunders, associate director for National Consumer Law Center. “It is outrageous that the Administration would gut the consumer watchdog working to protect people from unaffordable 400 percent APR loans.
“The Trump administration budget proposal is cruel to the point of absurdity, as is the move to use the budget to gut the CFPB and let payday loan sharks have free rein in our communities.” said Liz Ryan Murray, policy director for People’s Action.
“Along with destroying critical pillars of our nation’s social safety net, Trump’s budget effectively dismantles the CFPB, threatening basic protections for consumers everywhere,” said Lindsay Daniels, Associate Director of Economic Policy at the National Council of La Raza. “At a time when the consumer agency is working to curb the predatory payday lending industry that specifically targets communities of color, Latino families need a strong, independent CFPB now more than ever.”
“If Trump eliminates the CFPB’s budget, our servicemembers will lose their protections against payday debt traps. Without someone in their corner against financial scams, servicemembers will lose security clearances, we’ll have fewer deployments, and our country will be less safe,” said Mike Litt, consumer advocate for U.S. PIRG
“Proposed under the guise of creating greater accountability, the President’s surprise budget proposal to restructure and refocus the CFPB is not only about creating a less effective, independent consumer watchdog—it’s about eliminating it altogether. In the end, this harmful proposal would only serve to leave countless families susceptible to the debt trap of high-cost payday loans and the very same predatory practices brought our economy to the brink of collapse. What Americans need is a budget that promotes greater financial security and less economic inequality, and this requires a strong, independent CFPB,” said David Newville, director of federal policy for the Corporation for Enterprise Development.
The Consumer Financial Protection Bureau is a 21st century agency that implements and enforces Federal consumer financial law and ensures that markets for consumer financial products are fair, transparent, and competitive. For more information, visit consumerfinance.gov.
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