A Cooperative Baptist Fellowship advocacy specialist criticized a federal banking agency’s plan to roll back Obama-era restrictions on short-term, high-interest loans that many Americans view as predatory.
The Consumer Financial Protection Bureau announced Wednesday it wants to rescind a 2017 rule requiring lenders to find out whether borrowers can afford to pay back the money before issuing payday, vehicle title and other certain high-cost installment loans.
Stephen Reeves
Stephen K. Reeves, associate coordinator of partnerships and advocacy for the Georgia-based CBF, said the decision “effectively guts” payday-lending reform backed by a broad coalition of religious leaders representing groups including both CBF and the Ethics and Religious Liberty Commission of the Southern Baptist Convention.
“The bureau charged with protecting consumers is instead choosing to side with multi-billion-dollar corporations over families struggling to make ends meet,” Reeves said in a statement.
The CFPB, a government agency created by Congress in response to the financial crisis of 2007-2008 and subsequent Great Recession, said evidence “is not sufficiently robust and reliable to support” the 2017 rule labeling it “an unfair and abusive practice” to loan money without first determining whether the borrower has the ability to repay.
“If a lender will not assess a borrower’s ability to repay before extending a loan, that product is not a loan, it’s a trap,” Reeves said, citing the agency’s own research showing that 75 percent of all fees earned by payday lenders come from consumers taking out 11 or more loans a year.
Debt piles up quickly, Reeves said, with fees marketed for repayment within a couple of weeks adding up to as much as 400 percent interest over the course of a year.
Reeves said CBF advocacy “will continue to condemn usury,” the practice of making unethical monetary loans that unfairly enrich the lender, and to “call for a return to moral lending laws.”