Washington, D.C. — Today, the Consumer Financial Protection Bureau (CFPB) released a final rule governing payday loans, vehicle title loans, and related credit products. The rule requires that lenders making short-term loans verify the borrower’s ability to pay back the loan the first time; limits lenders’ ability to continue leading borrowers into a cycle of debt; and restricts lenders’ ability to repeatedly tap into a borrower’s bank account without authorization. Joe Valenti, director of Consumer Finance at the Center for American Progress, released the following statement:
Each year, $8 billion in interest and fees flow from vulnerable borrowers to lenders who all too often lead Americans into debt traps and financial ruin: Payday loan borrowers risk bank account closures while hundreds of thousands of title loan borrowers lose their cars to repossession. Today’s CFPB action is a major step toward ending predatory practices that lead borrowers to disaster.
As the CFPB continues to hold financial actors accountable to the American people, Republican leaders in Congress continue to attack the bureau and threaten its future. These attacks are not only misguided, they are dangerous—and the financial sector does not deserve a free pass from accountability. Congress should stand with the CFPB, not with predatory lenders looking to make a quick buck at Americans’ expense.
For more information or to speak with an expert, contact Allison Preiss at email@example.com or 202.478.6331.