On Oct. 7, the New Economy Project submitted a powerful letter –- signed by the Progressive Caucus and 130 other New York elected officials; a government agency; community, labor, civil rights, faith-based, and legal services groups; and community development financial institutions –- forcefully urging the Consumer Financial Protection Bureau to issue the strongest possible payday lending rules. Abbreviated text below:
Dear Director Cordray,
Together, we urge you to issue a strong payday lending rule that ends the payday loan debt trap. As the CFPB prepares to issue a final rule to address payday lending nationally, we urge you not to undermine our state’s longstanding civil and criminal usury laws. Indeed, we urge you to issue a rule that enhances our existing protections.
As New Yorkers, we believe we have an especially relevant perspective to share. More than 90 million Americans – nearly a third of the country – live in states like New York where payday lending is illegal. Our experience clearly demonstrates that: (1) people are way better off without payday lending; and (2) the best way to address abusive payday lending, as well as other forms of predatory high-cost lending, is to put an end to it once and for all.
As proposed, the CFPB’s payday lending rule is filled with loopholes and would effectively sanction high-cost loans that are illegal in our state and many other jurisdictions in the country. We call on the CFPB to issue a strong final rule that does not undermine New York’s longstanding usury and other consumer protection laws. We urge you to set a high bar for the entire country and issue a rule that enhances, and does not undermine, our existing protections. We call on the CFPB to use its full authority to issue the strongest possible final rule that will truly end the payday loan debt trap.
We are deeply concerned that weaknesses in the proposed rule will inevitably be seen as sanctioning high-cost loans that are illegal in New York. A rule that undercuts laws that protect tens of millions of Americans in payday loan-free states does not, in our view, constitute sound public policy-making, even if the rule mitigates some of the harms caused by payday lending in states where it is now legal. Many groups are referring to the proposed rule as addressing the worst abuses of payday lending. Given the agency’s clear mandate, and given all we know about payday lending, why isn’t the CFPB seeking to address all of the abuses of payday lending?
Families in our state—and everywhere—are better off without these high-cost, unaffordable loans. We urge the CFPB to issue the strongest possible rule, without loopholes.
New Economy Project works with community groups to build a new economy that works for all, based on principles of cooperation, democracy, equity, racial justice, and ecological sustainability.
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City Limits, Local Pols, Advocates Plead With Feds to Strengthen Payday Lending Rules