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Msgr. Egan Campaign for Payday Loan Reform Submits Comments to CFPB Rule

Date: 
10/11/2016

For immediate release

Contacts: Brent Adams 773-844-5544, Lynda DeLaforgue 773-251-0328

October 7, 2016

State Payday Loan Reform Coalition Weighs In on Proposed Payday Rule

As Time to Comment Closes, Group Offers Comments, Tales from the Trenches

October 7, 2016. The Monsignor Egan Campaign for Payday Loan Reform and two of its leading members, Woodstock Institute and Citizen Action/Illinois, today told the Consumer Financial Protection Bureau (CFPB) that a proposed rule to rein in the worst abuses of payday and car title lending will add to the work that has already been done in Illinois but that the CFPB should close loopholes in the rule.

The message came via a seven-page comment letter to the Director of the CFPB, Richard Cordray, submitted today, which is the last day for the public to weigh in on the proposed rule.

The comment letter can be found here.

“The proposed payday lending rule contains significant loopholes,” said Dory Rand, President of Woodstock Institute. “By submitting this comment, we hope to remind the CFPB of why getting this rule right is so important and also to help them understand why the rule as written will not stop the debt trap.”

The proposed rule, unveiled in June, is centered around a smart, fair, and flexible standard that requires all loans to be affordable and defines affordable loans as ones in which a borrower can pay off the loan and still be able to afford basic necessities of living. But the proposed rule allows payday lenders to make six unaffordable loans before this standard kicks in, essentially putting a government seal of approval on loans with interest rates of 300-400 percent.

In addition to the comment letter, the coalition submitted a letter signed by 37 groups representing the faith community, labor, and major not-for-profits. The letter offers support for requiring lenders to ensure that a loan is affordable and urges the CFPB to extend that requirement to every loan.

The coalition thanks the members of the Illinois Congressional delegation who signed on to letters to the CFPB. The letters applaud the CFPB and call on it to close loopholes in the rule. Senator Richard Durbin signed on to the Senate letter. The following members of Congress signed on to the House letter: Danny Davis, Robin Kelly, Jan Schakowsky, Luis Gutiérrez, and Tammy Duckworth.

“Illinois has come a long way over past decade, but there is still much room for stronger protections to keep families out of the payday, payday installment and car title debt trap,” noted Lynda DeLaforgue, Co-Director of Citizen Action/Illinois. “For example, the car title debt trap is in particular causing a great deal of harm to Illinois families. Car title loans in Illinois carry annual

 

“Illinois has come a long way over past decade, but there is still much room for stronger protections to keep families out of the payday, payday installment and car title debt trap,” noted Lynda DeLaforgue, Co-Director of Citizen Action/Illinois. “For example, the car title debt trap is in particular causing a great deal of harm to Illinois families. Car title loans in Illinois carry annual interest rates averaging 189% and the average borrower in debt for a full 490 days.”

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