Durbin Opposes Kraninger Plan To Gut CFPB Payday Lending Rule
WASHINGTON – U.S. Senate Democratic Whip Dick Durbin (D-IL), a member of the Senate Appropriations Subcommittee on Financial Services and General Government, released the following statement today opposing the proposal by Director Kathleen Kraninger of the Consumer Financial Protection Bureau (CFPB) to eliminate key protections of the CFPB’s payday lending rule. Director Kraninger’s plan would eliminate the requirement that lenders first ensure that consumers can afford to pay back loans and still meet their basic living needs before extending a loan.
The CFPB’s payday lending rule was established to prevent predatory lenders from charging cash-strapped American consumers ridiculous interest rates and hidden fees. By gutting key protections of the CFPB payday lending rule, Director Kraninger has sided with special interests at the expense of hardworking American families.
Research has long shown that short-term payday loans trap consumers in high interest debt for long periods of time that can result in serious financial harm, including increased likelihood of bankruptcy. Nearly 12 million Americans use payday loans each year, incurring more than $8 billion in fees. While some loans provide a needed resource to families facing unexpected expenses, predatory loans with interest rates exceeding 300 percent often leave consumers with the difficult decision of having to choose between defaulting and repeated borrowing. According to the CFPB’s research, the majority of payday loans are renewed so many times that borrowers end up paying more in fees than the amount they originally borrowed. This predatory business model exploits the financial hardships facing hard working families, trapping them into long-term debt cycles.
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