Image provided by: University of Oregon Libraries; Eugene, OR
About The skanner. (Portland, Or.) 1975-2014 | View Entire Issue (Oct. 10, 2012)
News Attack on Minorities, Unbanked Consumers Measure in Congress would undermine CFPB enforcement and preempt state laws A t the urging of veteran Michigan Congressman John H. Conyers, a R ESPONSIBLE growing number of Congression- L ENDING al Black Caucus colleagues are actively opposing a bill that would negatively Charlene impact consumers of color and others Crowell who lack a personal bank account. More- over, the bill, HR 6139 would also remove the Consumer Financial Protec- tion Bureau (CFPB) from its current enforcement authority over non-bank lenders and additionally preempt state laws enacted to pro- tect consumers. Joining Rep. Conyers in vocal opposition are members of Congress representing minority-majority districts. In a Sept. 14 letter to the full House, Conyers, along with Rep- resentatives Hansen Clarke (Detroit), Elijah Cummings (Baltimore), Delegate Eleanor Holmes Norton (DC), Bar- bara Lee, (Oakland), Charles Rangel (New York City) and Bobby Rush (Chicago) spoke directly to the effort to estab- lish a two-tiered financial regulatory system. HR 6139 claims to help minorities, when in fact it would hurt them disproportionately by enabling predatory lend- ing. Far from helping these communities stay in the mainstream bank- ing system, the Office of the Comptroller of the Currency charter would push them further into the economic margins. HR 1639 would pre- empt anti-predatory lending laws in 17 states and District of Columbia while also circumventing CFPB oversight of non- bank creditors. Additional concerns regarding HR 6139 include: — Carve-outs for the same lenders the Department of Defense found harmful to military families. After a 2006 Department of Defense report that found predatory lending practices targeted military members and their families, a bipartisan effort led to the enactment of the Military Lend- ing Act of 2007. This law covered payday, car title and refund anticipation loans and also put an end to interest rates that ran as high as 800 percent. Interest rates on these loans were capped at 36 percent. — Roll backs more than 40 years of consumer protections under the Truth in Lending Act (TILA). By exempting lenders from annual percentage rate (APR) disclosure, loans of one year or less could disclose the cost of these loans as a dollar amount rather than an APR that TILA now requires. Without an APR, disclosure on these loans, con- sumers would be less likely to make a baseline cost of cred- it comparisons with other financial products. Additionally the Center for Responsible Lending research and analysis has found that: — Twelve million Americans are trapped every year in a payday loan debt cycle and generate $4.2 billion in preda- tory fees every year. — States that ban payday lending save their citizens an estimated $1.4 billion in predatory lending fees each year. — Seventy-six percent of payday loans are the result of repeat borrowing on the same principal. — From 2008-2010, voters in three states have said ‘NO’ to triple digit interest rates when their state legislatures did not: Arizona, Montana and Ohio. Considering the economic chaos caused by the worst economy since that of the 1930s Great Depression, many lawmakers and consumers have called for more vigorous monitoring and enforcement. Already, more than five mil- lion consumers have turned to the CFPB for information, assistance and advice. Better than one-in-four consumers filing a complaint with CFPB have received monetary compensation. When Capitol Hill lawmakers return for the lame duck session that follows the November election, HR 6139 and other non-regulatory measures could reach a House floor vote. “Economic justice and financial freedom for all American households must remain priorities for Congress and finan- cial service regulators alike,” said the CBC members. “We urge you to oppose HR 6139 and allow the CFPB to con- tinue its work of facilitating a transparent and safe financial marketplace for all households.” Charlene Crowell is a communications manager with the Center for Responsible Lending. Twelve million Americans are trapped every year in a payday loan debt cycle and generate $4.2 billion in predatory fees Please Recycle Newspapers October 10, 2012 The Portland Skanner Page 9
