Director Kathleen Kraninger
Consumer Financial Protection Bureau
1700 G Street NW
Washington, DC 20552
Submitted electronically via https://www.regulations.gov 

Re: Comments on Proposal to Rescind Ability-to-Repay Requirements Governing Payday, Vehicle Title, and Certain High-Cost Installment Loans, Docket No. CFPB-2019-0006; RIN 3170-AA80

Dear Director Kraninger,    

We, the undersigned [###] civil rights, consumer, labor, faith, veterans, senior, business, and community organizations [from all 50 states] write to vehemently oppose the proposed rescission of the commonsense ability-to-repay requirements of the Consumer Financial Protection Bureau (the Bureau)’s 2017 payday and vehicle title loan rule (“Ability-to-Repay Rule” or “Rule”).

We are painfully aware of the severe harm that unaffordable payday and car title loans cause to the communities we represent. Payday lenders concentrate themselves within low-income neighborhoods and far more heavily—even controlling for income—within communities of color, making loans without assessing whether borrowers can repay them. Unaffordable payday and car title loans set debt traps—long series of loans that drive borrowers deeper into financial distress and often to financial ruin. The debt trap is the lenders’ business model.

The debt trap is associated with greater risk of delinquency on rent payments and other bills, delayed medical care, overdraft fees, loss of bank accounts, and bankruptcy. It can also inflict severe psychological harm, including distress resulting from aggressive debt collection practices. The debt trap, in the words of some who have been there, is a “living hell.”

Bank-issued payday loans, whose expansion the Bureau now encourages, were also typically unaffordable, leading to a cycle of repeat loans. Contrary to bank claims, we have seen no evidence that these loans gave people an alternative to non-bank payday lending or drove non-bank payday lender volume down. Rather, data suggests they simply saddled bank customers with additional unaffordable debt.

Hundreds of organizations all across the country earlier called for a strong Bureau rule to stop the debt trap, including by urging the Bureau to finalize a rule more protective of consumers than the one it issued in 2017. We have known since before the 2017 Rule was finalized that the payday lenders—a powerful, well-resourced, savvy lobby—would pull out all the stops to preserve their debt trap business model, including through Congress and through the courts.

We did not expect, however, that new Bureau leadership would side with payday and car title lenders at every turn. In December 2017, new Bureau leadership endorsed efforts in Congress to overturn the Rule—even stating that Congress was “the more appropriate place” for the repeal to happen. That effort failed. Bureau leadership then sided with industry associations in litigation challenging the Rule. That litigation, on its own, did not erase the rule. The Bureau leadership now attempts to repeal the rule through this proposal.

The Bureau’s proposed repeal relies on fabricated rationales in support of prejudged conclusions to give predatory lenders what they want. It is an abdication of the Bureau’s statutory mandate and a betrayal of every financially distressed American preyed upon by unaffordable payday and car title loans. As president and CEO of the Leadership Conference on Civil and Human Rights, Vanita Gupta, recently said, a rescission of the Ability-to-Repay Rule would be “a slap in the face to consumers—especially people of color—who have been victims of predatory business practices and abusive lenders.” The Bureau’s attack on the “unfair” and “abusive” standards broadens that betrayal to virtually every American who, at one time or another, will be harmed by unscrupulous financial practices.

Nearly 100 million Americans live in the 16 states plus the District of Columbia where laws cap rates at 36% or below, not permitting the high rates payday lenders charge. As a result, nonbank payday lenders do not operate in those states, and residents save over $2.3-- billion annually on payday loans. States not permitting high-cost car title loans save their residents $2.8 billion annually. State laws in the remaining states leave their residents vulnerable to the debt trap caused by unaffordable payday loans. This is no excuse for the CFPB to roll back critical protections against the debt trap; indeed, Congress gave the CFPB a special mandate to address payday lending across the nation. Moreover, a return of unaffordable payday loans by banks, which generally do not abide by state usury caps, would threaten the financial well-being of consumers from sea to shining sea.

Please withdraw this unjustified repeal proposal and permit the protections against the payday and car title lending debt trap to go into effect.

1 See, e.g., Diane S. Williams, Getting Out of the Debt: Part 2 of a series, Public Employee Press, District Council 37 (quoting a payday loan borrower who asked not to be identified), http://www.dc37pep.net/news/PEP/3_2012/420_payday_loan.html. Additional examples on file with Center for Responsible Lending.


Sincerely,

To see the current list of signers: https://docs.google.com/document/d/1lwNNrdddLWNW4n9SRcNHxkDVFUtt54ONH1DyhTqiZhM/edit?usp=sharing