Dear Indiana Members of Congress,

The undersigned organizations urge your offices to oppose H.J. Res. 122, sponsored by Representatives Ross, Hastings, Graves, Cuellar, Stivers, and Peterson. The bill would repeal the Consumer Financial Protection Bureau's "Payday, Vehicle Title, and Certain High-Cost Installment Loans" rule. We see this as a significant step backward in consumer protections for low-income borrowers. Congress should oppose any effort to repeal or block the Payday Rule's protections against the payday lending debt trap.

At its core, the Payday Rule mandates lenders to determine a borrower's ability to repay, inclusive of making loan repayments and meeting other financial obligations and basic needs, before issuing a loan. It's important for financial institutions to ensure that they only make loans to borrowers who can afford them. Payday lenders who have access to borrowers' checking accounts and car titles lack this incentive. Because these lenders can collect directly from a borrower's checking account on payday, receive a post-dated check the day the loan is issued, or seize a borrower's vehicle, they can remain profitable even when borrowers cannot afford to repay loans without defaulting on other financial obligations.

The Payday Rule is the culmination of more than five years of stakeholder input and extensive research, showing clear evidence of harm caused by making these loans without regard to ability to repay. A large body of research has demonstrated that payday and car title loans are structured to create a long-term debt trap that drains consumers' bank accounts and causes significant financial harm, including delinquency and default (http://bit.ly/2rAqQWL), overdraft and non-sufficient funds fees (http://bit.ly/2DwQ25d), increased difficulty paying mortgages, rent, and other bills (http://bit.ly/2F0H7pB), loss of checking accounts (http://bit.ly/2DxlJfc), and bankruptcy (http://bit.ly/2n18n0A).

Hoosiers widely support the Payday Rule. According to a recent poll of likely voters, conducted by Prosperity Indiana, Indiana Institute for Working Families, and Brightpoint, in partnership with Bellwether Research and Consulting, 78 percent of Hoosiers, including Democrats, Republicans, and Independents, favor an ability to repay requirement. The Bureau's recent announcement that the agency would engage in a rule-making process to reconsider the Payday Rule is further reason for lawmakers to unequivocally defend vital consumer protections their constituents desperately need.

Low-income households often use alternative financial services, such as payday loans, in times of economic hardship to smooth income volatility and/or pay for unexpected financial "shocks"; however, these products often trap borrowers in a cycle of debt, which depletes a borrower's wealth and from which it is difficult to recover. The Payday Rule is necessary to help ensure that lenders cannot trap financially-distressed borrowers in a cycle of debt that only leaves them worse off.

We urge you to stand with Hoosiers by voting against H.J. Res. 122. The repeal of the Payday Rule would give payday lenders a free pass to continue exploiting financially vulnerable Americans.

For more information, please contact Erin Macey, Policy Analyst at Indiana Institute for Working Families, at emacey@incap.org or Kathleen Lara, Policy Director at Prosperity Indiana, at klara@prosperityindiana.org.