WASHINGTON, D.C.–(ENEWSPF)–March 7, 2012. U.S. Senators Dick Durbin (D-IL), Kay R. Hagan (D-NC), Charles Schumer (D-NY) this week urged the Director of the Consumer Financial Protection Bureau (CFPB), Richard Cordray, to take additional steps to limit payday lenders from preying on consumers. The Senators sent a letter to Cordray on Monday. The text of that letter is attached. This week is designated as National Consumer Protection Week.
“Even as our economy begins to show signs of recovery, many hardworking families are still struggling to make ends meet,” said Durbin. “Unfortunately, many of these families are the targets of lenders offering payday loans with outrageous, often hidden interest rates that can have crippling effects on those who can afford it least by trapping them in a cycle of debt. I hope CFPB Director Cordray will do everything in his power to protect America’s working families from these predatory lenders.”
“Payday lenders market their services as short-term advances, but astronomical interest rates often trap consumers in a spiral of debt,” said Hagan. “Unfortunately, many of these lenders operate near our military bases and prey on military families who are often new to a community. The CFPB was created to ensure that consumers, including our brave servicemembers, would not be left vulnerable to predatory lending practices. I urge Director Cordray to use all the tools at his disposal to rein in payday lenders.”
“Just as the economy is starting to turn the corner, now more than ever we need to protect consumers from the predatory practices of payday lenders,” said Schumer. “This type of loan is intended to be short-term, but rollovers can trap consumers in a never-ending cycle of spiraling debts. This is exactly the sort of consumer abuse that we created the Consumer Financial Protection Bureau to address, and that’s why we are urging Richard Cordray to protect consumers from some of the most egregious, unfair and deceptive lending practices.”
According to the Center for Responsible Lending, over 60 percent of payday loans go to borrowers with 12 or more transactions per year and 24 percent of payday loans go to borrowers with 21 or more transactions per year.
Last Congress, Durbin, Hagan and Schumer introduced the Payday Lending Limitation Act of 2010 to limit rollovers and prohibit creditors from issuing new payday loans to borrowers with six loans in the previous 12 months or 90 days aggregate indebtedness. That bill would have ensured that payday loans remain “short-term.”
Durbin has a long history of fighting to protect consumers from predatory lenders. In 2009, he introduced the Protecting Consumers from Unreasonable Credit Rates to eliminate the excessive rates and fees that are charged for payday loans, car title loans and other types of credit by creating an interest and fee cap of 36% for all consumer credit transactions. The 36% rate is similar to usury caps already enacted in many states and is the same as the national cap that already protects military personnel and their families.
Durbin was also instrumental in the creation of the Consumer Financial Protection Bureau. In 2008, he introduced legislation to create an agency whose sole purpose was to protect consumers from the tricks, traps, shadowy markets and fine print of Wall Street. That bill was added to the Dodd-Frank Wall Street Reform and Consumer Protection Act and resulted in the creation of today’s CFPB.
- CFPB Letter (Download PDF)