The administration is on the verge of rescinding another Obama-era regulation created to protect Americans.
The Trump administration will officially roll back an Obama-era regulation on predatory lenders next week – a move that will make it easier for lenders to prey on vulnerable and cash-strapped Americans in the face of the economic fallout from the pandemic. COVID-19.
The New York Times reported on Wednesday that the rationale for the cancellation – which “will no longer require lenders to assess whether customers can pay their fees before offering a loan” – was based on data tampered with by a named person. by Donald Trump at Consumer Financial. Protection Bureau which manipulated the data of payday lenders to make their practices less predatory.
The manipulated data was detailed in a note last year by a “career economist” who left the agency last summer. The memo specifically described “several maneuvers by his agency’s political overseers that he saw as legally risky and scientifically indefensible, including pressuring staff economists to water down their findings on payday loans and use statistical gimmicks. to minimize the harm consumers would suffer if the wage restrictions were repealed. “
The Times got a rating from a current CFPB employee.
Payday lenders typically charge exorbitant interest rates and high fees on short term loans. Those looking for payday loans are often low-income Americans who don’t have access to credit and often end up quickly incurring more fees and interest than the loan they actually took, which sinks even further. these borrowers in debt, according to a March 2014 review of payday lending practices by the CFPB.
Experts say the COVID-19 pandemic is already ripe for payday lenders looking to exploit the most vulnerable Americans, millions of whom are struggling to put food on the table amid job losses and time off.
“When people are scared or desperate, they are less effective at shopping carefully and weighing options,” Chris Peterson, former CFPB regulator, said in a recent interview. “There is a temptation to just find the first option that looks acceptable and jump on it.”
During his tenure, former President Barack Obama attempted to shield Americans from these predatory lenders, by issuing a rule requiring lenders to ensure borrowers can repay loans before approving them.
But the Trump administration has been trying to roll back that rule since 2017 – an attempt initially led by former CFPB acting director Mick Mulvaney, who later became Trump’s chief of staff.
Mulvaney left the White House in March.
The Trump administration finally announced that it would end the Obama-era lender rulebook on February 6 – the first days of the COVID-19 pandemic.
This announcement gave 90 days for public comment before the return took effect. Those 90 days expire next week.
Published with permission from the American Independent Foundation.