Monday, April 11, 2016

Finally, Cracking Down on Payday Lending

Cash America
Not the official campaign HQ of Rep. Pete Sessions

Payday lenders like CashAmerica and ACE Cash Express often make loans with annual percentage rates of 350 percent or more. They prey on the poor, trapping borrowers in debt they can never pay off. Sixty percent of borrowers are repeat borrowers who string together loan after loan, using the proceeds of the next loan to pay off the last.

But help is on the way. Finally.

The Consumer Financial Protection Bureau is about to release sweeping new rules that take aim at the payday lending industry, a controversial attempt to rein in loans that offer lifelines to lower-income borrowers but come with staggeringly high fees.
Finally. I say finally because this isn't a new problem. Predatory lending is a longstanding problem that has been particularly difficult to address because the payday lenders have bought themselves powerful agents in Washington like Richardson's own Congressman Pete Sessions. Not only doesn't Sessions want the CFPB to rein in the predatory practices of payday lenders, Sessions wants to abolish the CFPB instead.

The Dallas Morning News noticed back in 2012. The Wheel noticed, too. At the time, CashAmerica was Pete Sessions' biggest campaign contributor. (It might still be. I haven't looked in a while.) In turn, he did his best to protect payday lenders. Now, finally, it looks like the CFPB is going to regulate the loan sharks, limiting their ability to trap the poor in endless debt without doing away with their ability to make emergency loans altogether. Better late than never.

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