Bill aims to block Obama pay­day loan crack­down

The Washington Times Weekly - - National - BY KELLY RIDDELL

A bi­par­ti­san group of law­mak­ers has in­tro­duced leg­is­la­tion to thwart Pres­i­dent Obama’s crack­down on pay­day loans, while ev­i­dence has emerged that reg­u­la­tors at the Con­sumer Fi­nan­cial Pro­tec­tion Bureau con­spired with left-lean­ing groups to draft their reg­u­la­tions against the in­dus­try.

In March the CFPB pro­posed pay­day rules to end what it calls “pay­day debt traps” by lim­it­ing the in­ter­est rates pay­day lenders can charge, pro­hibit­ing bor­row­ers from tak­ing out more than one loan at a time and by re­quir­ing lenders to as­sess the bor­rower’s abil­ity to pay. Mr. Obama has long cham­pi­oned such re­form, how­ever, many states are up­set with how the ini­tia­tive has been han­dled at the fed­eral level.

Florida, in par­tic­u­lar, has crit­i­cized the CFPB for not con­sid­er­ing its pay­day lend­ing reg­u­la­tions as a model for the fed­eral pro­posal. The state ar­gues if the CFPB’s rec­om­men­da­tions hold, the ma­jor­ity of Florida’s au­tho­rized pay­day lenders will be put out of busi­ness, and con­sumers will be forced into less reg­u­lated and more preda­tory prod­ucts.

The en­tire Florida del­e­ga­tion, in­clud­ing Demo­crat Na­tional Com­mit­tee Chair­woman Deb­bie Wasser­man Schultz, wrote CFPB Chair­man Richard Cor­dray this spring, urg­ing him not to pursue a one-size-fits-all model in the agency’s rule-making. Rep­re­sen­ta­tives in the state later met with the di­rec­tor face to face to plead their case, where he re­port­edly was un­sym­pa­thetic.

“They ac­knowl­edged there were some el­e­ments of the [Florida] model they liked, but they never made a com­mit­ment to adopt­ing it,” Rep. Car­los Curbelo told The Wash­ing­ton Times. “In our view [the CFPB’s pro­posed pay­day reg­u­la­tions] are go­ing to make it im­pos­si­ble or dif­fi­cult to of­fer this kind of prod­uct, and peo­ple like me who rep­re­sent a lot of low-in­come house­holds and im­mi­grants, th­ese loans may mean the dif­fer­ence be­tween keep­ing a car or los­ing a car, or they might just need a lit­tle ex­tra cash.

“A lot of peo­ple use this prod­uct re­spon­si­bly, and lot of oth­ers don’t, and we have to pro­tect them,” said Mr. Curbelo, a Florida Repub­li­can. “We think Florida has reached this bal­ance. This type of loan needs ex­tra scru­tiny, but that doesn’t mean it should be out­lawed en­tirely.”

So some mem­bers of the del­e­ga­tion de­cided to take things into their own hands.

On Mon­day Rep. Den­nis A. Ross, Florida Repub­li­can, in­tro­duced a bill dubbed the “Con­sumer Pro­tec­tion and Choice Act” with three Democrats and two Repub­li­can co-spon­sors, all from his state. The leg­is­la­tion will ex­empt Florida from the fed­eral pay­day lend­ing reg­u­la­tions be­ing crafted at the CFPB and give other states two years af­ter the CFPB writes its rule to ei­ther choose it or the Florida model to im­ple­ment.

“CFPB has pro­posed a one-size-fits-all pol­icy on pay­day loans that would undo the work of Florida and other states to set a strong bal­ance of con­sumer pro­tec­tion and ac­cess to short-term credit. This will force con­sumers to turn to more ex­pen­sive al­ter­na­tives or un­li­censed lenders, as our en­tire del­e­ga­tion noted in our let­ter to CFPB Di­rec­tor Cor­dray in April of this year,” Mr. Ross said in a state­ment to The Times.

The bill has been as­signed to the House Fi­nan­cial Ser­vices Com­mit­tee, on which Mr. Ross serves. Its supporters range from lib­eral Reps. Cor­rinne Brown and Al­cee L. Hast­ings to mod­er­ates like Mr. Curbelo and Rep. Pa­trick Mur­phy, Florida Demo­crat, and a con­ser­va­tive like Rep. Bill Posey, Florida Repub­li­can.

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