Business
CFPB Makes Move to Support Payday Lenders During Black History Month
NNPA NEWSWIRE — When given the chance at the ballot box, Americans overwhelmingly vote to impose a 36 percent or less rate cap. Today, 16 states and the District of Columbia have these rate caps in place, providing strong protection from payday loan sharks. In remaining states – those without a rate cap – interest rates run as high as 460 percent in California, over 400 percent in Illinois and 662 percent in Texas.
By Charlene Crowell, Communications Deputy Director with the Center for Responsible Lending and NNPA Newswire Contributor
Each February, Black History Month commemorates the unique American experience of Blacks in America. This year marks the 400th anniversary of the Jamestown, Virginia arrival of captured and shackled Africans.
In the ensuing years, as slavery grew, so did the wealth of those who claimed our forefathers as ‘property’. By April 12-13, 1861, the wealth built on slave labor was forcefully protected with the Battle of Fort Sumter, considered by historians to be the start of the Civil War that lasted until 1865 and the war’s end.
Slavery’s iron shackles that bound women, children and men may be gone. But in today’s America, the iron has been replaced by a different kind of shackle, just as debilitating as iron: predatory debt.
Abundant research has shown that payday and car-title lenders trap people in debilitating debt that can trigger a series of negative consequences: overdraft fees, the loss of a bank account, loss of personal vehicles and even bankruptcy. People struggling to repay these loans have been reported to forego daily living needs or needed medical treatments.
So, it is indeed troubling that in 2019, that under the Trump Administration, the federal agency with a designated mission to provide consumer financial protection took an about-face to protect predatory lenders instead of consumers on February 6. Kathy Kraninger, the Director of the Consumer Financial Protection Bureau (CFPB) announced the agency’s plan to repeal a rule aimed at stopping the payday lending debt trap.
Promulgated by CFPB’s first director during the Obama Administration, the rule requires payday and other small-dollar lenders to make loans only after determining borrowers’ ability-to-repay. That now-suspended rule followed years of public hearings, rulemaking sessions, and research that ultimately found that triple-digit interest rates on loans were virtual debt traps for borrowers. Further, the people targeted for these predatory loans are those who could least afford interest or fees that exceeded the principal borrowed: the poor, the elderly, communities of color, and military veterans.
The Bureau’s Notice of Proposed Rulemaking (NPRM) announced by the CFPB offers a two-part plan. The first is to needlessly delay the effective date of a common-sense consumer protection rule. The second is to rewrite and likely gut the substance of the rule itself. The likely cumulative effect will allow payday and other predatory lenders to continue to ply their wares and continue financially exploiting consumers of color.
Reactions to CFPB’s announcement were as strong as they were plentiful.
“With little accountability for their actions, payday lenders have long preyed upon communities of color and drained them of their hard-earned savings,” noted Hilary O. Shelton, NAACP’s Washington Bureau Director and Senior Vice President for Policy and Advocacy. “Stripping the key protections of this rule is a disservice to the public,” he added.
Similar comments came from other civil rights organizations.
“This decision will put already struggling families in a cycle of debt and leave them in an event worse financial position,” said Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights. “This administration has moved the CFPB away from protecting consumers to protecting the very companies abusing them.”
When given the chance at the ballot box, Americans overwhelmingly vote to impose a 36 percent or less rate cap. Today, 16 states and the District of Columbia have these rate caps in place, providing strong protection from payday loan sharks. In remaining states – those without a rate cap – interest rates run as high as 460 percent in California, over 400 percent in Illinois and 662 percent in Texas.
According to Rebecca Borne, a CRL Senior Policy Counsel, Kraninger’s announcement ignores five years’ worth of input from a broad group of stakeholders: faith leaders, veteran and military organizations, civil rights groups, consumer advocates and consumers across the country.
“But over the past year, payday lenders have spearheaded an in effort with Mick Mulvaney and now Kraninger’s help, to take consumer protections away from financially vulnerable Americans, “said Borne. “We urge Director Kraninger to reconsider, as her current plan will keep families trapped in predatory, unaffordable debt.”
Let us all hope and work for a different kind of emancipation: financial freedom.
Charlene Crowell is the Communications Deputy Director with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.
Activism
Oakland Post: Week of April 17 – 23, 2024
The printed Weekly Edition of the Oakland Post: Week of April 17 – 23, 2024
To enlarge your view of this issue, use the slider, magnifying glass icon or full page icon in the lower right corner of the browser window.
Business
V.P. Kamala Harris: Americans With Criminal Records Will Soon Be Eligible for SBA Loans
Speaking in Las Vegas on Jan. 27, Vice President Kamala Harris announced a forthcoming federal rule that will extend access to Small Business Administration (SBA) loans to Americans who have been convicted of felonies but have served their time. Small business owners typically apply for the SBA loans to start or sustain their businesses.
By California Black Media
Speaking in Las Vegas on Jan. 27, Vice President Kamala Harris announced a forthcoming federal rule that will extend access to Small Business Administration (SBA) loans to Americans who have been convicted of felonies but have served their time.
Small business owners typically apply for the SBA loans to start or sustain their businesses.
Harris thanked U.S. Rep. Steven Horsford (D-NV-04), the chair of the Congressional Black Caucus, for the work he has done in Washington to support small businesses and to invest in people.
“He and I spent some time this afternoon with business leaders and small business leaders here in Nevada. The work you have been doing to invest in community and to invest in the ambition and natural capacity of communities has been exceptional,” Harris said, speaking to a crowd of a few hundred people at the Brotherhood of Electrical Workers Hall in East Las Vegas.
On her daylong trip, Harris was joined by Horford, SBA Administrator Isabella Guzman, Interim Under Secretary of Commerce for Minority Business Development Agency (MBDA) Eric Morrissette, and Sen. Catherine Cortez Masto (D-Nev).
“Formerly incarcerated individuals face significant barriers to economic opportunity once they leave prison and return to the community, with an unemployment rate among the population of more than 27%,” the White House press release continued. “Today’s announcement builds on the Vice President’s work to increase access to capital. Research finds that entrepreneurship can reduce recidivism for unemployed formerly incarcerated individuals by as much as 30%.”
Business
G.O.P. Lawmakers: Repeal AB 5 and Resist Nationalization of “Disastrous” Contractor Law
Republican lawmakers gathered outside of the Employee Development Department in Sacramento on Jan. 23 to call for the repeal of AB5, the five-year old California law that reclassified gig workers and other independent contractors as W-2 employees under the state’s labor code.
By California Black Media
Republican lawmakers gathered outside of the Employee Development Department in Sacramento on Jan. 23 to call for the repeal of AB5, the five-year old California law that reclassified gig workers and other independent contractors as W-2 employees under the state’s labor code.
Organizers said they also held the rally to push back against current efforts in Washington to pass a similar federal law.
“We are here to talk about this very important issue – a battle we have fought for many years – to stop this disastrous AB 5 policy,” said Assembly Republican Leader James Gallagher (R-Yuba City).
Now, that threat has gone national as we have seen this new rule being pushed out of the Biden administration,” Gallagher continued.
On Jan. 10, the U.S. Department of Labor issued a new rule providing guidance on “on how to analyze who is an employee or independent contractor under the Fair Labor Standards Act (FLSA).”
“This final rule rescinds the Independent Contractor Status Under the Fair Labor Standards Act rule (2021 IC Rule), that was published on January 7, 2021, and replaces it with an analysis for determining employee or independent contractor status that is more consistent with the FLSA as interpreted by longstanding judicial precedent,” a Department of Labor statement reads.
U.S. Congressmember Kevin Kiley (R-CA-3), who is a former California Assemblymember, spoke at the rally.
“We are here today to warn against the nationalization of one of the worst laws that has ever been passed in California, which has devastated the livelihoods of folks in over 600 professions,” said Kiley, adding that the law has led to a 10.5% decline in self-employment in California.
Kiley blamed U.S Acting Secretary of Labor, July Su, who was the former secretary of the California Labor and Workforce Development Agency, for leading the effort to redefine “contract workers” at the federal level.
Kiley said two separate lawsuits have been filed against Su’s Rule – its constitutionality and the way it was enacted, respectively. He said he is also working on legislation in Congress that puts restrictions on the creation and implementation of executive branch decisions like Su’s.
Assemblymember Kate Sanchez (R-Rancho Santa Margarita) announced that she plans to introduce legislation to repeal AB 5 during the current legislative session.
“So many working moms like myself, who are also raising kids, managing households, were devastated by the effects of AB 5 because they lost access to hundreds of flexible professions,” Sanchez continued. “I’ve been told by many of these women that they have lost their livelihoods as bookkeepers, artists, family caregivers, designers, and hairstylists because of this destructive law.”
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