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MADISON – Congress is seeking to undo new protections that would keep payday and car title lenders from trapping consumers in a spiral of growing, high interest debt. These crucial safeguards were finalized just weeks ago by the Consumer Financial Protection Bureau (CFPB). Reversing them would put millions of Wisconsinites and Americans across the country at risk.
“Some members of Congress are wasting no time in their push to empower payday loan sharks at the expense of the most vulnerable consumers,” said WISPIRG Director Peter Skopec. “The choice is simple: Will Congress stand with everyday Americans, or with payday loan sharks?”
Payday lenders made more than 115,000 payday loans in Wisconsin last year, according to the Department of Financial Institutions. The average Wisconsin payday loan was for $303, and comes with an astronomical annual interest rate of 515 percent.
“Wisconsin doesn’t need these predatory financial products that trap people in debt they can’t escape,” added Skopec. “The CFPB’s new protections are a step forward. Congress should be working to defend these new protections, not further empower predatory lenders.”
At the heart of the Consumer Bureau’s new protections, finalized in October of 2017 after a years-long campaign from consumer groups, faith organizations and low-income advocates, is an “ability to repay” check. Payday and car title lenders will have to make sure a potential borrower can repay their loan and afford regular living expenses before money changes hands.
The bill, H.J.Res.122, was introduced by Rep. Dennis Ross (R-Fla.) and co-sponsored by Rep. Alcee Hastings (D-Fla.), Tom Graves (R-Ga.), Henry Cuellar (D-Texas), Steve Stivers (R-Ohio), and Collin Peterson (D-Minn.). Using an obscure mechanism called the Congressional Review Act, H.J.Res.122 would nullify the CFPB’s payday and car title rule and prevent the agency from issuing similar protections in the future.
The Wisconsin Public Interest Research Group (WISPIRG) is a non-profit, non-partisan public interest advocacy organization that stands up to powerful interests whenever they threaten our health and safety, our financial security, or our right to fully participate in our democratic society.
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