Center for Responsible Lending


July 6, 2017
Summer presents the opportunity for advocates and organizations to see their federal and state lawmakers in person at town halls and group gatherings across the country. This July and August, we hope you take this chance to meet with your members of Congress and state representatives and urge them to protect important consumer protections and fight back against toxic legislation to weaken the Consumer Financial Protection Bureau (CFPB)—our main watchdog on Wall Street.

The House of Representatives recently passed the Financial CHOICE Act—dubbed the Wrong Choice Act—a predatory lending bill to rollback important safeguards for preventing another financial crisis. This effort was led by Congressman Jeb Hensarling (R-Texas) who deliberately included a provision in the bill to prevent the CFPB from issuing rules on payday and car-title lending. The legislation is currently waiting to be considered in the U.S. Senate. As financial reform begins to get debated at the federal and state level, the Center for Responsible Lending (CRL)--through collaboration with our state and national partners -- will continue to make the point that Americans want a fair and inclusive financial system that works for everyone. Also, CRL will soon release new data on how the country views our current financial system and industry under the Trump Administration and the current Congress.

Last week, CRL President Mike Calhoun testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs for a hearing entitled, “Principles of Housing Finance Reform.” In his testimony, Mike argued that any proposed legislation to reform the U.S. housing system must ensure broad access for all creditworthy borrowers and permit equal participation for small lenders and community banks. He also cautioned that reform has already occurred with the Housing and Economic Recovery Act of 2008, and through the new independent regulator, the Federal Housing Finance Agency, that ongoing reform efforts must not interrupt the current market. CRL has consistently fought to push GSE reform that would benefit all creditworthy borrowers, especially rural residents, low-income families, and communities of color. In March, Mike also testified before the House Financial Services Committee’s Financial Institutions and Consumer Credit Subcommittee for a hearing entitled “The State of Bank Lending in America.”

He highlighted how the Dodd-Frank Wall Street Reform and Consumer Protection Act is working to expand credit and strengthen consumer protections while also helping community banks and credit unions rebound from pre-recession levels. Mike emphasized that bank and credit union profitability is near record levels, and lending volumes are increasing. He also underscored that as we move forward with housing reform, lawmakers must reject perniciously proposed reforms, such as providing Qualified Mortgage status for all loans held in portfolio by lending institutions of any size, which threaten to plunge our nation into another economic catastrophe..
Predatory for-profit colleges are attempting to make a comeback through the Department of Education’s proposed budget, which includes cutting $10.6 billion from federal education initiatives. The plan would drive low-income college students to for-profit colleges that leave them with a high debt load and limited career opportunities. The budget is also expected to exacerbate the explosive burden of student loan debt that now follows millions of Americans over the course of their lives, with the worst impact hitting women and people of color. The Department also announced its decision to rollback the Borrower Defense to Repayment and Gainful Employment regulations. The premises of the Gainful Employment Rule and the Borrower Defense to Repayment Rule are simple: 1) career training programs should provide sufficient education to enable graduates to obtain jobs and actually pay off their debt without a significant financial hardship and 2) students defrauded by their schools should be able to have their loans discharged. The announcement detailed not just delays in implementation and enforcement of the current rules but an entirely new rulemaking process. Nineteen State Attorneys General have also joined the call to fight back against the elimination of existing protections for students. Public hearings to discuss these harmful rollbacks will be held in Washington, D.C., and Dallas, Texas, on July 10 and 12.

In June, consumer advocates and civil rights organizations renewed their call to Congress to let the CFPB finish its job of finalizing a strong rule on payday and car-title lending. Last year, people from across the country gathered in Kansas City, Missouri to witness the announcement of a long-awaited proposal by the CFPB to rein in the harms of payday, car-title, and other high-cost installment loans. Since that time, hundreds of thousands of people have urged the CFPB to finalize a strong rule to prevent the harms of these unaffordable debt trap loans. Meanwhile, payday lenders and their supporters in Congress keep trying to delay and block the CFPB from doing its important work. Members of Congress have geared up to dismantle the Consumer Bureau, most notably with the recent passage of the Financial CHOICE Act, which would severely weaken the Bureau’s ability to protect consumers from predatory lenders. Among several anti-consumer provisions, the bill includes legislation that would prevent the CFPB from regulating payday and car-title lenders. If the Wrong Choice Act were law today, payday lenders would have a free pass to keep people trapped in a cycle of debt. Any attempt to weaken the CFPB in anyway serves to benefit payday lenders and other predatory actors.

CRL recently sent a letter to House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Ranking Member Maxine Waters (D-Calif.) rebutting the committee's majority staff report criticizing the CFPB role in investigating Wells Fargo's fraudulent account scheme. The letter stresses the Consumer Bureau's role in working with local regulators to address Wells' practice of opening unauthorized accounts and highlighted how the CFPB furthered its investigation by issuing Civil Investigative Demands that led to the PricewaterhouseCoopers analysis that quantified the scope of the abusive activity. The letter also notes that the majority staff report was released contemporaneously with the Committee majority's broader efforts to defang CFPB by passing Chairman Hensarling's Financial CHOICE Act. The bill would severely weaken the CFPB's ability to protect consumers from practices like those Wells Fargo engaged in, as well as payday and other predatory lenders.

A Victory Worth Celebrating: In case you missed it, a Congressional Review Act (CRA) resolution to rescind a new consumer protection rule on prepaid cards was stopped in the Senate, nixing its chances of being fully repealed by Congress this session. The prepaid card rule was finalized by the CFPB last October. The rule includes many commonsense protections for prepaid users, such as standard fraud and disclosure provisions of the Electronic Funds Transfer Act and protections against overdraft fees. These safeguards apply to error resolutions, lost cards, and unauthorized transactions, and the rule finalizes new "Know Before You Owe" disclosures for prepaid accounts to give consumers clear, upfront information about fees and other key details. The rule is especially important for low-income families, many of whom have no bank account and use prepaid cards to manage their household finances.

Thank you for joining us in the fight to keep the financial industry transparent and accountable to working families.
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JUJ Task Force on Predatory Lending