CFPB Finally Takes the Stick to Predatory Payday Lending Industry

New Orleans   The Consumer Finance Protection Bureau, a beleaguered federal agency much needed by consumers and much despised by the entire phalanx of Republican governmental officeholders, has released new rules for the payday lending industry. It wasn’t the full list of Christmas presents that many of us had sent the CFPB Santa Claus, but there were some pretty decent presents under the tree.

The key gift was a limit on loans to $500 and a cap of eighteen months between loans with a few exceptions that all could only be triggered based on an affordability or ability to pay standard. This is huge. As part of the national campaign ACORN Canada launched more than a decade ago in that country we arranged for an independent report by a recognized academic expert. The study found that the entire business model for payday lending companies – several of which were owned by companies in the United States – was premised on a constant churning of the loans that larded on interest and fees over a cycle of a year-and-a-half before a consumer could escape. This rollover is so baked into the current payday lending business model that the CFPB estimates that it will shrink the $6 billion industry by two-thirds.

The CFPB backed away from the issue of usurious interest rates on these loans, which has been ACORN’s key tool province by province in Canada in our fight with the industry. They also ended up walking away from similar predatory products like installment loans. On the other hand in conjunction with the Office of the Controller of the Currency they did slightly loosen restrictions on banks to allow more small scale personal loans for the lower income families demanding this kind of bridge financial assistance. Credit unions and community banks were largely exempted, and restrictions were lifted on smaller banks doing 2500 loans or less that are not more than 10% of their business. None of that is really enough, but it’s something.

One of ACORN’s most effective weapons in the fight against payday lenders sucking money from lower income families and neighborhoods has been our ability to win restrictive zoning codes, especially in the working class suburbs of Vancouver. The codes require distance from schools and some other facilities, like liquor stores, and from each other, which has limited new openings of such storefront outlets to a mere trickle.

Twenty states already have limits on payday lending in the US, but there is still a Scrooge hanging around these new rules that might protect our constituency in the other thirty states, and not surprisingly that’s in Congress. Elected representatives, long with their hands out for industry contributions and their arms locked with the industry lobbyists, have in some cases threatened to try to gut these new rules. The industry of course has threatened to sue to stop implementation now scheduled for 2019.

We’ve won a battle, not the war.


Action Day for ACORN in Ottawa Conventions

Arriving for the dawn briefing

Ottawa  The last day of an ACORN Convention is action day. It starts early because it’s also going home day for the members, as they pack out their gear on the buses so they are ready to roll once the work is done. There were already members sitting on the steps outside of the dorm room at 630 am when I hit the street.

Briefing from the leaders before the action

There were speakers in the morning, local and federal politicians and labor leaders came by, but the real preparation was practicing the chants for the day, so that Fair Banking and Affordable Internet substituted on some of the lines where normally a cry for Justice arose. Everyone was in good form by the time the briefing was finished, the speeches over, and it was time to roll downtown.

assembling for the march and asking drivers to honk their support!

After off loading on Queen Street, the march assembled near the War Memorial on Elgin, picking up some supporters along the way, and pressing cars driving by to honk their support as they sang and chanted. Humid days and sprinkling rain had been substituted for a bright day with a steady breeze breaking the heat, so everything seemed in order as the march set off down Elgin towards the building housing the Ministry of Finance, picking up some bicycle cops along the way as our de facto escorts.

coming down Elgin Avenue towards the Ministry of Finance

At the corner of the Ministry building, Ottawa moved along the side door to the formal entrance, while Toronto went towards the Elgin Street entrance, and Nova Scotia and British Columbia took the other side door. Quickly and efficiently everyone was in the large foyer of the building. Some held banners in front of the building with our demands so that all could see. Banking of any sort in the modern day specializes in security, so there was never any notion that the crowd would get past the foyer, so the chants demanded the Minister come down and meet. After some time when the police threatened to call the paddy wagons and begin arrests, all the members responded by sitting down and continuing signing and shouting their chants for action on fair banking and an end to predatory lending.

Come meet with us Minister

We’re Not Going Anywhere!

A demand letter was sent up as the members moved across the business district to rally in the shadow of the federal Parliament building and in front of the creepily named, Ministry of Innovation. The ministry had acceded to our demands for a meeting and held up announcements on internet access they had privately negotiated with telecoms after we protested our exclusion. This was a “warning” rally, that we were watching and waiting, but would be back in force if we didn’t get satisfaction.

marching to the Ministry of Innovation

Marva Burnett, ACORN’s president, addressed the crowd ending the action, and the convention, as everyone roared and then settled in for the trip home and the fights to come.

Marva Burnett, ACORN Canada and ACORN International President addresses the end of the convention

marching home