Clinton Praises Pending Payday Loan Restrictions
In recent years, payday lenders have endured increased scrutiny and harsh criticism from a variety of sources. Consumer protection agencies, citizen’s action committees, credit counseling services and even actors have all made public statements condemning payday loans. Many politicians have been quite vocal about the issue as well. Hillary Clinton has become one of the most recent politicians to issue a statement praising the payday loan restrictions proposed by the Consumer Finance Protection Bureau, which is commonly known as the CFPB.
Clinton Praises Pending CFPB Regulations for Payday Loans
In a statement issued by Clinton and posted on the website, Hillary for America, she responded to the CFPB’s release of proposed regulations. In her statement, Clinton refers to “abusive payday lenders” who are a “drain on the resources” of needy families. She decries payday loans as an endless debt cycle that traps families and that can result in “brutal” collection practices. She describes the CFPB as a “government watchdog” with the sole function of protecting Americans from deceptive and unfair financial practices.
In the same statement, Clinton compares her support for the CFPB with what she alleges to be the position of her opponent, Donald Trump, accusing him of wanting to abolish the CFPB and roll back the Wall Street reforms that arose after the financial crisis. In an interview with Reuters, Trump stated that the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 has harmed the economy and needs significant reform. In fact, Trump stated that he would dismantle almost all of Dodd-Frank, claiming that it has “made it impossible” for the nation’s bankers to function and “very hard” for them to make business loans that could create jobs.
Support for Proposed CFPB Regulations Divided by Party
Although there are some Democrats who oppose the pending CFPB regulations and some Republicans who support them, most Republicans have voiced opposition to the regulations and most Democrats have expressed support. This is not surprising; Republicans have been pushing for changes to Dodd-Frank from the time it was enacted. Republicans in both the Senate and the House have pushed for relaxed requirements for smaller banks, greater restrictions on the introduction of new rules and abolishment of the CFPB. In April, a bill passed the House Financial Services Committee that would include the CFPB, which is currently funded by the Federal Reserve Board, in the federal budget to make the CFPB more accountable.
In addition to the presidential candidates, several members of Congress have issued statements regarding the proposed CFPB regulations and the Dodd-Frank Act. For the most part, Republicans have been critical of both. As quoted in an article published by DSNews.com, Rep. Jeb Hensarling states that the “Dodd-Frank Act is a failure.” Rep. Randy Neugebauer posted his reaction to the proposed CFPB regulations on his official website, warning that the proposed rules will cause harm to the nation’s underbanked and unbanked consumers and calling the rules “Washington at its worst.”
By contrast, most Democrats have been extremely protective of the CFPB and Dodd-Frank. When speaking of the bill to place the CFPB on a budget and a second bill that would repeal the bailout fund for large financial institutions, Rep. Maxine Waters stated that if enacted, the two bills would return the financial system to a time when regulators could not provide protection for consumers or the economy against “financial sector ruin.” On June 2, Sen. Elizabeth Warren tweeted that if anyone attempts to delay or block the proposed CFPB payday loan regulations, “it’s time to fight back hard.”
Do Payday Lenders Need Federal Oversight?
Another reason that the CFPB proposed rules have been politically divisive involves the rights of the states to make their own decisions regarding financial products. Rep. Randy Neugebauer states that the CFPB has not consulted state officials or tribal officials to determine what frameworks already exist. He asserts that virtually every state has enacted laws addressing payday loans, and he goes on to state that recognized tribes and state legislatures have “universal authority” to regulate payday loans. He feels that before state laws are preempted, additional study should be undertaken, claiming that there are too many questions that the CFPB has not answered for the proposed regulations to be implemented at this time.
Simple Answers to Payday Lending Issues Non-Existent
There are no simple answers to the issues raised by supporters and detractors of payday loans. Both sides in the debate have raised valid points that can be applied to at least some lenders and borrowers. If you would like to explore the controversy over payday loans, you will find many more articles on the topic at PersonalMoneyStore.com.