Meanwhile, payday lenders drain a half million dollars in fees from Maine’s economy
Augusta, Maine (June 2, 2017) Today marks the one-year anniversary of the federal Consumer Finance Protection Bureau’s (CFPB) release of long-anticipated consumer protections aimed at reining in the worst abuses of high-cost, predatory lenders that trap Mainers in a cycle of debt and poverty.
“While these protections are needed in Maine now more than ever, where such loans carry interest rates averaging over 200 percent, Congress has decided instead to protect payday lenders,” said Jody Harris, associate director of the Maine Center for Economic Policy (MECEP).
Specifically, the U.S. House of Representatives is set next week to vote on the so-called CHOICE Act, which would essentially undo all the consumer protections put in place following runaway Wall Street lending and federal bank bailouts that led to the Great Recession.
This bill, among other things, specifically bars the CFPB from regulating payday lenders, who drain more than $500,000 in fees from Maine each year. That means the anticipated protections would never go into effect and the bureau would be barred from enforcing existing laws.
“I shudder to think how much money the legalized loan sharks have spent convincing members of Congress to support this bill,” said Harris. “Sadly, far too many in Congress are ignoring the plight of their constituents who are being cheated by this industry.”
Payday lending exploits struggling Maine families, siphoning away money they need for food, gas, rent, utilities, and other basic needs and often leading to a cascade of other financial consequences: hefty overdraft fees, delinquency on other bills, involuntary loss of bank accounts, and even bankruptcy.
Since its inception, the CFPB has helped return $11.8 billion to 29 million consumers from financial companies employing abusive and deceptive practices including:
- Payday lenders who collected debts consumers did not legally owe
- Payday lenders for illegally overcharging service members
- Payday lenders who lured borrowers into one unaffordable loan after the next
“The bill is the wrong choice for Maine,” Harris said. “MECEP urges our representatives in Congress to oppose it.”
[pdf-embedder url=”https://www.mecep.org/wp-content/uploads/2017/06/Payday-anniversary-statement-6-2-2017ConstantContact.pdf” title=”Payday anniversary statement 6-2-2017ConstantContact”]