Kraninger’s Semi-Annual Report Is Incomplete If She Fails to Acknowledge the $3B Consumers Lost to Predatory Lenders Thanks to Her
Washington D.C. – Trump CFPB Director Kathy Kraninger is presenting her semi-annual report before the House Financial Services Committee today, one year to the day after she rolled out her proposed rule scrapping a core protection against the payday loan debt trap, the ability-to-repay standard. Consumer watchdog group Allied Progress warned that Kraninger’s report would be incomplete and highly misleading if she neglects to mention that her decision to delay the ability-to-repay standard from taking effect last August has already cost consumers more than $3 billion and counting. Without this safeguard in place, there’s been nothing to stop payday lenders in many states from approving high-interest loans – that average nearly 400% APR – to struggling communities they know cannot pay back them back in time. The Bureau’s final payday rule is expected in April.
“This is one anniversary not worth celebrating,” said Derek Martin, director of Allied Progress. “One year ago, Kathy Kraninger decided the best use of her power was to let predatory lenders continue to exploit the most vulnerable among us. Her first major action as director was adopting a top priority of the payday loan industry that just happened to have given over $2 million to Donald Trump and held a ritzy conference at his golf resort. And that was just the beginning of what would become a hopelessly tainted rulemaking process.”
In the year that followed Kraninger’s announcement, many serious concerns have been raised as to whether the Bureau’s payday lending rulemaking process has been corrupted beyond repair, including:
- Reportsin February 2019 that Hilary Miller, the president of a payday lending trade group, had negotiated with the Trump CFPB as it was considering its new proposed payday rule.
- In March 2019, the Community Financial Services Association of America, the top payday industry trade group, heldits second conference at the Trump National Doral just weeks after the Bureau released its industry-friendly proposed rule. The combined costs of the two conventions at Trump National Doral was reported to be “about $1 million.”
- As the public comment period on Kraninger’s proposed payday rule came to a close in May 2019, an Allied Progress analysis found that over 7,000 pro-industry comments used suspiciously duplicative language and hundreds included identical ‘personal’ anecdotes.
- In May 2019, Thomas Pahl, a senior CFPB official, admitted to Congress that the Bureau’s proposed rule rolling back the ability-to-repay standard was not based on “any new research.”
- In September 2019, during a payday industry-sponsored webinar, payday executive Mike Hodges bluntly discussedhow contributions to the Trump campaign had bought access to his administration and promises of favorable regulations.
- In October 2019, Vice President Mike Pence was the keynote speakerat a Trump campaign fundraiser co-hosted by payday executives, Tina and Mike Hodges, and Garry McNabb, the owner of payday lender, Cash Express. Tickets ranged between $1,000 and $100,000.
- In November 2019, it was revealedthat payday industry executive Mike Hodges paid Mick Mulvaney’s former congressional Chief of Staff $350,000 to lobby the White House on the payday rule and CFPB issues.
“At every turn of this process, there’s been the strong appearance of improper influence,” added Martin. “The Trump CFPB has admitted that their payday protection elimination scheme is not supported by a shred of new academic research and that it will pad profits of the payday industry to the tune of $7 billion annually. Contrast that with the original Obama-era payday rule that was carefully crafted after 5 years of research and input from the full spectrum of stakeholders. If there’s a good reason why the Trump Bureau went down this path other than a trail of payday money, we still haven’t heard it. What’s best for consumers was never a factor in the administration’s equation – only what’s best for Trump’s predatory lending industry donors. Director Kraninger has an opportunity today to finally come clean about what motivated her actions and pledge to make it right.”
- PREVIOUS FROM ALLIED PROGRESS: CFPBWatch.org Launched, Spotlights Trump Administration’s Anti-Consumer Agenda