Trump’s CFPB Has Already Saved the Payday Industry Over $900 Million By Pushing More Consumers into the Payday Debt Trap
WASHINGTON, D.C. – Executives from payday lending companies Advance Financial and Cash Express are among the top sponsors for a mega-dollar fundraiser for the Trump reelection campaign in Nashville, TN today. Tickets are going for as much as $100,000 for the lavish affair that will be keynoted by Vice President Mike Pence. Consumer watchdog group Allied Progress called the event the latest and most brazen instance yet of favor-trading between Donald Trump and payday lenders, which has corrupted the administration’s rulemaking involving the industry. *See below for the timeline of Trump’s Payday Payback.
The Trump Consumer Financial Protection Bureau is finalizing a rule that would scrap a critical consumer protection against the payday loan debt trap, the ability-to-repay standard, designed to keep payday lenders from approving high-interest loans to borrowers they know cannot pay them back in time. Keeping people drowning in debt is how payday lenders make most their money. Only 15% of payday loan borrowers are able to repay their loans on time and the remaining borrowers either default or take out a new loan to cover old loan(s), which average nearly 400% APR. This administration stopped the ability-to-repay standard from taking effect in August, a decision which has already enriched the payday industry by over $900 million on the backs of vulnerable communities.
The administration’s efforts to take away consumer protections from predatory lenders is clearly payback for the millions of dollars the payday industry has already given Trump’s campaign and inaugural committees, and the estimated $1 million the payday trade association spent holding its annual conference at Trump’s National Doral Golf Resort two years in a row.
“We’ve learned a lot about Donald Trump’s fondness of quid pro quos in recent days, and his mutually beneficial relationship with predatory lenders is consistent with that,” said Jeremy Funk, spokesman for Allied Progress. “The payday loan industry has dumped millions into Trump’s campaign and personal businesses. In return, his administration is working to save the payday industry billions of dollars, coming directly at the expense of hurting families. If the administration is concerned about growing warning signs of an economic downturn, here’s a thought: don’t push millions more consumers into a long-term, high-debt situation. The Trump CFPB can start putting billions of dollars back in the pockets of working families and lift up the economy simply by allowing existing payday protections to take effect.”
WHAT YOU NEED TO KNOW:
Timeline of the Trump-CFPB’s Payday Industry Payback
- 2016 Election Cycle: Payday loan industry donates $2.2 million to Trump political and inaugural committees and $1.2 million to Republican campaigns.
- October 5, 2017: Former CFPB Director Richard Cordray issues a final payday rule that would require payday lenders to consider a borrower’s ability to pay back the loan in the time allotted before approval.
- April 16-19, 2018: The Community Financial Services Association of America, the payday trade association,holds its annual conference and expo at the Trump National Doral in Miami, Florida.
- 2018 Election Cycle: Payday loan industry donates over $296,000 to Trump political committees and $1.1 million to Republican campaigns.
- February 6, 2019: CFPB Director Kathy Kraninger releases a proposed rule throwing out the ability-to-repay standard established in the Bureau’s 2017 final rule.
- February 27, 2019: The New York Post reports that Hilary Miller, the president of a payday lending trade group, negotiated with the Trump CFPB before it scrapped the ability-to-repay standard of the 2017 payday rule.
- March 12, 2019: CFPB Director Kathy Kraninger admits during a Senate Hearing that the elimination of the ability-to-repay standard would save the payday loan industry “$7.3 to $7.7 billion” annually at the expense of consumers.
- March 18-21, 2019: The Community Financial Services Association of America holds a second conference at the Trump National Doral. The combined costs of the two conventions at Trump National Doral was reported to be “about $1 million.”
- May 15, 2019: The public comment period closes on the CFPB’s February proposal to remove the ability-to-repay standard of the payday rule. An Allied Progress analysis finds that over 7,000 pro-industry comments used suspiciously duplicative language and hundreds included identical ‘personal’ anecdotes.
- May 16th, 2019: Thomas Pahl, a senior CFPB official, testifies to Congress that the bureau’s proposed rule rolling back the ability-to-repay standard was not based on “any new research.”
- June 6, 2019: CFPB issues a 15 month delay from compliance with the ability-to-repay standard of the Cordray-era payday rule, with a new compliance date of November 19, 2020.
- August 19, 2019: The original date the 2017 Cordray payday rule would have gone into effect. Conservative estimates note that the payday debt trap costs consumers nearly $6.4 billion in fees a year – or $213 per second.
- 2020 Election Cycle: As of the second quarter of the 2020 cycle, the payday loan industry has donated over $35,000 to Trump political committees and $178,694 to Republican campaigns.