Back in July, Senator Mark Warner [D-VA, @MarkWarner, 202-224-2023] introduced S.1642 – The Protecting Consumers’ Access to Credit Act of 2017, which bans states from capping the interest rates charged by payday lenders who serve poor and vulnerable people, so long as the payday lenders partner with a national bank.
The bill is nominally about allowing for innovation in finance products, but it has been widely condemned, drawing opposition from Americans for Financial Reform, the Center for Responsible Lending and the Consumer Federation of America, the NAACP and the Southern Poverty Law Center, who’ve warned that the bill will “open the floodgates to a wide range of predatory actors to make loans at 300% annual interest or higher.”
Dozens of states regulate payday lending through usury caps ― blocking loans with annual interest rates higher than a certain amount, often 36 percent. Payday loans usually take the form of a two-week advance of a few hundred dollars with a “fee” of a few dozen dollars. In 2013, the Pew Charitable Trusts found that a typical payday loan was about $375, with a $55 fee. Since the life of the loan is so short, in just two weeks this “fee” works out to an annual interest rate of over 380 percent. In practice, though, it’s usually much worse than that, since, according to Pew, a typical customer ends up repeatedly rolling over a payday loan, ultimately handing over about $520 in fees to pay off an initial $375 advance.
This Democrat Is About To Give Payday Lenders A Big Boost
[Zach Carter/Huffington Post]
(via Naked Capitalism)