Republicans Senator Lindsey Graham and Congressman Dennis Ross (FL-22) introduced a Congressional Review Act (CRA) Joint Resolution in the Senate and House, S.J. Resolution 52 and H.J. Resolution 122, with the hopes of repealing a consumer protection rule related to payday lending that was enacted last fall.
Both resolutions seek congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Bureau of Consumer Financial Protection (CFPB) relating to “Payday, Vehicle Title, and Certain High-Cost Installment Loans.”
The CFPB rule provides basic consumer protections from payday loans and was finalized in October 2017. It included fundamental standards that lenders have to follow before issuing loans, like verify a borrower’s income and ability to repay the loan before making the loan.
Their proposal would not only reverse last fall’s ruling but also prevent the CFPB from issuing a similar rule in the future.
The Federal Advocacy Director at theCenter for Responsible Lending, a consumer protection and advocacy organization, Scott Astrada, said of Graham’s proposal:
Payday loans trap people in a vicious cycle of debt with loans costing over 300% annual interest. The debt trap is their business model, with 75% of loan fees going to people trapped in more than 10 loans a year. This often leads to overdraft, involuntary bank account closures, delayed medical care, and bankruptcy.
The Consumer Bureau’s rule would help free people from this suffocating debt trap and its efforts are supported people all across this country including veterans’ groups, faith leaders, civil rights organizations, consumer advocates, and many more. Congress should stop defending the payday lenders and reject this misguided resolution.
H.J. Res. 122 was referred to the House Committee on Financial Services on Dec. 1, 2017. S.J. Res. 52 has been read twice and was referred to the Committee on Banking, Housing, and Urban Affairs on March 22, 2018.