By Jim Lardner, Americans for Financial Reform
U.S. Senator Jeff Merkley yesterday warned that Mick Mulvaney’s actions as the unlawful acting head of the Consumer Financial Protection Bureau is destroying the bureau’s ability to stop predatory lending – the infamous “debt trap.”
“The CFPB has become the ‘Corporate Financial Protection Bureau’ under Mick Mulvaney as it abandons efforts to stop the debt trap,” Merkley said in a call with reporters.
Merkley spoke on a call organized by the Center for Responsible Lending and Americans for Financial Reform. Merkley was joined by Rev. Willie Gable Jr., head pastor at the Progressive Baptist Church in New Orleans, Yana Miles, senior legislative counsel at the Center for Responsible Lending, and Jose Alcoff, from the Stop The Debt Trap campaign.
Payday lending involves small-dollar loans at exorbitant interest rates, averaging 391 percent APR nationally, with rates regularly reaching or exceeding 500 percent and even 1,000 percent APR. These loans trap borrowers into a cycle of debt where they cannot escape, targeting the most financially vulnerable communities.
“This predatory business model is designed to target the poor, and keep them in the cycle of debt,” Gable said.
Contrary to consumer bureau’s mission, Mulvaney has dropped cases against lenders that either charge illegal annual interest rates of up to 950 percent in 17 states, and have a long track record of abusing consumers. One of these lenders, the World Acceptance Corp, had donated $4,500 to Mulvaney’s past election campaigns .
Long before Mulvaney joined the White House as the director of the Office of Management and Budget, he was a shill for payday loan sharks, an industry that has fought the consumer bureau tooth and nail since the agency started, and is now trying to cash in on the Trump administration. Mulvaney took $63,000 from them over the course of his election campaigns.
Hacking away the consumer bureau’s efforts to stop payday lending is only one of the ways Mulvaney has harmed consumers during the 75 days since President Trump installed him as the bureau’s acting head. “His continued effort to undermine the integrity of the consumer bureau will have lasting and damaging effects on working families across the country,” Miles said.
Merkley said that Mulvaney is “blatantly trying to dismantle the bureau from the inside,” and called on supporters of the bureau to fight back.
“If this isn’t a crystal-clear example of the Trump administration governing of, by, and for the powerful rather than of, by, and for the people, then I don’t know what is,” Merkley said. “This is exactly the opposite of what Trump promised during his election campaign. He is standing up for predatory Wall Street practices, instead of standing up for our working Americans. We need to change that.”
A majority of Americans, including coalition of congregations, civil rights groups, unions, consumer advocates, and others, would like to see consumer bureau’s work continue, according to a poll released by AFR and CRL. Mulvaney needs to let the consumer bureau do the excellent job it did under the previous director. “Trump needs to nominate a director with a track record of protecting consumers, one who can earn bipartisan support in the Senate,” Alcoff said.