US Senator Jeff Merkley had scathing words for a recent decision by the Consumer Financial Protection Bureau that will allow businesses to offer payday loans knowing that beneficiaries are financially unable to repay the loans on their due date.
“Every day the Trump administration prioritizes the privileged and powerful over American workers, but deliberately helping loan sharks cannibalize the wallets of vulnerable families is a blow to them, even to them,” Merkley said.
Payday loan companies, when granting a loan, require recipients to post-date their check as well as interest charges to ensure that the loan company receives the payment without a hitch. When that day comes for the deposit of the check, the recipient often has to renew their loan because they cannot afford the original loan. Fees pile up, resulting in accrued interest charges and loan repayments that keep families stuck in a cycle of financial insecurity.
Merkley said that “the majority of loans are given to borrowers who have to renew so many times that their fees end up exceeding the original loan amount,” he cited following a CFPB study.
The law will come into effect in November 2020 and revises Obama-era regulations aimed at preventing payday loan companies from exploiting low-income customers. The decision rests with the leadership of the newly appointed CFPB by Trump.