Warren, Waters Lead Letter Pressing Mulvaney on Sudden Actions to Benefit Payday Lenders
Concerns Raised about Mulvaney's Close Ties to Payday Loan Industry
Washington, DC - Today, United States Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing and Urban Affairs Subcommittee on Financial Institutions and Consumer Protection and Congresswoman Maxine Waters (D-Calif.), Ranking Member of the House Financial Services Committee sent a letter to Acting Consumer Financial Protection Bureau (Consumer Bureau) Director Leandra English and Director of the Office of Management and Budget Mick Mulvaney, questioning Mulvaney's recent actions that benefit payday and installment lenders. These actions have unwound years of careful work by the Consumer Bureau and benefited an industry that has close ties to Mr. Mulvaney and that has contributed more than $60,000 to his political campaigns.
Just in the last month, Mulvaney has halted implementation of the agency's "Payday Rule" designed to protect consumers from predatory lending practices, withdrew a lawsuit against four deceptive payday lenders who charged interest rates approaching 1000%, and discontinued an investigation into World Acceptance Corporation, a high-cost installment lender, which engaged in aggressive collection practices and trapped customers into years of debt.
A 2014 report by the Consumer Bureau found that most payday loan borrowers cannot afford to pay back their loans and 80% of them roll the balance over into a new payday loan within 14 days of it coming due, incurring new fees. Half of all payday loans are made to borrowers who roll over their loans at least ten times.
Under the leadership of Richard Cordray, the Consumer Bureau issued the Payday Rule to put an end to predatory debt traps by requiring lenders to ensure that consumers can actually afford to pay off their payday loans. On the day the rule was set to take effect, Mick Mulvaney announced his plan to strip those protections from consumers.
"The CFPB spent five years honing the Payday Rule, conducting research and reviewing over one million comments from all types of stakeholders: from payday lenders, to state regulators, to faith leaders," wrote Ranking Members Warren and Waters. "This work produced a targeted and balanced rule that will keep many American families from falling into debt traps."
In the letter, Ranking Members Warren and Waters expressed concern that the Consumer Bureau's recent actions may be connected to Mr. Mulvaney's close ties with the payday loan industry, which gave him nearly $63,000 in campaign contributions, including $4,500 from the World Acceptance Corporation political action committee. Mr. Mulvaney has yet to answer Senator Warren's November 28 inquiry about his ethics arrangements and recusals.
Senators Richard Blumenthal (D-Conn.) and Jeff Merkley (D-Ore.) and Representatives Al Green (D-Texas), Ranking Member of the House Financial Services Subcommittee on Oversight and Investigations and Keith Ellison (D-Minn.) also signed the letter.
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