A bipartisan group of House lawmakers want to scrap a Consumer Financial Protection Bureau rule that tightens restrictions on payday lenders, saying Friday that it’s “a de facto ban” on the industry.
“More than 1.2 million Floridians per year rely on Florida’s carefully regulated small-dollar lending industry to make ends meet,” Rep. Dennis Ross, R-Fla., said. “I and my colleagues in Congress cannot stand by while an unaccountable federal agency deprives our constituents of a lifeline in times of need, all while usurping state authority. Today, we are taking bipartisan action to stop this harmful bureaucratic overreach dead in its tracks.”
The CFPB, which promulgated the new regulation in October, maintained that it would prevent predatory lenders from taking advantage of cash-strapped people who couldn’t make ends meet. Then-CFPB director Richard Cordray argued that the previous system entrapped low-income Americans in a “cycle of taking on new debt to pay back old debt” that could wreak havoc on their finances. The opposing lawmakers countered that the agency has placed a major barrier in front of individuals short on cash.
“Americans should be able to choose the checking account they want, the mortgage they want and the short-term loan they want and no unelected Washington bureaucrat should be able to take that away from them,” House Financial Services Committee chairman Jeb Hensarling, R-Texas, said in support of the resolution.
Hensarling is one of the most conservative lawmakers in the House. His opposition to the regulation is consistent with broader Republican complaints that the CFPB, which was created during former President Barack Obama’s administration, is a rogue agency designed to be unaccountable to Congress. That debate has played out with particular intensity over the last week, as Cordray and President Trump’s team have fought a legal battle over whether Trump can pick Cordray’s successor now that the ex-CFPB director has stepped down.
A federal court gave Trump a preliminary win on Tuesday, when a judge refused to block the president’s chosen acting director from taking the reins at the agency. That litigation is ongoing, as Democrats maintain that Cordray’s aide needs to remain at the CFPB in order to prevent the administration from gutting the agency or the rules developed recently.
“For six years, this agency has fought for working people, and now it is time for us to fight for the agency,” Sen. Elizabeth Warren, D-Mass., said Tuesday while demanding that Trump allow Cordray’s aide to serve as acting director of the agency.
Ross’s resolution breaks the typical partisan lines, however, as three Democrats joined him in introducing legislation under the Congressional Review Act that would nullify the payday lending rule if it were to pass.
“The prevalence and popularity of small-dollar loans can, like in any industry, attract unscrupulous actors,” Rep. Alcee Hastings, D-Fla., said Friday. “Like all of my colleagues in Congress, I welcome safeguards that will ensure consumers are protected and that bad actors in the industry are held accountable. Unfortunately, the rule promulgated by the Consumer Financial Protection Bureau (CFPB) does not reflect this sound policy.”
Hastings echoed traditionally Republican arguments that such regulations could be left to monitors in the state government. “Florida knows all too well that there can be dishonest actors in the small-dollar, short-term credit industry,” he said. “That is why, 17 years ago, the Florida legislature acted unanimously to reform the states’ small-dollar credit industry to protect consumers and their access to credit. And the system has worked.”