President Obama commended new efforts by a government agency to protect Americans from abusive payday loans in a video released Saturday.
“The idea is pretty common sense: if you’re a payday lender preparing to give a loan, you should make sure that the borrower can afford to pay it back first,” Obama said in his weekly address. “While payday loans might seem like easy money, folks often end up trapped in a cycle of debt. If you take out a $500 loan, it’s easy to wind up paying more than $1,000 in interest and fees.”
The Consumer Financial Protection Bureau, an independent agency created by the Dodd-Frank Wall Street Reform and Consumer Protection Act in the wake of the Great Recession, proposed new rules on Thursday that would require lenders to either ensure that borrowers can repay their loans or limit the number of loans they let a single consumer take out.
“As Americans, we believe there’s nothing wrong with making a profit,” Obama said. “But there’s something wrong with making that profit by trapping hard-working men and women in a vicious cycle of debt.”
The president also noted tax cuts proposed by Republicans.
“It was a new, more-than-$250 billion tax cut for the top one-tenth of the top one percent of Americans,” Obama said. “That would mean handing out an average tax cut of $4 million a year to just 4,000 Americans per year, and leaving the rest of the country to pay for it.”
