This is what Trump looks like silently fucking the poor

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Trump is not being nice.

(Photo by Win McNamee / Getty Images)

Of all the powerful business interests that have benefited from Donald Trump’s deranged presidency, payday lenders it might be the easiest to miss. They shouldn’t be. These companies take advantage of the precariousness by offering high-cost loans to cash-strapped borrowers, earning billions of dollars a year, even as their clients are often trapped in a vicious cycle of deprivation.

But it has been clear for some time that, under the leadership chosen by the president, the Consumer Financial Protection Bureau (CFPB), the guard dog conceived by Elizabeth Warren to take care of normal people after the financial crisis, it would refuse to regulate these lenders. Under Barack Obama, by contrast, the CFPB actually conceived and finalized a policy to curb these loans. Last year, however, Trump’s initial acting director at CFPB, Mick Mulvaney, actually joined a lawsuit brought in by the payday loan industry looking to reverse it. A few months later, Mulvaney made clear his agency’s intention to alter (that is, gut) the rule and the judge in the case. suspended effective date in anticipation of the lobby getting away with it.

Now, Trump’s new contact person at this consumer agency, which apparently takes care of everyone from debtor students to people scammed for extra debit card fees, wants to get the job done. It is the latest example of the president and his cronies hiding behind a seemingly hot economy while dismantling the few safeguards that stand between you and oblivion.



On Wednesday, former White House aide Kathy Kraninger, now atop the CFPB, proposed rescind the heart of the payday loan rule. The more aggressive policy would have forced lenders to assess whether borrowers could actually afford to make their payments, while meeting their other financial obligations, before issuing these risky loans. “Subscription”, as this process is known, is common to virtually all loan transactions, because reputable lenders do not want their loans to default. But payday lenders have a different model: Most of their cash-strapped borrowers pay off your loans by getting another loan, get caught in a debt spiral. This provides generous fees for payday lenders, who also set average interest rates. as high as 400 percent.

The CFPB rule, which was finalized under Richard Cordray, appointed by Obama in 2017, it would not have put payday lenders out of business. But it would have changed the small dollar lending business model enough that the industry, which collectively issues about $ 46 billion in loans a year, has made a monumental effort to combat it.

As vice revealed In 2016, at a resort in the Bahamas, the Community Financial Services Association of America (CFSAA), the industry’s trade group, planned to undermine the rule even before it was finalized. Lawyers and lobbyists discussed bombarding regulators with hundreds of thousands of comments, including from clients, to deliberately slow down the process. They urged lenders to recruit clients to sign form letters: “We will have a team of three full-time writers in our office” to help them, said an attorney who works for the industry.

This is exactly what happened: CFPB received a million public comments, many of them with the same words and phrases, which suggests that they were written by ghosts.

The industry also paid studies suggesting that many payday loan stores would likely go out of business if the rule was adopted. And they tried to use the courts to have the rule annulled. But it turns out that all they really had to do to make sure he never saw the light of day was get Donald Trump elected and keep him happy.

They also worked that angle. Payday lenders have turned over more than $ 2.2 million to Donald Trump’s inauguration and political committees since 2016, including $ 250,000 from Advance America, the nation’s largest payday lender. And CFSAA decided to celebrate its Annual meeting 2018 at Trump National Doral Golf Club in Miami.

When Mulvaney, himself a past recipient of payday loan cash, he became acting CFPB director in November 2017, dropped at least one investigation at payday lenders and worked to prevent the rule from taking effect. In one case, the agency reduced a penalty (which would only have recovered the excess charges) against a payday lender called Triton Management Group by two-thirds, citing the company’s “demonstrated inability to pay.”

That’s the same standard that CFPB decided to eliminate for payday loan borrowers. In other words, it is now official policy for the government to reduce pauses for shady companies facing a financial deficit, but not for the human beings they take advantage of.

The hard work of slipping campaign donations and personal praise to a corrupt CEO has paid off for the industry. The CFPB’s proposed regulation states that repealing the ability to pay standard “would increase consumer access to credit.” If you think the kind of credit that traps you in a spiral of debt with ever-increasing rates is really worth putting in the hands of people, that argument might appeal to you.

Some minor parts of the initial proposed rule would remain. Lenders would have to give written notice before withdrawing their loan payments directly from borrowers’ bank accounts. If two consecutive attempts to make these withdrawals fail, lenders will need written consent before making a third attempt. For this reason, payday lenders have had the nerve to criticize the CFPB’s gift to their bottom line, saying they were disappointed. “We believe that the final rule of 2017 should be repealed in its entirety,” said Dennis Shaul, executive director of the CFSAA, in a statement.

Meanwhile, the proposal is open to public comment for 90 days, but no one really believes that Trump’s people are keeping an open mind. As Sherrod Brown, a senior Democrat on the Senate Banking Committee and a possible presidential candidate, said in a statement Wednesday, “The CFPB is helping payday lenders steal hard-earned money from families.” .

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