President Obama is expected to discuss new regulations on payday lending during a trip to Alabama on Thursday, with the Consumer Financial Protection Bureau announcing the new rules before his speech.
The CFPB will hold a field hearing on payday lending and car title lenders in Richmond, Virginia on Thursday. The administration is concerned that consumers fall into deep debt rapidly from the short-term, high-rate loans.
CFPB deputy director Steven Antonakes dropped a hint Wednesday that the agency is preparing to take sweeping action against subprime auto lending, which he called an “emerging risk.”
“The average term of a subprime auto loan for a new vehicle has increased every year since the crisis and is now at a length never seen before,” Mr. Antonakes said at the Consumer Bankers Association’s annual conference in Orlando, Florida.
“At the same time, we have seen credit losses for recent loan vintages over the past two years rising from historically low levels, and some preliminary analysis suggests high levels of early delinquencies,” he said.
Mr. Antonakes said the agency is contemplating action against “potentially unfair, deceptive, and abusive practices” in this industry.
White House press secretary Josh Earnest said Wednesday that Mr. Obama, as “an advocate for middle-class families … notices when those kinds of stories are told and when those kinds of reports are filed.”
A White House official said Mr. Obama also will discuss congressional Republicans’ “efforts to limit the ability of the CFPB to do its job and to undermine other crucial reforms.”
Republicans want the agency to be funded through congressional appropriations, rather than through the Federal Reserve, an action which the administration contends would hamper its independence.
“The House Republican budget calls for rolling back key aspects of Wall Street Reform, while underfunding the agencies working to implement it,” the official said. “It terminates mandatory funding for the Consumer Financial Protection Bureau, greatly limiting the independence of this watchdog for the rights of consumers.”
Rep. Terri Sewell, Alabama Democrat who will attend the president’s event, told the Birmingham News that there is an “urgent need for stronger consumer protections and increased transparency” in the payday loan business.
“The economy is slowly recovering, and many of my constituents rely on payday loans to help make ends meet,” Ms. Sewell said. “I recognize the need for emergency credit, but we must also ensure that these products help consumers, rather than trap them to a perpetual cycle of debt.”
• Dave Boyer can be reached at dboyer@washingtontimes.com.
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