The predatory-lending industry recently scored a victory. Current acting director of the Consumer Financial Protection Bureau (CFPB) and Trump appointee, Mick Mulvaney has indefinitely suspended a rule finalized in 2017 under the Obama administration that placed restrictions on “payday” lending.

Reversing the Regulations

Set to go into effect on January 16, 2019, the ability-to-repay ruling would have required lenders to determine if borrowers can legitimately repay their debts before issuing them a loan. It would have also placed a cap on the number of loans that lenders could issue a single borrower. In addition to delaying the ability-to-repay requirements for payday lenders, the CFPB has also extended the compliance date until August 2019 to give the lending industry time to incorporate the expected changes.

The Need for Payday-Lending Restriction

For years, public-interest groups have demanded restrictions on the type of short-term loans that exploit lower-income Americans. An advance on a future paycheck, “payday”  loans average between $100 – $500. Borrowers are given two weeks, typically until the next paycheck, to repay the loan plus interest. This creates a never-ending cycle of debt as many borrowers lack the ability to pay back their loan after the initial two weeks. Because of their astronomical interest rates, such loans are not structured for repayment, but usury. The rule would also have restricted lenders from directly withdrawing money from the accounts of borrowers who did not repay their loans on time.

The New Consumer Financial Protection Bureau

Evident from its name, the Consumer Financial Protection Bureau was established to protect consumers from financial ruin and exploitation by shady lending practices such as the payday-lending sector. Mulvaney’s actions signal a shift in the goals of the CFPB from protecting the interests of consumer to the interests of Wall Street.

Payday Lending Salvation

If you have suffered mounting debt from short-term, payday loans with exorbitantly high interest rates, there is a way to end your debt spiral. At Progressive Debt Relief, we offer debt assistance and credit counseling programs that can help settle your payday loans and other unsecured debt. Let us provide you with the tools you need to get back on your feet. Contact us today to schedule your complimentary consultation.