U.S. Sen. Jeff Merkley had sharp words for a recent Consumer Financial Protection Bureau decision that will allow companies to offer payday loans with the knowledge that the recipients are financially unable to repay the loans by their due date.
"Every day the Trump Administration prioritizes the privileged and powerful over working Americans, but deliberately helping loan sharks to cannibalize the pocketbooks of vulnerable families is a low blow even for them," said Merkley.
Payday loan companies, upon granting a loan, require that recipients postdate their check along with the interest fee to ensure that the loan company receives the payment without hitch. When that day comes for the check to be deposited, the recipient often must renew their loan because they cannot afford the original loan. Fees stack up—leading to accumulated interest fees and loan repayments that keep families stuck in a cycle of financial insecurity.
Merkley said "the majority of loans are made to borrowers who have to renew so many times that their fees end up exceeding the original amount of the loan," research he cited as the result of a CFPB study.
The law will take effect in November 2020 and revises Obama-era regulations on curbing payday loan companies from exploiting low-income customers. The decision comes under newly Trump-appointed CFPB leadership.