Combating Payday Lending

1. Combating Payday Lending Role for Credit Unions in State & National Policy Lucia Mattox, Policy & Outreach Associate, Center for Responsible Lending

2. About CRL The Center for Responsible Lending (CRL) is working to ensure a fair, inclusive financial marketplace that creates opportunities for all responsible borrowers, regardless of their income, because too many hard-working people are deceived by dishonest and harmful lending practices. CRL is a nonprofit, non-partisan organization that works to protect homeownership and family wealth by fighting predatory lending practices. Our focus is on consumer lending: primarily mortgages, payday loans, student debt, bank overdrafts, and auto loans.

3. Agenda • Current Federal Landscape for Payday Lending • State by State Landscape • State Landscape: How Credit Unions Can Advocate • Credit Unions & State Advocacy Fights

4. Federal Landscape: CFPB Payday and Car Title Lending Rule • Earlier this year, new leadership at the CFPB proposed to repeal a 2017 rule that would disrupt the debt trap business model of payday and car title lenders. • Linchpin of the rule would require lenders to determine a borrower’s ability to repay a loan before making it.  • The rule was five years in the making and was supposed to go into effect on August 19, 2019. 

5. Federal Landscape: CFPB Payday and Car Title Lending Rule, cont’d • This past spring: • ~150K comments in total were submitted to the CFPB (incl. from Inclusiv!) • 25 state AGs opposed the rule repeal • Individual, state-specific, and coalition comments • Last month, Chairwoman Maxine Waters & 101 members of Congress sent a letter to Dir. Kraninger, calling on her to implement the Payday Rule without further delay. • Repeal & delay in compliance date proposals are still pending

6. State by State Landscape for Payday Lending

7. State Landscape: How Credit Unions Can Advocate • Credibility: Credit Unions are already engaged in responsible lending practices, and can use this to counter payday lenders' claims of lack of lending options.  • Borrower stories: Credit Unions support members experiencing harmful loans, understand unique needs, and can bring those stories to bear in advocacy efforts. • Relationships: Credit Unions are rooted in community, so are ideally suited to build & engage with elected officials as well as partner with peer institutions.

8. Credit Unions & State Fights – Louisiana • 2018: Expansion bill attempt • Industry tried to bring longer term, high cost loans into the state • Credit Unions joined grassroots groups to fight bill • Two Credit Union CEOs testified in the legislature against the bill • Bill failed in the House committee in large part because of Credit Union testimonies • 2019: Rate Cap bill attempt • Credit union leaders testified in support of bill • Bill did not pass

9. Credit Unions & State Fights– Michigan • In recent years, MI Credit Union League has been the most engaged in state advocacy efforts • Opposed payday expansion in the state • Mobilized members • Provided talking points for Lobby Days • Billboard campaign leading up to State Capitol

10. Credit Unions & State Fights – California AB 539, 2019 Rate Cap Bill • Sponsored by LA County • 3rd attempt to pass bill since deregulation in mid-80s • Coalition of credit unions & leaders from faith, labor, veterans and consumer advocates communities • Political support & pressure came through borrower stories, loan documents, community partnerships, etc.