It’s been a dramatic 12 months for the CFPB.
However, all of what’s transpired over the last year may be the warm up act for the drubbing that it may face over its widely anticipated regulatory guidelines for short-term lenders.
There were the hearings earlier this year in the House that devolved pretty quickly into dueling insults. But that might not have been any big surprise given the title of the hearing: “The CFPB’s Assault on Access to Credit and Trampling of State and Tribal Sovereignty.”
There have also been the stunning reversals.
Short-term lending found itself with a surprise advocate in DNC chairwoman Debbie Wasserman Schultz. In the cliffhanger ending of all cliffhangers, Wasserman Schultz found herself agreeing with her Republican colleagues about the risks of overregulation.
Then it even looked as though the CFPB might be at risk of softening (some) on their position that short-term lenders are a bastion of predatory practices designed to ensnare consumers into an inescapable cycles of debt. The head of the CFPB, Richard Cordray, said during testimony on The Hill last week (April 7) that FinTech companies will likely be a significant presence in making payday loans (or smaller dollar loans) to consumers.
The statements by Cordray were carefully worded but came with the offhand admission that the lending process in the small loan pond is a “tricky” one — and offered an opening for FinTech lenders who might otherwise be classified as payday lenders but who are offering a greater variety or innovation in service.
Again, those were some very muted remarks – but at least some acknowledgement of FinTech players and a spot at the table was taken as positive, particularly in light of accusations that the CFPB is most uninterested in lenders’ perspectives of all stripes.
However, the era of good feelings when it comes to payday lenders — and the current official general opinion of the service they offer — was apparently short-lived, because by late last week the White House was on the outs with payday lenders, citing on their blog that religious groups find payday lenders “sinful.”
The White House And The Evangelicals Have Found Common Ground
The blog post in question was one referencing a recent meeting at the White House by a “diverse array” of religious leaders, from “Southern Baptists to Reform Judaism.”
And in that context, when referring to payday loans, the words “predatory,” “abusive” and “sinful” were all used.
“We heard from the group about what they are seeing in their communities, including specific heart-wrenching stories of members of their congregations whose lives have been devastated by usurious loans. We heard their recommendations for action to address the abuses in payday lending that are visiting hardship upon their communities,” the post noted.
And while the White House didn’t quite say that the Almighty was on the side of payday loan reform, they did at least note the statistics on how believers feel about payday lending and the perceived abuses and excesses of the system.
“A recent survey [by LifeWay Research] reported that 77 percent of American Christians and 85 percent of Evangelical Christians think predatory lending is sinful. Ninety-four percent of Christians believe that lenders should only extend loans at reasonable interest rates based on an ability to repay.”
The White House took the opportunity to give the CFPB a shout-out too, noting that the consumer protection agency was dedicated to creating and enforcing the sort of regulations and controls necessary to keep consumers safe from the worst predations of predatory lenders.
“Yet even as there is widespread agreement across a diverse array of faith communities that something needs to be done to address payday lending abuses, too often these reasonable efforts face stiff resistance from the special interests supported by the payday loan industry,” the post noted.
“So, today was an important reaffirmation that diverse religious leaders and thousands like them are making clear why the independent CFPB has such strong moral grounds for addressing abuses in payday lending. We are grateful to these religious leaders for their commitment to serve their communities and look forward to working with them in the days ahead.”
So have Evangelical Christians and the Obama administration — after almost 8 years — finally found an issue they can agree on?
About Those Survey Results
While the White House certainly correctly cited that survey from LifeWay, there are at least a few other data points referenced that also seem worth noting.
The only descriptor that more than half the respondents agreed to in terms of payday lending was “expensive.” That is not a positive description, but it is not explicitly negative (insofar as it is accurate). There were negative responses that few significant minorities — 37 percent thought they were harmful, while 33 percent said predatory. But there were 16 percent who noted that they thought short-term loans were helpful — more than those who explicitly said they were immoral.
It also may be the case that the average religious respondent to the poll takes a slightly different operating definition of what constitutes “abusive” payday lending. A majority (55 percent) noted that 18 percent seemed to be the “maximum reasonable” interest rate on such loans, while another 37 percent named 12 percent as a reasonable cut-off. Only 18 percent, however, thought that a firm cap should be placed at 18 percent.
Which is the sort of question mark left by the survey results — and a mark that hangs over the likelihood of the White House and consumer protection advocates on the left forging an active working relationship with the more typically right-leaning Evangelical Christian community. When asked very direct and somewhat leading questions about whether or not they broadly favored laws that protect consumers from predation, an overwhelming majority responded they did.
Only 18 percent of those surveyed mentioned advocacy for changes in law or legislation as their favored solution for the issue, while 56 percent said they wanted to see their churches offer guidance to those with financial needs and 27 percent expressed a desire to see their church enter lending via gift loans to those in crisis.
For a storyline, it’s hard to beat religious leaders of all stripes coming together at the White House to decry payday lending.