The head of a Tennessee-based consumer advocacy group lauded as a ‘good start’ the federal Consumer Finance Protection Bureau’s proposed rules on small-dollar lending by the payday and car title loan industry, reports the Chattanooga Times-Free Press.
Charging the industry is filled with “loan sharks” and “predatory lenders,” Andy Spears, executive director of Tennessee Citizens Action, said at a news conference today that his group has unsuccessfully sought to curb the industry’s worst practices in the state Legislature but run into road blocks.
“Tennessee families pay more than $400 million a year in payday and car title lending fees,” Spears told reporters. “The average Tennessee borrower pays $490 in fees to borrow $300 for five months.”
Spears said “today’s proposed rule by the CFPB is a good start. It focuses on the ability to repay which is a critical element missing because the current standard is the ability to collect.”
In announcing the proposed federal rules, CFPB Director Richard Cordray said in a statement that “too many borrowers seeking a short-term cash fix are saddled with loans they cannot afford and sink into long-term debt.
“It’s much like getting into a taxi just to ride across town and finding yourself stuck in a ruinously expensive cross-country journey,” Cordray added.
But the Tennessee Flexible Finance Association is attacking the proposed federal rule, saying it threatens to ruin the industry and thereby restrict access to low-dollar loan credit for thousands of Tennesseans. Continue reading