Financial Services and General Government Appropriations Act, 2017

Floor Speech

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Ms. SEWELL of Alabama. Mr. Chairman, today I rise in support of the CFPB's recent efforts to rein in predatory practices utilized by payday lenders across this country.

I am opposed to any congressional efforts to weaken or prohibit regulations of these actors. That is why I have offered an amendment striking section 639 of the underlying bill, which prohibits funds from being used by the CFPB to enforce any regulations or rules with respect to payday loans, vehicle title loans, or other similar loans during the fiscal year 2017.

I am proud to be joined by my colleagues, Representatives Waters, Ellison, and Hinojosa, in offering this simple yet critically important amendment.

President Obama's visit to Birmingham, Alabama, in the heart of my district in March 2015 to announce CFPB's efforts to address predatory lending practices was something that was very important to my constituency. During his speech, he noted that there were four times as many payday lenders in Alabama as there were McDonald's. Additionally, there are more title loan lenders per capita in Alabama than any other State.

This stark contrast not only illustrates the pervasiveness of this industry participant but, rather, underscores the critical need for stronger consumer protections to fight against unfair and abusive lending practices.

Oftentimes, African Americans, Latinos, and other minority communities are especially disproportionately impacted by the cycle of long-term debt resulting from payday loans, vehicle title loans, as well as check advance loans. These lenders target our most vulnerable, fiscally underserved communities, including low-income and elderly, while residents with limited access to traditional bank loans or credit are attracted to promises of easy access to fast cash.

Predatory lending compromises the financial security of millions of Americans. It is a problem that is too big to ignore, and the CFPB's efforts to protect these communities should be applauded rather than restricted.

The CFPB's proposed rules are not unduly burdensome. Rather, the majority of payday loans and title lenders who do not ask for any proof of income or whether the borrower has the ability to repay, that, to me, seems to be commonsense regulation. Lenders should be able to make loans to those who have the ability to repay, and asking that question doesn't seem overly burdensome.

Studies show that 69 percent of the borrowers use payday loans to meet everyday expenses such as rent, bills, medicine, and groceries. These CFPB rules would require lenders to make sure borrowers can afford to pay back the loans before giving a loan, in the same way that traditional banks do when they prepare loans. The payday lending industry should be subject to the same regulations as traditional banks when it comes to making sure that people who they are lending money to have the ability to repay.

The rule would also limit the ability of lenders to access borrowers' credit account information through automatic debiting if there are not sufficient funds initially in their checking accounts.

Borrowers should not be at the mercy of predatory lending practices. CFPB's proposed rules would strengthen consumer protections and make it harder to prey on vulnerable communities. CFPB's proposed rules have bipartisan support and empower consumers to make better financial decisions.

I understand that there are needs for short-term cash and for small- dollar-amount loans that provide consumers with this necessary access. I will continue to work with the CFPB and stakeholders to perfect this rule and create incentives for traditional and responsible lenders to enter this short-term lending space; however, it is unconscionable for any Members of this body to support legislation designed to thwart efforts to protect consumers and the most vulnerable Americans.

I strongly support the adoption of these proposed regulations and would continue to fight for greater consumer protections. I urge my colleagues to support this amendment which would allow for resources to be available to the CFPB to enforce these new regulations against payday lenders. I urge my colleagues to support this amendment.

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Ms. SEWELL of Alabama. Mr. Chairman, I yield 40 seconds to the gentleman from Minnesota (Mr. Ellison).

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Ms. SEWELL of Alabama. Mr. Chairman, I reserve the balance of my time.

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Ms. SEWELL of Alabama. Mr. Chairman, I want to say that I think it is really important that we not reward bad actors. I think that the fact of the matter is that lots of payday lenders--while access to credit is critically important, to reward bad behavior is not something that I think this House should be about, and I ask Members to support this amendment.

I yield back the balance of my time.

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Ms. SEWELL of Alabama. Mr. Chairman, I demand a recorded vote.

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