Watchdog: High-Cost Lenders Brag of Explosion in Loan Demand as Industry Ramps Up Lobbying Against Consumer Protections
Washington, D.C. — Following the release of quarterly earnings reports from major high-cost loan companies that boast of a spike in outstanding high-interest loans, government watchdog Accountable.US released a new analysis finding the high-cost loan industry has funneled at least $742,000 in campaign contributions to Members of Congress so far in 2021 – including at least $167,000 to Republican members of congressional committees considering national interest rate cap legislation. Additionally, in 2021 alone, Accountable.US found the high-cost lending industry has spent nearly $2.5 million lobbying on various financial issues, including the “Veterans and Consumers Fair Credit Act”, arguably the strongest measure to ever come before Congress to keep consumers from falling into endless cycles of debt.
According to the latest earnings reports, installment lender World Acceptance credited waning “federal economic stimulus” for a 25.7% increase in gross outstanding loans from the prior-year period. World Acceptance also reported an 88% increase in new customers from the prior-year period and a 19% boost from pre-pandemic levels.
“The more that high-cost lenders brag about a surge in new borrowers they’ve caught in the debt trap, the more urgent it becomes for Congress to pass stronger consumer protections. As American families continue to navigate a pandemic and fragile economic recovery, the last thing they need is additional debt burden due to abusive fees and penalties from ruthless predatory lenders,” said Jeremy Funk, spokesman for Accountable.US. “An interest rate cap has already worked wonders to shield our brave service members and their families from usury — and lawmakers now have a bipartisan opportunity to build on that success and afford the same protections from financial ruin for veterans and all hard-working Americans. It would put billions of dollars in consumers’ pockets and help grow the economy rather than the profits of financial industry vultures. That is why the high-cost loan industry is sparing no expense to muck up the legislative process and keep consumers vulnerable. The question is: will the lawmakers that have taken industry money hand over fist vote to further predatory lending practices that exploit veterans and vulnerable communities — or will they put consumers first?”
The bipartisan “Veterans and Consumers Fair Credit Act”, backed by several veterans’ advocacy groups and even conservative Congressman Glenn Grothman (R-WI), would expand the Military Lending Act’s 36 percent interest rate cap to veterans, Gold Star Families, and all consumers nationwide – a blessing for vulnerable borrowers in states where 400 percent or higher APRs are commonplace and perfectly legal. The bill would help mitigate the mass consumer harm done by the Trump-Kraninger CFPB’s rule that rolled back the ability-to-repay standard, a critical protection against the payday loan debt trap. The high-cost loan industry has already padded its profits by nearly $15 billion (due to abusive fees and penalties) under the Trump administration’s decision in August 2019 to delay the implementation of the safeguard that would keep predatory lenders from approving high-interest loans to vulnerable people they know cannot pay back them back in time.
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