New payday lending rules would be a good first step, but rate cap still needed to help consumers

Arise Citizens Policy Project executive director Kimble Forrister issued the following statement Thursday, March 26, 2015, in response to President Obama’s speech in Birmingham on proposed new federal payday lending regulations:

“It’s past time to rein in high-cost payday lending. The proposed new federal regulations that President Obama talked about in Birmingham today would be a big step toward keeping consumers out of debt traps in Alabama and across the country.

“The safeguards that the Consumer Financial Protection Bureau is considering would make life better for thousands of families in Alabama. A mandatory cooling-off period after repeated loans would protect borrowers and encourage responsible lending. It’s also heartening to see a proposal aimed at taking into account borrowers’ ability to repay loans.

“As promising as these proposals are, work remains to be done. The CFPB should work to require all payday and title lenders to evaluate borrowers’ repayment ability. And the most important step – reining in the triple-digit annual interest rates on these loans – requires action from our state leaders. By capping these rates at 36 percent, Alabama lawmakers can strengthen our communities and protect families from the high costs of high-cost lending.”

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