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US Capitol South Side

US Capitol South Side

In lieu of the Consumer Financial Protection Bureau (CFPB) releasing a series of proposed regulatory reforms for the payday loan lending industry, many of the smaller payday lenders are seeking assistance from Congress. But will congressional representatives and senators offer assistance to bad credit loan lenders?

With the influx of numerous reforms, at both the federal and state level, very few are willing to come to the aid of the payday loan industry. And it hasn’t been without the industry trying.
The Hill reported that many smaller payday loan lenders, including Thrifty Loans LLC and Payne’s Check Cashing, have appealed to lawmakers for help in their fight of the CFPB’s new rules.

Writing in a letter to Louisiana Republican Senator David Vitter and Ohio Republican Congressman Steve Chabot, chairmen of the House and Senate committee on small business, seven small payday lenders have requested to review the federal agency’s regulatory framework. They noted that they have attempted to engage with CFPB to discuss the proposals, but to no avail.

“In fact, many of our fellow lenders believe the CFPB is trying to eliminate the payday lending industry and only conducted the Small Business Regulatory Enforcement Fairness Act (SBREFA) process to try to prevent its regulation from being overturned in court,” their letter said.

The group of bad credit loan lenders added in their letter that it has been a frustrating process because CFPB officials failed to outline problems with the state regulatory reforms and proposals. They even concede that bureau regulators “admitted they had not even analyzed the existing state programs.”

Authors of the letter say they’re concerned consumers will head to unregulated financial lenders as a last resort. “We worry that the CFPB does not understand this critical fact: if the CFPB proposal advances, our customers will fall victim to unregulated and unlicensed lenders and inferior forms of credit.”

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Despite the number of concerns, no one in Washington appears to be willing to help them.

In March, the CFPB released several recommendations to reform the payday loan industry. Some of them include capping interest rates, limiting the number of payday loans each borrower can take out, allowing borrowers more time to pay back their loans and changing the way payday lenders can collect funds from their customers.

Many argue, however, that federal regulators could be overreaching when it comes to the ways states handle bad credit loans. Even those in favor of reining in the payday loan industry say federal regulatory frameworks couldn’t necessarily overrule state reforms, including when it comes to interest rates.

“Even with strong federal action, there’s still work to be done in the Ohio Legislature to get interest rates under control. Ohio payday-loan interest rates are just really through the roof,” said Kalitha Williams, policy liaison with Policy Matters Ohio, in an interview with Public News Service.

With that being said, Williams is urging consumers to file complaints with the CFPB so the federal agency can understand what Americans in financial disarray are going through with payday loan lenders.

One Pew survey found that most Americans hold unfavorable views of payday loan lenders.