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Coalition of Jewish Groups Meets with CFPB Director, Call for Strong New Regulations of Payday Lending Industry

Press Contact: 
Alex Tucciarone
Press Contact
646-200-5295
Release Date: 
Tuesday, September 8, 2015

 

 

 

WASHINGTON, D.C.—As the Consumer Financial Protection Bureau (CFPB) prepares to issue new regulations of the payday lending industry, a coalition of four Jewish organizations led by Bend the Arc: A Jewish Partnership for Justice met with CFPB Director Richard Cordray today to press for the strongest possible regulations to curb the predatory practices of payday lenders.

 “Our meeting with Director Cordray today demonstrated that this administration understands the need for robust, new regulations to meaningfully reform the payday lending industry,” said Stosh Cotler, CEO of Bend the Arc. “Our organizations are driven by our Jewish values and a steadfast commitment to building a more just, compassionate America. At a time when more and more Americans are struggling to make ends meet in the face of appalling inequality, we believe that there should be no leniency for predatory lenders who take advantage of the most vulnerable among us. We look forward to continue working with Director Cordray as the Consumer Financial Protection Bureau prepares to issue important new regulations of the payday lending industry. For millions of Americans who have been ensnared by predatory lenders, these regulations can’t come soon enough.”    

 The Consumer Financial Protection Bureau (CFPB) is in the process of developing new broad regulations for the payday lending industry, which targets many of the 45 million Americans living below the poverty line. At their meeting with CFPB Director Cordray, representatives from the four Jewish organizations specifically pressed for regulations that would prohibit exorbitant interest rates, systems that are set up to trap a borrower in a never-ending cycle of re-borrowing, and unreasonably long loan terms. 

Joining Bend the Arc at the meeting were the Jewish Council for Public Affairs, Religious Action Center of Reform Judaism and the Hebrew Free Loan Society. In a letter sent to Cordray prior to their meeting (full text included below), a larger coalition of 15 Jewish groups noted that their advocacy for strong regulations is grounded in Jewish values.

“In biblical times, those trapped in debt could become bound to their creditors through debt slavery,” their letter read. “Thus, Jewish tradition commands a year of release from debt every seven years, lest any person continue to be so oppressed indefinitely. This year on the Jewish calendar, 5775, marks that seventh year, the shmitta year. Thus, it is an appropriate year for the American Jewish institutions listed below to call upon our wider society to regulate abusive practices.”

Bend the Arc has long history of economic justice advocacy on behalf of working-class communities. In recent years, the organization has joined the nationwide push to raise the minimum wage, vocally supported the Obama administration’s efforts to update overtime compensation rules and backed campaigns to increase wages for homecare workers and protect the right of hotel workers to unionize.

Text of Letter to Director Cordray:

The Honorable Richard Cordray
Director
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, D.C. 20552

Dear Director Cordray:

As organizations representing a wide range of institutions in the Jewish Community, we are writing to express our grave concern about the practices of payday lenders.

In communities across the country, payday and car title lenders charge triple-digit interest rates and claim to offer a quick financial fix for households who are struggling financially. However, the reality is that these small loans are designed to the lenders’ benefit when the borrower fails to repay the loan on the original terms. 

Payday and car title lenders charge 300% APR and higher and extend credit without regard for the customers’ ability to repay. Lenders take access to a borrower’s bank account or car title and have unusual power to collect, even if a person cannot afford it. When unaffordable balloon-payment loans come due in just two weeks, lenders take fees to renew the loans over and over again. This means that the average payday loan borrower is in debt for more than half of the year and pays more in fees than they receive in credit.

We urge the Consumer Financial Protection Bureau to enact strong regulations to stop the payday loan debt trap.

In biblical times, those trapped in debt could become bound to their creditors through debt slavery. Thus, Jewish tradition commands a year of release from debt every seven years, lest any person continue to be so oppressed indefinitely.  This year on the Jewish calendar, 5775, marks that seventh year, the shmitta year.

Thus, it is an appropriate year for the American Jewish institutions listed below to call upon our wider society to regulate abusive practices in the payday and car title markets. In Jewish tradition, regulation known as shmittat kessafim —the release of money-- was instituted as a safeguard for debtors. As a larger society, we can agree that exorbitant rates of interest and loans that result in a cycle of re-borrowing are unacceptable.  In today’s marketplace lenders should only be allowed to extend loans that fit within a borrower’s budget without having to re-borrow. Loans should not be allowed to continue for unreasonable amounts of time.

With 45 million Americans currently living below the poverty line and economic inequality on the rise, now is the time to expand economic opportunity, not to set traps for the most vulnerable of our fellow citizens.

The Consumer Financial Protection Bureau, mandated by Congress, must act this year to adopt strong rules to regulate payday lenders and help to free people from the predatory cycle of debt.

Sincerely,

Bend the Arc: A Jewish Partnership for Justice
Carolina Jews for Justice
Commission on Social Action of Reform Judaism
Habonim Dror North America
JALSA, the Jewish Alliance for Law and Social Action
Jewish Community Action
Jewish Community Relations Council of the Milwaukee Jewish Federation
Jewish Council for Public Affairs
Jewish Council on Urban Affairs
Jewish Social Policy Action Network
Jews for Racial and Economic Justice      
Jews United for Justice
Rabbinical Assembly
T’ruah: The Rabbinic Call for Human Rights
Uri L’Tzedek