By Dorothy R. Leavell, NNPA Chairman
In recent days, general market news has reported on the Consumer Financial Protection Bureau’s (CFPB) new rule to rein in harmful practices by payday lenders. The announcement came after years of research by the CFPB, and a strong push by a broad-based coalition of leaders and activists who wanted rules to stop payday lending’s debt trap.
Yet to date, this same news coverage has yet to reflect the diversity of the reform coalition.
People of all colors, professions and locales came together to convince CFPB that high-cost, unaffordable loans like payday and car-title, harmed rather than hurt consumers everywhere. Across the country, payday and car-title lenders ply their wares, exploiting people in need of just a few hundred dollars. Instead of a quick, emergency loan, these products delve borrowers deeper in debt with every loan renewal.
Across the country, many of us could essentially tell the same outrageous story. Payday lenders moved in to our communities, charging triple-digit loan shark interest rates to borrow just a few hundred dollars. Car-title loans soon arrived with the same kind of interest rates and hold titles to free-and-clear vehicles as hostage collateral on larger loans until the debt is fully repaid.
Far too many of these customers often wound up losing both their hard-earned money and their personal transportation. While these loan sharks saturate Black neighborhoods, they also snatch away our hard-earned money right out of our bank accounts.
On behalf of the more than 200 newspapers throughout the nation and the Virgin Islands that are Black-owned and operated as members of the National Newspaper Publishers Association (NNPA), we thank and salute those who took a strong stand for Black America’s fight against predatory lenders.
For example, the nation’s oldest civil rights organization, the NAACP, has publicly stood against payday and predatory lending for years. On the day that CFPB announced the long-awaited rule, the NAACP was still standing up and speaking out.
“This new rule will help, and we will fight unreservedly any attempts to undo it in Congress,” said Hilary O. Shelton, NAACP Washington Bureau Director and its Senior Vice President for Policy and Advocacy. “We also call for continued monitoring of the payday lenders, who are the Houdinis of consumer protection and can be expected to try their best to escape the requirements that they make loans only to those who can afford them.”
But the NAACP’s Shelton was not alone. In the Black community, we are never very far from the church. And Reverend Willie Gable, Jr., a prominent member of the National Baptist Convention, USA, Inc. also spoke to how the Black Church felt about payday’s predatory clutch on the working poor.
“Particularly in communities of color, people are seeking economic opportunity that will lift them out of poverty and into financial self-sufficiency,” added Rev. Gable. “Yet at the same time, payday lenders are in profusion, charging triple-digit interest rates that financially enslave people.”
Reverend Gable is right.
Neither economic opportunity, nor growth can come from predatory lenders. Instead, both Black consumers and businesses need and deserve access to affordable credit that can restore economic vitality where we live, work and worship. As our children grow and graduate from college, our communities need career opportunities that can access their newly-honed skills and education.
More and bigger Black businesses can grow the number of nearby needed services and products. I would also expect that they would charge fair prices and hire people from their own community as well. That kind of rippling effect would go a long way towards our own economic revitalization.
As Mike Calhoun, President of the Center for Responsible Lending referred to CFPB’s new payday rule, the successful effort “was years in the making, and it wouldn’t have been possible without the tireless effort of community and faith leaders, consumer and civil rights advocates, and countless people across the country who organized and worked hard to make their voices heard.”
So let us savor this consumer victory. But let us also be inspired to continue the fight for full economic freedom.
America is always at its best when everyone stands together for justice in all of its many forms – including financial fairness.