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by Nick Henry and Danny Knee
Last week, the Consumer Financial Protection Bureau (CFPB) announced it would scale back an existing plan to protect consumers from predatory lenders. In particular, the provision being axed would have forced lenders to assess an applicant’s ability to repay the loan. This is a huge win for the predatory loan industry, as their entire business model relies on targeting borrowers who can’t repay the loan and then dragging them along at high interest rates for as long as possible. Indeed, as a CFPB official anonymously told reporters, this provision would have disqualified some two thirds of payday borrowers.
It’s disappointing to see consumer protections evaporating before our eyes. All the more reason to support the policy-related work being done by great organizations such as the Center for Responsible Lending and Arizonans for Responsible Lending Coalition.
For our part, here at CIC, we believe in creating better alternatives, where lending is done in a responsible way. That’s why, with our “A Better Loan Experience” product, we take the time to assess a borrower’s ability to repay during the application process. We launched this product last year in conjunction with our partners, Catholic Community Services – Pio Decimo Center and Pyramid Federal Credit Union.
Traditionally, we have been a commercial business lender, so moving into the consumer lending space is a new foray. Recently, our director Danny Knee had the opportunity to talk about the rationale for this decision during an interview he did for the Mrs. Greens World Podcast. Please check out this short clip or download the full interview here.
Feature image designed by Freepik.
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