The Hundred Years War: Payday Lending

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The Hundred Years War between England and France is one of history’s most notorious conflicts. The war began in 1337, continued for 116 years – I’m assuming historians called it the Hundred Years War because that sounds better – and sowed death and destruction across Europe. Throughout the decades, one side claimed to have vanquished the other on numerous occasions, but the war did not end until the French won the Battle of Castillon in 1453.

During the hostilities, France and England were led by an assortment of King Henrys, Louis, Phillips and Edwards, but the biggest star by far was Joan of Arc, who, using guidance derived directly from God, reversed the fortunes of the flagging French army until the British burned her at the stake. Along with providing fodder for legends and at least one halfway decent movie, the war also spawned technological and strategic advancements that made killing and maiming the common folk kings used as cannon fodder more effective and efficient than ever before.

Why you may ask, have I provided this brief history lesson? Because those of us who are battling the payday loan industry often feel like we’re engaged in the same type of war.

The similarities are abundant and striking, beginning with the fact that these legal loan sharks, like medieval monarchs, exploit and destroy poor and working class Americans without blinking an eye. During my tenure as Ohio’s attorney general, I conducted hearings across the state that gave payday lending victims the opportunity to tell their stories. They talked about how they had been driven to financial ruin, lost homes, cars, jobs and sadly, hope for the future. Their testimony was so shocking and heart-rending that the General Assembly passed and Ohio voters affirmed a law that capped the interest rates payday lenders could charge.

In another similarity to the Hundred Years War, that victory was fleeting. The vultures who own and operate the industry, assisted by their lawyers and lobbyists, found a loophole in the law that enabled them to once again charge interest rates as high as 300 percent on short-term cash and auto title loans. Like the 14th century royals who constantly sought new and improved ways to destroy lives, payday lenders in Ohio and across the nation have continued to bring new products to market that entrap desperate and/or unwitting borrowers in virtually inescapable cycles of debt.

Fortunately, inspired by a growing public outrage and media reports, a Joan of Arc, in the form of the Consumer Financial Protection Bureau (CFPB), has emerged to rally the forces arrayed against the usurious payday lenders. Earlier this year, the CFPB issued a series of rules designed to do what many state leaders could not or would not do: clamp down on the moneygrubbers. The proposed regulations would end payday debt traps by requiring lenders to ensure borrowers have the ability to repay their loans and cut off repeated debit attempts that rack up exorbitant fees. The new regulations would cover payday loans, auto title loans, deposit advance products and certain high-cost installment and openend loans.

While I and other consumer advocates, ranging from the Pew Charitable Trusts to the Southern Baptist Conference, don’t believe the rules go far enough, they are a significant and important start. Industry representatives howled in agony like a medieval torture victim when they were announced and I can assure you their reaction won’t be limited to howling. Under federal law, interested parties have until Oct. 7 to comment on the CFPB’s proposals. The industry has already organized its forces and is submitting statements denigrating both the regulations and the rulemaking process.

Frankly, there’s too much at stake to allow these new guidelines to be burned at the stake like St. Joan. That’s why I’m asking attorneys, consumer advocates, community leaders and all those who have been victimized by the payday lending industry to submit comments in support of the rules. You can do so by logging into www.regulations.gov and following the instructions for submitting comments, by emailing a statement to [email protected], or by mailing hard copies to:

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Monica Jackson Office of the Executive Secretary Consumer Financial Protection Bureau 1700 G Street, NW. Washington, D.C. 20552

All submissions should refer to Docket No. CFPB-2016-0025 or RIN 3170–AA40.

My office is preparing a submission that will be posted on www.stopohioforeclosure.com. I invite you to use our statement as a model for your comments.

I’m devoting considerable time and resources to campaign on behalf of the rules for two reasons. First, because the decadeslong war the payday lending industry has waged against working families must come to end. Second, because the industry will never stop fighting to preserve its ability to earn huge profits by exploiting and cheating desperate consumers.

The gauntlet’s been thrown. Please join me in the fight for justice.  Marc Dann

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