Last December, Senators Grassley and Ernst had a chance to stand against predatory payday lenders and stand with hardworking Iowans. Instead, Grassley and Ernst voted to confirm Kathy Kraninger to run the Consumer Financial Protection Bureau (CFPB), the federal regulator charged with policing Wall Street and predatory lenders.

After just two months on the job Kraninger is proposing to gut consumer protections against payday lending which Richard Cordray’s CFPB spent 5 years working to craft. Kraninger wants to eliminate a requirement that payday lenders confirm that a borrower can repay a loan while managing other expenses as well.  The CFPB’s own research found that 80 percent of payday loans are taken out to pay back earlier payday loans.

She isn’t doing this because they are popular, as payday lenders are despised by Democratic and Republican voters alike. Payday lending costs Iowans millions of dollars per year, and the average payday loan-consumer in Iowa has taken out 20 or more, usually just to pay back their earlier debts.

If there was ever a time for Grassley and Ernst to stand up for working Iowans, it was in December when considering who would head the CFPB. And now that Kraninger is pushing to let payday lenders operate like it’s the Wild West, Grassley and Ernst could speak out against the proposal.

But so far not a peep. Thankfully we have a chance to weigh in, as the CFPB has a comment period before they make a final decision. Please submit a comment. And then, let Grassley and Ernst know that they missed a chance to stand with everyday Iowans by confirming someone who would rather protect predatory loan sharks than their victims.

Iowa leaders weigh in onConsumer Financial Protection Bureau (CFPB) proposed action on payday lending industry

On March 26, the CFPB held a field hearing on proposed rules to address the payday loan industry and other small dollar lending institutions such as car title lenders.

The action by the CFPB is the first federal action concerning such lenders since the 2007 act that prohibited payday lenders from taking advantage of members of the military with triple digit interest rates.

In response, and in solidarity with opinion leaders across the country, numerous Iowans weighed in on the rule-making unveiled by the CFPB:

Payday lenders continue to prey on the most vulnerable of society.  It’s time to bring true protection to those that the industry has gorged themselves on for way too long. -Steve Abbott, president, Communications Workers of America – Iowa State Council


Payday lenders are like the wild west of financial institutions.  Thankfully there’s a new sheriff in town – the CFPB – who’s committed to bringing some law and order to an industry that’s been left unchecked until now. -Berkley Bedell, former U.S. Congressman


I encourage the CFPB to act to protect consumers and families living in or near poverty from predatory financial products, especially payday loans. -Tom Chapman, Iowa Catholic Conference


The CFPB needs to be aggressive in its position in regard to payday loan companies.  These folks play on the circumstances, and take advantage of the most vulnerable of our society.  I encourage the CFPB to rein in the abuses of these predators.  -Mark Cooper, president, South Central Iowa Federation of Labor, AFL-CIO


For too long predatory lenders have had free rein to take advantage of people when they are desperate and therefore most vulnerable. Every citizen, but especially our military veterans and service members, should not be put in this position. We all deserve better and we applaud any action taken to curb this despicable practice. -Sue Dinsdale, executive director, Iowa Citizen Action Network


Payday lenders and the big banks that finance their high interest rates they charge consumers needs to stop.  Their business is nothing more than a modern day cartel.  We should stop protecting these lenders who prey on the anxious middle class by enacting tougher state and federal laws.  In the meantime, the CFPB is the consumer’s only protection. – Jack Hatch, former State Senator and 2014 Democratic Gubernatorial candidate


Payday lenders are extremely exploitive in their lending and prey upon working people who struggle paycheck to paycheck.  All too often, hidden penalties lead to garnishments for those that are unable to pay back their $500 loans. The big banks restrict financing to these same people and then loan the money out the back door through another company (e.g., EZ Money). The CFPB needs to find ways to prevent harsh penalties and garnishments. -Joe Enriquez Henry, State Director, League of United Latin American Citizens – Iowa


Payday lenders have operated in the shadows for far too long, and it’s about time we had a “cop on the beat” that’s looking out for everyday folks across the country and cracking down on predatory loan sharking that rivals mobster behavior. We applaud this effort by the CFPB and urge them to be as bold as their charter allows to regulate this toxic industry. -Cherie Mortice, board president, Iowa Citizens for Community Improvement


Every way you look at it payday lenders are bad for our communities.  Their whole business model depends on families getting caught into a vicious debt cycle, renewing loans over and over again. We as a country can be and are better than this. We can create just alternatives for our neighbors. -Chris Schwartz, Organizer, Americans for Democratic Action


Payday lenders don’t help Iowa families build wealth, they bleed our communities dry.  In the absence of state legislation, it’s refreshing to see the CFPB take a stand for people here in Iowa and across the country -Matt Sinovic, executive director, Progress Iowa

The Iowa state legislature has failed to pass meaningful reform to the payday loan industry in recent years despite a broad coalition of groups, representing Republicans and Democrats alike, rallying behind measures in both the Senate and House. In the absence of state legislation addressing the worst abuses of payday lenders, Iowa CCI members and others see action by the CFPB as a needed step in the right direction.


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Cordray hears from community before public hearing

Members of Iowa CCI and other allies met on the morning of March 28 in Des Moines and sent him back to DC with a broad mandate to crack down on predatory payday lenders and mortgage servicers.

“It’s a telling irony – not lost on some of us – that we even need such a bureau, that we need protection from a financial mafia that should be in prison… but instead sits in places of power.” -CCI member Judy Lonning

The CFPB and Director Cordray were in Des Moines to meet with grassroots groups tackling predatory lending. CCI, in partnership with other allies, hosted a closed-door meeting to discuss predatory financial institutions and the CFPB’s role in holding them accountable. Following the closed-door meeting, CFPB held a public community forum to announce changes to their consumer complaint database to better serve consumers who were wronged and bring to light the predatory lending institutions that are the worst actors in the field of consumer lending.

In our closed door meeting, CCI member Cherie Mortice laid out the devastating effects payday loans – both storefront lenders and payday loans pushed by banks like Wells Fargo – have on families and neighborhoods like the one where she lives on the east side of Des Moines.  “I live in a working class neighborhood and it doesn’t take much to push these people over the edge,” said Mortice.  “Payday loans tear apart the economic stability of neighborhoods like mine, and if we don’t have serious regulations placed upon this industry, the people will see this as just another shell game to punt off responsibility.”

Mortice called on the CFPB to issue sweeping regulations of the payday loan industry, including extending the payback period for these loans due in full on the borrower’s next payday, as well as prohibiting the use of Social Security checks as collateral for obtaining a loan to protect the most vulnerable.  She also urged the CFPB to publicly stand with other financial regulators and move immediately to halt big banks like Wells Fargo from offering similar predatory loans to their customers.

If you want to join Cherie and thousands of others in calling on federal regulators to get big banks out of payday lending, take action here.

CCI member Jess Mazour laid out many of the abuses in the servicing industry she witnessed with her time at Wells Fargo during the height of the recession and foreclosure crisis.  “It seemed impossible for someone to work through the system for help.  I hated telling people sorry your husband got cancer, or sorry you lost your job – but you signed this contract and this is the process.  It seemed so immoral to me.”

CCI member Larry Ginter called on the CFPB to use everything in their power to clamp down on fraud and abuse in the servicing industry.  He specifically called on them to require all servicers to offer a struggling homeowner a modification in good faith, and most importantly to require them to correct any and all errors made in a modification – something servicers are currently only required to acknowledge, but not correct. “Servicers are experts at what they do,” Cordray explained. “It’s just that nobody is holding their feet to the fire.”

Judy Lonning, a CCI member from Des Moines, ended the closed-door meeting by directing the CFPB to fully embrace their work for we the people.  “You and your agency represent hope that things can change.  We need you to go over the heads of the financial elite to address in meaningful ways the grave injustices resulting from a climate where anything that maximizes profits has been regarded as fair game.”