tv Washington Journal Diane Standaert CSPAN February 16, 2019 7:34pm-8:01pm EST
washington journal live every day with news and policy issues that impact you. president trump's elections prospects. aboutbrazile talks campaign 2020 and the direction of the democratic party. also, the future of the united states role in afghanistan. researchers watch washington journal live at 7:00 eastern sunday morning -- the sure to watch washington journal live at 7:00 eastern sunday morning rick likes we are back for our have -- last half hour. executive vice president and state policy director for the center for responsible lending. talk about payday loans and the changes the administration is talking about. before we get into that, diane, tell us what the center for responsible lending is, and
where do you all get your funding? guest: the center for responsible lending is a nonprofit, research center that wealth.ated to building we are also a policy arm of the self-help credit union that seeks to provide access to inponsible credit products mortgage lending, small business lending in north carolina, california, illinois, and elsewhere. like most funding, other nonprofits, through a wide variety of donors and foundations and the like. host: so explain to our audience exactly what payday lending is and how big of an industry this is in america. guest: payday loans are marketed as a quick financial fix, but in reality cause a long-term debt crisis. payday loans on average are about $300 but come at a very high price. the average payday loan cost is 300% interest.
these small loans are causing big problems for people, particularly low income consumers who are on average about $22,000 a year. so some of the examples that these payday loans, problems with payday loans cause include ,ot only the debt trap itself where a borrower is stuck with more than 10 of these loans a ofr, costing hundreds dollars in fees over the original loan amount, so the short term consequence is our severe, but so are the long-term consequences. receiversns experience penalty fees, increase slightly the bankruptcy, increased likelihood that your bank account is going to get close. d. payday loans are literally bouncing people out of the mainstream financial system. from there, people are going to experience aggressive debt collection practices, which damaged credit scores, and that affects things in the long run,
housing. jobs, it is the damage that payday loans cause, and that is why this is such an important issue. to give you a sense of the scale of what we're talking about, every year, payday and car title lenders took away $8 billion in fees from people who are in average about $22,000 a year. is the huge extraction of wealth and income that is happening due to predatory lending products that carry these 100% interest rates. host: are payday loans legal in all 50 states? can you get these everywhere? guest: no, thankfully, a number of states have enacted th led ty in enacting laws against these products. 16 states and the district of
columbia have cap's at about 36%. today, that is nearly 100 million people in this country are protected against this product. unfortunately, that leaves the remaining 34 states with interest rates at 300%, 400%, even 500%, in states like texas and other places. it is in those states where people are really exposed to the harms of the debt trap. with no protections against it. host: before we get into talking about the changes they are making, i want to make sure our a testament as they in this conversation. if you have experience with payday lending, we want to hear from you. we have a special line for you. we want you to call. (202) 748-8000. once again, that line is for people who have experience with payday lending. want toy else, if you talk about this and you do not have experience with payday lending, we still want to hear
from you. we want you to call in at (202) 748-8001. ise again, (202) 748-8000 for people who have experience with payday lending. (202) 748-8001 is for everyone else. so we want to get your questions about payday lending on those two lines. has been proposed changes to the payday lending rules and regulations in america. what is the administration trying to change, and why are they trying to make these changes? guest: that is a great question. is whyd in that question is the current administration fighting with payday lenders, 300% interest rates, rather than consumers who were harmed by these predatory practices. in 2017, under the previous administration, the consumer financial protection bureau finalized april 2 protect against the harm of the payday lending debt trap. part of this rule was this basic
idea of a payday lenders showed a borrower's ability to repay a loan, they could make sure the loan was affordable in light of a borrower's income, expenses, and they could repay the loan without repeatedly reborrowing. finalized in 2017 and was supported by hundreds of thousands of people all over this country. it was set to go into effect of august of this year. the payday lenders doing the work and getting ready to comply with those new protections against the debt trap, they have been fighting tooth and nail to block these protections. and so that is what happened last week under the leadership of director kathy creditor, who follow mick mulvaney. they gave the payday lenders a huge gift, they gave them a gift of proposing to repeal these common sense protections to make sure payday loans are affordable
to borrowers. the fact that the payday lenders oppose this idea that their loans should be affordable and should be paid back without borrowing, that converts everything we know about the payday loan system. host: so is the 2017 rule now not going into effect while they try to overturn it, or will it confuse the fact, the fact that the administration is against it will stop it from going into place in august? guest: the current administration has proposed a delaying the compliance for the rules as well is proposing a repeal of the rule and maybe replacing it with something far weaker. host: let's let pamela, who is calling from california get in on this conversation. good morning. caller: good morning. i am concerned. i have been reading about this particular problem in the "l.a. times," and i love consumer protections.
i like to be protected from unfair practices, certainly because a far less sophisticated me may need more protection. available tofunds people who are facing eviction or they have a car bill, they cannot get their car repaired, they are going to be able to .ontinue working they absolutely have no resources, no family member, they have no credit, and they have no ability, other than possibly selling their blood, to get any money to put food on the table or to keep their car running or to put gas in the tank. i understand what you're saying, it is as a cycle, and very stressful and difficult position to be in. that, family members
fortunately, they do not have to call the lender, they can call me, and i can give them a loan, which they don't have to pay back. happen about what will to them went -- i am elderly -- when i am not around. concerned about you advocating to regulate these loans out of business, because i -- they may be unfair, and the average person was just average credit would never agree to the terms, but these are people that are very high risk as far as their ability to pay back and their credit records. host: go ahead and respond. guest: yeah, so i think it is how paydayo remember loans are structured and their design, that the payday loan product in itself is structured to be a debt trap, not only with the high interest rates but their ability to take direct access to a borrower's bank
account, so that means on payday, when income comes into the bank account, the payday lenders stands first in line to take that money away, before somebody has a decision about how they want to pay their rent, utility bills, or other obligations, they have to me that. the repayment of that loan then leaves them without enough money to make it to the next payday, so they need the next payday loan, and thus the cycle begins. that is what the payday lender is counting on. that is what is driving their business model. . loan whichat payday may look to solve that solution in the short-term term just causes that financial hardship to extend for months and months and months. many of the things that she was describing in terms of harm to be concerned about, evictions, difficulty putting food on the table, these are all the things that borrowers, we hear all the time, that the payday loans stresses, and it is harder than that original
emergency. so a payday loan extends the financial emergency, not solves it. so what we see in terms of how people manage when these 300% payday loans are not around, then we can look to the district of columbia as we speak and the 16 states. in those states, we hear from borrowers who have a range of options that they choose from when they are experiencing financial stress. there are several states that used to have payday loans but now do not, and we hear all the time that borrowers are glad. it was easy to get into, but it was hard to get out of. and just to the final point, again, the protections that we are talking about today that were proposed by the consumer were again areau common sense principle that is consistent in a range of
lynching practices that lenders can simply ensure that that loan is affordable -- range of lending practices that lenders can simply ensure that that loan is affordable. is something that payday lenders do not do, and it is something that tends to drive their business model. host: let's talk to ron, who is in washington, d.c. and have experience with payday loans. ron, good morning. caller: good morning. thank you for c-span. i love your show. i'm a native washingtonian. this is my first time in 20 years i have gotten through. host: go ahead. caller: my point is, yeah, it is a trap. i have dealt with financial stress with divorce back in 2002, and i have a special needs child. my son has asked for her symptom, which is -- as perger's syndrome, which is a form of autism.
road, you know exactly the area and talking about, in washington, d.c., the interest rate on the loan is insane. it is like you are paying back the principal and almost double of what you've just got. it is insane, and it just keeps going up and up. after the third time i did it, it is almost like you are getting addicted to crack and you just cannot get out. after the third time, i was like "this is insane," i am giving them more money, and it is actually exacerbating my problem. after the third time, i have not done that, and that was back in 2005, i believe, was the last time i even took one of those out. i stay away from those things. so for them to deregulate payday loans, lenders, where you can possibly lose your car, i mean, turn your car title over? your cart to get
to and from work, and you miss a payment, you think they will not snatch your car away from you? it is insane. thank you for your thoughts, and thank you for c-span. guest: thank you, ron, for sharing your story. unfortunately, it is a story that is all too common that we hear time and time again. again, the design, it is a debt trap that is intentional. thankfully, the concerns and experienced in the district of columbia did take steps in 2008 to rein in and cap the rate here in d.c. at 28% interest. justther part of that, reflecting on what you share in your experiences and the stress that it caused, i just want to highlight that that type of stress, again, is not unique and is quite familiar. the same stress was happening to our active-duty military. 2006, time, prior to
payday lenders set up around military bases and were targeting our active-duty soldiers, because they had this steady paycheck coming in. the u.s. department of defense found that these payday and car title loans were so dangerous that they were undermining our military readiness. and as a result in 2006, congress enacted, with bipartisan support, a 36% rate cap for these loans -- host: for the military. guest: for active-duty military, yes. we are thankful that that protection exists for active duty military, and similar to what other states have in place, so we see that is a pretty common sense, most effective way to stop these harmful practices. host: speaking of congress, is in the housee or senate to go back in reverse with the administration is trying to do, or will the administration make its move first, and then congress will see what happens?
guest: weguest: have already seen a number of members of congress already expressing .uite amount of displeasure last week, several members of the u.s. senate and the house expressed opposition to this robot in -- rollback in favor of payday lenders. we will have to see what the process plays out, what the bureau does, in terms of whether it will finalize this repeal, congresse meantime, can, just like the states can, congress could also enact a 36% rate cap in this country. that would also be there choice. host: let's go to linda, who is calling from largo, florida. . linda also has experience with payday lending. linda, good morning. caller: thank you so much to c-span or this topic today. i have experience using payday loans, and i would agree with her that it is a vicious cycle. i had to bar whitley's hundred dollars, and the fees were over
$100 -- i had to borrow almost $500, and the fees were over $100. states thatis the are using payday loans, are they getting some sort of kickback, and is that why they do not want to stop these unfair practices? thank you. guest: thank you for your question and for sharing your story. i know in florida, those pernicious.e quite the average interest rate in florida is 206% apr, and payday loans drained away over $300 million in fees from floridians every year. the payday lenders -- i have been doing this for 10 years, if it is in the states or at the federal level, and a is any protections that will cut into their debt trap business model in any way, they will fight using every tool available to block those protections. is,ink the primary reason
for example in florida, they get to strip away $300 million a year from people earning very little money. so the debt trap is alive and well in florida, as we have seen. florida of the loans in for the borrowers, more than 5 million a year, and that has been consistent for over a decade. , if the rules had gone into effect, they would be able to provide protections in florida that the florida state legislature has refused to do on its own. host: what is your counter argument to the idea that americans should be able to enter any deal they want, even if it is a bad deal, if they want to sign for a payday loan that has 300%, people should have the right to go out and find that loan. what is your counter argument for that? guest: again, this is a flawed, dangerous product that is not actually functioning as a main full access to credit.
it is really just access to a debt trap. payday lenders, the market alone as a quick and easy fix, they will disclose the 400% interest rate, but they do not disclose ist their business model actually counting on you walking back in the door, 8, 9, 10 more times. just to give you an example, only 2% of all payday loans go to borrowers who take one out and do not come back for a year. only 2% of the loans are actually being used in the way they are marketed. on the flipside, 75% of their revenues are due to borrowers with more than 10 loans eight year. so this is really just a debt trap that is being marketed as a loan product. to faith who is calling from san jacinto, california. faith, good morning. faith, are you there? caller: yes, i am joyce. host: go right ahead.
caller: thank you, c-span, for having "washington journal." it is where we the people have a voice. thank you so much. anyway, new york has the most comprehensive loss in my research. -- inpeople have failed the abuser he laws in california. no reply back. with hisrs spoke assistant about this. no reply back. credit cards are up to 30% and rising. ridiculous. even a 30% or 36% cap is not going to help people who are in dire straits military being targeted, it is disgusting. they keep us safe. i cannot believe it. it is disgusting. guest: yeah, there are a lot of people who share that.
300% interest rates are outrageous, and this country and ithy -- every major fa tradition has deep rooted sochings against usery, there are long-standing principles against usery practices in our country, ifth-based predictions, and you look at the founder of capitalism and even voters, when voters get to weigh in on this callion, they uniformly for reining in these practices, so just in the last two election cycles both in south dakota and colorado, over 75% of voters thoseed a 36% rate cap in states, ending the 300% and 400% interest rate on payday loans. so this deep-rooted sense around b the outrageousness of
usury is quite common again, and it shows how out of step and how out of sync with the bureau did last week really good. host: so you need money immediately, and you have bad credit, what would you suggest someone who needs that loan immediately to do instead of going to a payday loan? guest: do not go to a payday loan is the first thing. host: where do you suggest they go? guest: borrowers tell us all the time, they talk about the range of options they can do to manage financial stress. onhave heard some of that the call today, whether borrowing from friends and family, or credit unions have access to some products, or working out payment plans with a utility provider or even other places to moving the budget. a lobbyist same options that people used to actually get out of the payday loan debt trap are actually options that still exist today. host: let's go to wayne, who is
calling from olympia, washington. wayne has experience with payday loans. wayne, good morning. caller: yeah, hi. how are you? host: go ahead. goodr: yes, well, i had a but there are not germany places i can go and get $200, for, you know, $28. paid itrest rate, i back in a month, and that is about it. the places that lend out around here, well, i have nothing but good places to say about them. and if youof them, cannot pay it back, they work with you, so, uh, you know, if the government would stay out of their business around here, they will work with people. host: wayne seems to be one of
the few people, that to present you were talking about. guest: wayne, thank you for calling in. i have a full you did not get caught in this trap that payday lenders are designed to do. but again, as we talked about, that is not the typical experience that you see and hear about all of the country. again, only 2% of borrowers take a loan out and don't come back for two years. again, as a contrasting example, over the course of our work, i have learned a lot terms that payday lenders have for some consumers. they refer to them as 26ers, and that is because the terms for customers they will see 26 weeks out of the year, every payday, because they cannot get out of the debt trap that the payday lender has put them in. host: where can people find more information if they want to learn more about this? centeryou can visit the for responsible lending's website, or stop
>> if beale street could talk received three oscar nominations. sunday, we will discuss the movie based on the 1974 james baldwin novel. deputye washington post editor. >> it was beautiful. what sticks with you is how lovely the film is. i think his writing really does deal with love, whether it is universal, loving one's self. between people and society. that is the overarching theme. they see him, because he was so
passionate fighting for the rights of african-americans, sometimes people mistake that for anger. i think he was not angry but forceful in his to enunciate and of >> sunday night at 8:00 eastern on c-span's q&a. next, eulogies for the late congressman john dingell of michigan. then, supreme court justice some yes sotomayor talks about her life on the court. after that, c-span interviews some of the newest members of congress. carrying the body of former michigan u.s. congressman john dingell. longtime dean of the house was brought to the u.s. capitol,. representative debbie dingell the congressman, greeted some of the mourners gathered outside. the congressman's body was flown to dearborn, michigan for a funeral