WASHINGTON — Sen. Elizabeth Warren, the founder of the Consumer Financial Protection Bureau, said Thursday she would fight back against congressional efforts to delay or revamp the agency's payday lending proposal even while she acknowledged the plan could have been tougher.
The Massachusetts Democrat touched on some consumer groups' concerns that the plan would still give payday lenders too much leeway to harm consumers.
The proposed payday lending rule isn't perfect — it could do more — but the payday industry is already firing back.
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The Consumer Financial Protection Bureau's long-awaited proposal to establish the first federal rules for payday, auto title and high-cost installment loans did not include a provision that banks had planned would allow them to compete by offering small-dollar installment loans.
June 2 -
At least three large U.S. banks are preparing to go to market with new small-dollar installment loan products in a move that could potentially disrupt the payday lending industry.
May 6
— Elizabeth Warren (@SenWarren)
Payday lending is a $7B/yr industry. That buys a lot of influence in Congress — not just with the GOP, but also some Democrats.
— Elizabeth Warren (@SenWarren)
June 2, 2016
The latter tweet appeared to be a shot at Rep. Debbie Wasserman Schultz, D-Fla., the chair of the Democratic National Committee, who has backed a bill that would delay the CFPB's proposal from taking effect for another two years.
Congress wasn't elected to help predatory lenders. If anyone tries to block or delay the
@CFPB payday rules, it's time to fight back hard.— Elizabeth Warren (@SenWarren)
June 2, 2016
Overall, Warren praised the CFPB's plan, arguing it would protect consumers from payday lenders' high-cost practices.
The
@CFPB 's new rule cracks down on tricks payday lenders use to generate thousands in interest & fees from ppl trapped in cycles of debt.— Elizabeth Warren (@SenWarren)
June 2, 2016
The reaction from other lawmakers on Capitol Hill was predictable. Most Republicans objected to the plan, arguing it would prevent consumers from accessing much-needed credit, while Democrats largely supported the plan.
Rep. Randy Neugebauer, R-Texas, said the agency had failed to adequately consult state and tribal officials who have been regulating payday and installment loans for more than 40 years.
"States and recognized tribes have universal authority to regulate these products," Neugebauer said.
House Financial Services Committee Chairman Jeb Hensarling, R-Texas, said CFPB Director Richard Cordray "is running roughshod not only over consumers, but also the democratically elected governments of all 50 states. They already regulate small-dollar loans and possess full authority to address any abuses."
Sen. Jeff Merkley, D-Ore., said the plan "will help hardworking Americans keep more of their own money and finally create national protections to prevent families from being trapped in this inescapable vortex of debt."
Kate Berry contributed to this article.
