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State should reign in payday lenders




Andy Spears

Andy Spears

Tennesseans are tired of the legalized loan sharks known as payday lenders. That’s why our organization has supported state level legislation to rein-in loan shark lending. Now, we’re also standing behind a federal rule proposed by the Consumer Bureau that would prevent the worst abuses of the payday loan industry.

Our members and supporters are asking Tennessee Senators Lamar Alexander and Bob Corker to oppose congressional efforts to overturn a Consumer Bureau rule that would go a long way to protect consumers in the low-dollar lending market.

Payday predator survivors like Michelle, from Nashville, who took out a small loan to cover an unexpected car repair and ended up in a cycle of debt that lasted six months, are ready to see the kind of relief this new rule would bring.

Ron, who worked for a payday store, knows the real story. Even though he needed work, he quit after just three weeks. He couldn’t stand what the payday loans were doing to his friends and neighbors.

The average interest rate is 391 percent APR for short-term loans, and even higher for online loans. Payday lending practices are designed to keep people in debt and keep taking out new loans – that’s how they make money, by taking ours.

Last year, the Consumer Financial Protection Bureau created rules to stop some of the worst payday loan abuses. The rule would require lenders to determine a borrower’s ability to repay. This would prevent payday loans being made to people who are likely to end up in a debt cycle, like I did.

But the payday lenders and their friends in Congress are trying to reverse these common sense protections and gut the consumer bureau.

Here’s the deal: Congress is now considering dumping basic consumer protections. Senators Corker and Alexander have a choice: will they protect us, or will they stand with the payday loan sharks who feed on us? We need our senators to stand with families and our communities.

Recently, I was in Chattanooga, talking about how to better regulate payday lenders and how to develop and promote alternatives that don’t leave consumers in an overwhelming cycle of debt. Yes, there are alternatives – such as your local credit union – that could offer you the small dollar loan you need without the painful sting of a payday predator’s bite. Groups in Chattanooga and in Upper East and West Tennessee are working on real solutions – and we’ll be sharing more about them as they develop.

For too long, the loan sharks in Tennessee have had their way. Now, we’ve had enough. We’re going on offense. Lifting up stories of survivors, pushing aggressively for state action, and supporting the Consumer Bureau Rule. We’re counting on Senators Alexander and Corker to stand with us and fight for Tennessee families.

 Andy Spears is the executive director of Tennessee Citizen Action, a statewide consumer advocacy organization founded in 1997.

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