- - Thursday, September 3, 2015

Rep. Alcee Hastings, one of Florida’s longest serving Democrats in Congress, has also been one of its most vocal critics when it comes to the Consumer Financial Protection Bureau’s plans to regulate payday lenders.

Mr. Hastings has repeatedly raised concerns that the strict regulations CFPB proposed this year for payday lenders might supersede rules that already work in Florida, and cut off an essential source of short-term loans for working Americans who can’t get such helps from big banks when they are in a cash crunch between paychecks.

CFPB says its goal is to stop customers from paying exorbitant interest rates as high as 30 percent and to keep Americans with heavy debt from getting further snowed under.

The payday lending industry, however, has warned that as many as 70 percent of its outlets could go out of business if the CFPB’s proposed rules take effect. 

During a speech this summer before the National Urban League Conference, Mr. Hastings laid out his concerns with a passionate tone, suggesting the federal government had a double standard when it came to the current plight of payday lenders and the bailout of bigger banks after the 2007-09 financial crisis.

That double standard, he warned, could leave working poor Americans out in the cold if local lenders went out of business.

“Payday lenders have been described by many of us, and many of you, and some in the administration, as predators,” he told the crowd. “I want to remind you of something.

“When Ms. Lillie’s or Ms. Lizzie’s or Mr. Johnson’s lights are about to be turned off, regrettably they can’t go to Wells Fargo or to Bank of America for a loan. So they go to the local loan company and then we criticize those local loan companies,” he added.

“And I will remind you, and I was there, when the then Treasurer of the United States walked in and said that we were about to go under. And we talked about banks too big to fail. Well, it was not the little loan companies that damn near brought this country down. It was the big banks that did that, and don’t you forget it.”

Mr. Hastings also has led the Florida congressional delegations efforts to fight the CFPB’s regulation from pre-empting the system they have created in their state, which is often praised as a model.

Florida’s payday lending law was enacted in 2001 after more than five years of state elected officials investigating the industry, talking with consumers who took out loans, payday businesses owners and consumer advocates. In the end, they were able to negotiate one of the toughest payday lending laws on the books without stifling the industry or a consumer’s access to credit.

It prohibits rollovers — that is a customer taking out a another payday loan to cover the original loan — and limits a borrower to a single advance of no more than $500. Payday lenders that operate in Florida cannot charge interest fees that exceed 10 percent of the original loan, and the terms of the loans can range from seven to 31 days. A statewide database, monitoring the industry and those who take out loans, also has been established.

Under Florida’s law, if borrowers can’t repay a loan, the bill provides for a 60-day grace period, provided they agree to take part in credit counseling and set up a repayment schedule.

Nearly all the Democratic and Republican members of the Florida congressional delegation sent CFPB a letter earlier this year saying they did not believe a one-size-fits-all regulation served the public well and would ruin the good payday regulatory system Florida has created on its own.

“To ignore our experience, which has proven to encourage lending practices that are fair and transparent without restricting credit options, would do an immeasurable disservice to our constituents, many of whom rely on the availability of short-term and small dollar loans from regulated, licensed non-bank lenders to make ends [meet],” the letter signed by Mr. Hastings and the other lawmakers said.

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