OPINION:
For over a year now, Americans have suffered through the worst global pandemic in over 100 years, the effects of which have been felt throughout all demographics within our diverse nation — with the country’s economy, which was enjoying the longest period of economic expansion in history, unfortunately entering a period of contraction beginning in March of last year.
According to the National Bureau of Economic Research (NBER), that expansion had begun in of June 2009, following the enactment of the Troubled Asset Relief Program (TARP) and the American Recovery and Reinvestment Act, which saw economic growth average 2.3% from mid-2009 through early 2020.
The period of growth hit its highest notes during the Trump presidency, behind the revitalizing strength of the Tax Cut and Jobs Act of 2017 and the former president’s deregulatory efforts, which spurred an economic renaissance for the country, that had been hemorrhaging manufacturing jobs to countries like China.
Some of the biggest beneficiaries of President Trump’s economic doctrine were American minorities, who enjoyed higher wages, expanded opportunities and the lowest recorded unemployment numbers among the Black and Hispanic communities. Although the good times hit a snag with COVID-19, related job cuts and working-hour reductions, even now as the economy rebounds minorities and working-class Americans have been the hardest hit.
Even as the left continually claims that they alone are looking out for minorities, often time the real evidence undermines that view. Consider the online loan industry.
For some Americans, who may be lucky enough to check off the appropriate boxes on a lending application, acquiring additional funds during their time of need may not present any difficulties. But for others, they may unfortunately find themselves standing in the difficult middle ground where they may be able to prove the ability to pay back a legitimately needed temporary loan. But a lack of established credit may prohibit them from qualifying for many of the traditional loan products offered by most financial institutions. A ban on online lending or imposing a rate cap on loans will only limit the options for these families.
And if there is one thing that the last year has taught us, it is that we should always expect the unexpected. Car troubles, a particularly rainy spring or sudden health problems, not unlike the problems that many Americans have had to endure as a result of COVID-19, can all suddenly lead to costly vehicle repairs, roof replacements or unexpected medical bills.
These adversities, even for the gainfully employed, can lead Americans to immediately burn through our savings or prematurely dip into their 401k retirement accounts at a steep penalty. Perhaps even more shocking is the fact that in 2017 the Federal Reserve estimated that one in four American families did not hold adequate savings to account for an unexpected $400 expense. What about working-class and minority households?
In the past, getting an emergency loan would not have presented a problem for employed individuals with a demonstrated ability to pay back a non-secured loan. Prior to the enactment of the Dodd-Frank Act and the creation of the Consumer Financial Protection Bureau (CFPB), there were many lending options available. After its inception, however, the CFPB was granted specific authority to regulate all lenders, including those that operate online.
While the so-called payday loan market may have developed a negative reputation, many online loan products that offer a longer repayment term (than the usually 2 to 6 weeks associated with payday loans) have been unfairly lumped together with these short-term loans and the left is bound and determined to regulate them out of business.
After years of research, the Consumer Financial Protection Bureau proposed a rule to allow financial institutions to once again offer credit-worthy individuals easier access to loan products. But Massachusetts Sen. Elizabeth Warren sent the CFPB a letter that charged, “This new rule eliminates crucial protections for borrowers and makes it clear that the CFPB is not doing its job to protect consumers,” and argued against allowing these loans.
Ms. Warren’s letter illustrates her disconnect from the reality many Americans, particularly minorities, face when attempting to secure financing to cover unexpected expenses that arise at a moment’s notice.
It is particularly galling for Ms. Warren to make this argument about private lenders as previously she championed an initiative to allow the U.S. Postal Service to offer similar loans specifically to pay for rent, utilities, mortgage payments and other unforeseen expenses. Bureaucratic government loans yes, private companies no?
The fact is progressives like Ms. Warren and Illinois Gov. J.B. Pritzker (who last month signed a bill into law that caps loan rates at 36%) are only limiting borrowing options for minorities and working people who have the ability to pay back a loan yet lack the established credit to qualify for traditional lending options.
These actions are just more evidence that leftists often attempt to disallow minorities and working-class households the ability to have the options and freedoms — in this case access to credit when emergencies occur — that elite progressives take for granted.
Rather than ban online lenders — who have used technology to lower costs and more readily match lenders to the best loan options — progressives should put more energy toward helping to grow the economy and create opportunity. This is what looking after working-class and minority households actually looks like.
• Julio Rivera is a business and political strategist, the editorial director for Reactionary Times, and a political commentator and columnist.
