CFPB Actions Have Real Life Consequences for Communities of Color

    Last June the Consumer Financial Protection Bureau [CFPB] proposed a rule to severely restrict access to short-term loans.  Although I have no doubt that the CFPB meant well in crafting its rule, the unintended consequences this rule creates for communities of color and the poor make it an unworkable solution that only stands to do more harm than good. It just doesn’t work! I am the President and CEO of the Southern Christian Leadership Conference, a nationwide advocacy organization committed to the principles of economic, social and political justice.  We have a network of local chapters and affiliates that work hard to represent those on the margins of society and bring the ideals of Dr. Martin Luther King, Jr. to our nation in the 21st century.  In my work, I’ve seen firsthand how well-intended legislation can have a dramatic and unintended negative effect on the very people it was intended to help.  The CFPB’s latest proposal is a prime example. Whether the CFPB likes it or not, the fact is that short-term, small-dollar lenders are often the only financial institutions willing to serve communities of color and poor people.  They are critical lifelines when a child gets sick or a car breaks down.  If this proposed rule goes into effect, entire swaths of our community will be left without access to credit. According to the CFPB’s own estimates, residents in under-served and minority communities will be disproportionately impacted by the proposed rule.  Non-bank lenders in these communities stand to lose up to 84 percent of their revenue, which would likely put two out of every three out of...

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