Consumer protection groups have grown increasingly concerned about Republican promises to cut back on financial regulations next year. The roll back in regulations could pose a risk for minority communities who have historically been subject to discriminatory practices by mortgage, auto, and pay day lenders. The Consumer Financial Protection Bureau (CFPB) is the federal regulatory body targeted by deregulatory hawks in Congress.
The CFPB has been working diligently to mitigate some of the worst banking practices that target minority communities. The CFPB found the practice of redlining still exists, where African-Americans are excluded from receiving loans that their white counterparts, with similar circumstances, could receive. Auto loan companies have been forced to change their lending standards considering discriminatory practices that found African-Americans were receiving loans at rates much higher than their white counterparts.
The CFPB has been busy working to create rules to regulate pay day lenders. These loans serve as debt traps for those who live paycheck to paycheck. Often people are trapped in borrowing cycles that require them to take out more than 10 loans from these institutions at interest rates as high at 400 percent. The rules created by the CFPB would limit these practices and give those in low income communities opportunities to get ahead and become financial stable.
Local consumer groups like U.S PIRG, Virginia Poverty Law Center, and the NAACP have been at the front lines of this fight. If the CFPB were to be eliminated by Republicans, minorities in low income neighborhoods would be the first to feel the wrath of discriminatory and predatory lending practices. It’s important that Virginians make Sen. Mark Warner and Sen. Tim Kaine aware about the bureau’s successes and benefits brought to consumers.
Chris Lazare
U.S. PIRG Organizer