All politics are local, the saying goes. So consider this an example of how the politics of Washington invariably trickle down to Calhoun County.
It starts, as does most everything these days in the nation’s capital, with President Trump. His budget chief is Mick Mulvaney, previously head of the Consumer Financial Protection Bureau, whose job -- funny enough -- is to protect Americans from destructive financial policies.
When Mulvaney left that bureau, one of his protegees, Kathy Kraninger, replaced him. The U.S. Senate, by a slim 50-49 vote, confirmed her appointment in December.
And last week, Kraninger proposed to weaken key governmental safeguards on payday lenders and other short-term loans. Those safeguards, born under the Obama administration, are invaluable tools to protect Americans from exorbitant interests rates and other questionable practices employed by predatory lenders.
Specifically, Kraninger’s proposal calls for ending requirements that lenders must determine if their clients have the financial ability to repay their short-term loans.
Former bureau chief Richard Cordray called those requirements “the heart and soul” of the safeguards against payday lending’s extremes, the Los Angeles Times reports. “Rolling it back would mean exposing hundreds of thousands of people to considerable harm of the kind that we documented every day across this country. It restricts access to irresponsible credit. That seems like a reasonable measure.”
It is. To be clear, the Obama-era safeguards don’t prevent payday lenders from existing or profiting. It prevents them from preying on the most vulnerable of their customers -- those whose fiscal margin of error is paper thin. No lending agent should loan money to a client whom they know is likely to default on their debt.
And the local angle?
Thousands of Alabamians rely on payday lenders for weekly bills, for emergency expenses, for home improvements, and for medical bills. Should Kraninger implement her proposal, that would re-open the door for Alabamians to suffer from the worst purveyors of predatory lending practices.
U.S. Sen. Doug Jones, D-Birmingham, is having none of it, and shouldn’t. We hold little hope that the Republican members of Alabama’s congressional delegation will join hands with Jones on this issue. “I am deeply disappointed by reports of the CFPB’s actions to undermine rules for payday lenders,” Jones said. “Roughly 250,000 Alabamians take out over two million payday loans every year with interest rates that can soar to more than 450 percent. These borrowers cross all income levels and walks of life.”
In other words, it could be you who feels the pain.
The Trump administration, Mulvaney, Kraninger and defenders of the payday-lending industry paint any consumer safeguards as detriments to business growth. That’s rubbish. Put bluntly, they ignore the government’s role in protecting Americans from shady business models. As long as money flows, they’re good with it. People are collateral damage to them.