Sweeping new rules issued last Thursday by the federal Consumer Financial Protection Bureau “are an assault designed to annihilate access to credit for Georgians with imperfect credit histories,” the United Pawn Council of Georgia says of behalf of its members. “This rule is extremely hurtful because the short-term lending industry is a proven financial lifesaver and safety net to moderate and low-income consumers – especially with tough economic times continuing and with a record number of Americans underemployed and having no credit.”
Title loans are a credit product in which the lender takes a security interest in the borrower’s vehicle and the loan approval and amount is based on the vehicle’s value.
“The CFPB unfortunately is relying on a recent flawed study to promulgate its rule,” the statement says. “Usually an analysis, data collection and research are done first in order to come to a conclusion. In the case of the CFPB, it came to a conclusion first which it announced over a year ago and then trotted out a study just weeks before its sweeping rule-making to provide the pretense for its assault. Laws and regulations passed by Georgia anticipate repeat borrowing by reducing the rates charged after 90 days. So the CFPB rules are a direct attack on state autonomy and regulating access to credit and loan products within its domain. And just to be clear, title lending is already governed by Georgia and many federal statutes. Many borrowers, credible studies have discovered, rely on ‘repeat borrowing’ to be able to spread out repayment of their loan over several months.”
“The United Pawn Council of Georgia believes that while reasonable regulatory reform is welcomed, the CFPB relies on a flawed study and media scare stories to severely limit consumers’ freedom to choose this option. We hope that there are legal challenges to these rules and urge Congress to slam the brakes on this attempt to destroy an entire industry that is a financial safety net.”
