Senator John Hoeven
338 Russell Senate Office Building
Washington, DC 20510
Senator Heidi Heitkamp
SH-516 Senate Office Building
Washington, DC 20510
Representative Kevin Cramer
1717 Longworth House Office Building
Washington, DC 20515
April 17, 2018
Dear Senator Heitkamp, Senator Hoeven, and Representative Cramer:
The undersigned organizations urge your office to oppose House Joint Resolution 122 sponsored by Representative[s] Ross, Hastings, Graves, Cuellar, Stivers, and Peterson and Senate Joint Resolution 56 sponsored by Senator Graham. This measure would repeal the Consumer Financial Protection Bureau’s (Consumer Bureau) payday rule, which curbs the ability of payday and car-title lenders to trap consumers in an endless cycle of 380% interest debt in North Dakota. The repeal of the Consumer Bureau’s payday rule would also prohibit the Consumer Bureau from issuing another similar rule in the future to rein in payday loan abuses. It is imperative that Congress oppose any effort to repeal or block the rule’s protections against the payday lending debt trap, which often result in financial ruin.
At its core, the rule is based on the common-sense principle that lenders have a responsibility to determine whether a borrower has the ability to repay their loan without getting stuck in a cycle of unaffordable debt. This principle is particularly important for these high‐cost loans where lenders require the power to seize a borrower’s bank account or car. An ability-to-repay requirement is a sensible and sound approach and a principle that, according to a recent poll of likely voters, more than 70% of Republicans, Independents, and Democrats support.
This rule is the culmination of over five years of stakeholder input and extensive research showing clear evidence of the harm caused by making these loans without regard to ability‐to‐repay. A large body of research has demonstrated that payday and car title loans are structured to create a long-term debt trap that drains consumers’ bank accounts and causes significant financial harm, including delinquency and default, overdraft and non-sufficient funds fees, increased difficulty paying mortgages, rent, and other bills, loss of checking accounts, and bankruptcy. The lack of underwriting for ability-to-repay, high fees, and access to a borrower’s checking account or car title enables lenders to repeatedly flip borrowers from one unaffordable loan to another. A large portion of borrowers eventually default, but often not before paying hundreds or even thousands of dollars in fees.
This is why the payday rule is necessary—to help ensure that lenders cannot trap borrowers—who are typically already significantly financially distressed—in a debt trap that leaves them only worse off. Repealing this rule would leave veterans, seniors, and communities of color at particular risk, because they are often targeted by payday lenders who trap them in unaffordable high-cost loans.
While 15 states plus the District of Columbia cap state interest rates at 36% or less, which is the most effective protection against the payday lending debt trap, the Consumer Bureau’s rule provides critical protection in the 35 states that still permit these unaffordable debt trap loans.
H.J. Res. 122 and S.J. Res 56, by repealing the Consumer Bureau’s commonsense rule, would give payday lenders a free pass to continue exploiting financially vulnerable Americans. We urge you to stand against predatory lenders by voting against this measure.
Community Action Partnership of North Dakota
Community Action Partnership - Minot Region
Dakota Prairie Community Action Agency
High Plains Fair Housing Center
National Association of Social Workers, North Dakota Chapter
Native American Development Center
North Dakota Economic Security and Prosperity Alliance
North Dakota Women's Network
Office of Senator Tim Mathern
Sacred Pipe Resource Center
Submitted on Behalf of The North Dakota Economic Security and Prosperity Alliance
Coalition Facilitator/Senior Program Director
1003 E. Interstate Ave
Bismarck, ND 58503