Research & Policy

The following are some of the highlights of the report conducted by the Tennessee Department of Financial Institutions on the $73 million title lending industry in Tennessee: High Interest Rates Remain. Annual rates for car title loans are still 264%. Still a Lemon for Borrowers. According to the report, half of the new loans made in 2006 were for $500...

Consumer Financial Protection Agency (CFPA) In recent years, federal bank regulators looked the other way as tricky financial products with hidden costs and fees crowded out responsible loans. Dangerous products have stifled true innovation, depriving consumers of meaningful choices and leading the nation into today's financial crisis. We don't always need more regulation, but rather more effective regulation that is...

Consumer Financial Protection Agency (CFPA) In recent years, federal bank regulators looked the other way as tricky financial products with hidden costs and fees crowded out responsible loans. Dangerous products have stifled true innovation, depriving consumers of meaningful choices and leading the nation into today's financial crisis. We don't always need more regulation, but rather more effective regulation that is...

Industry arguments in support of payday lending hinge on one highly-flawed paper. Not only are there significant questions about the accuracy of that research, but it runs counter to the findings of many other studies. Paige Marta Skiba (Vanderbilt) and Jeremy Tobacman (U. of Pennsylvania), Do Payday Loans Cause Bankruptcy? http://tinyurl.com/skiba-tobacman-BK Using a database of 145,000 payday loan applicants from...

EXCERPT Mr. Chairman, Ranking Member Bachus, members of the Committee: Thank you for inviting the Center for Responsible Lending to discuss consumer financial products reform – a fundamental component of the effort to modernize and repair our financial regulatory system. Over the past decade, federal bank regulators looked the other way as responsible loans were crowded out of the market...

Reckless lending practices that became rampant in recent years have devastated the economy, costing Americans billions of dollars in lost wealth and resulting in the weakest economy since the great Depression. Unfortunately, the regulators overseeing bank safety and consumer protections fell down on the job. Congress has taken a number of actions to investigate the causes of the financial meltdown...

A proposal for improving our financial system An essential component of the Obama Administration's proposal for improving oversight of our financial system would correct the current lack of adequate consumer protection standards that has plagued our financial system, and imperiled our economy. A new Consumer Financial Products Agency ("CFPA") would implement sensible protections and make sure that companies follow them...

Loan terms are often complex and may include a number of extra fees that make the real cost to the borrower difficult to decipher and difficult to compare across credit options. Congress developed the APR, or Annual Percentage Rate of Interest, as a standard measure that calculates the simple interest rate on an annual basis (including most fees), accounts for...

Quick Facts on Payday Loan Amounts Nearly 80 percent of payday borrowers report that the amount they received was the amount they needed 90 percent of payday borrowers whose loan was insufficient didn't take out a new payday loan Borrowers whose loans were insufficient typically postponed purchases, did without and borrowed from friends and family A key provision of AB...

Payday lending—the provision of 459% APR loans to cash-strapped borrowers—drains more than $450 million from California's pockets every year. Payday lending requires borrowers to supply a post-dated check as collateral and typically only their identification and proof of income to obtain a loan at nearly 459% APR. These loans are marketed as "emergency" loans for borrowers who are having a...

"Stacked Deck" is a statistical analysis of outcomes in forced arbitration, also called mandatory arbitration or binding mandatory arbitration, that finds: Individual arbitrators have a strong incentive to favor the firms that provide them with repeat business over an individual consumer they may never see again. Companies win a favorable ruling in arbitration far more often than consumers. Companies involved...

A Comparison of House (Credit Cardholders Bill of Rights) and the Senate Amendment (formerly known as the Credit CARD Act) Legislation by the Congressional Research Service.

Too often in the recent past, discussions over consumer protection regulation have been portrayed as a zero-sum game, where consumer protections are assumed to be a drag on the market, and must come at the expense of business. But that is a false dichotomy. Businesses have a symbiotic relationship with their customers. In the end, the health of the business...

In this testimony, we first discuss why we support eliminating what is functionally discrimination in the law against the FTC in its rule-making authority, compared to other agencies. Section I. We also support the Congressional guidance to the FTC to use the APA rule-making in the area of consumer credit and debt, which we recognize to be central to the...

CRL Offers Quick Snapshot of Recent Issuer Activity We took a quick sampling of credit card issuers' recent activities to see how they have responded to the Federal Reserve rule changes that were announced in December, 2008 but won't take effect until July, 2010. We found the top eight issuers, who account for 80 percent of credit card balances, are...

Cost Climbs to $1.9 trillion during 2009-2012, with 92 million homeowners losing $20,300 on average This is CRL's third report on the spillover impact of mortgage foreclosures. This new report is based on new CRL projections of 2.4 million foreclosures for all loans (not just subprime) in 2009, and 9.0 million during 2009-2012. This report also reflects a somewhat more...

The Earned Income Tax Credit (EITC), which supplements the earnings of low-to-moderate income working families, returns over $44 billion each year to these households and their communities and lifts approximately five million people above the poverty line. Unfortunately, paid tax preparers have weakened the economic impact of the EITC by over $600 million a year by offering Refund Anticipation Loans...

It's the rare car buyer who walks out of a dealership convinced they got the absolute best deal on their purchase. CRL researchers have closely scrutinized dubious car lending practices – using data derived from industry sources and results from a consumer survey – so that buyers might be better informed and get a fairer shake. "Car Trouble: Predatory Auto...

Congress has an opportunity to prevent another mortgage fiasco by passing stronger protections on home lending. Americans are clear about wanting more accountability throughout the lending chain: Two-thirds of voters surveyed said Wall Street should be accountable for buying loans that put borrowers at serious risk of foreclosure. And 84% believe mortgage brokers should have a legal responsibility to act...

These findings were obtained primarily from CRL research on overdraft loans. Total costs vs. funds extended: Total cost per year consumers pay in overdraft fees: $ 23.7 billion. Total funds extended by institutions to cover consumers' overdrafts: $ 21.3 billion. This means consumers had to repay $45 billion for $21.3 billion in very short-term credit. Mostly debit cards and small...

Survey confirms public support for cracking down on high-cost lending As Congress debates various financial reforms designed to revive the economy, the Center for Responsible Lending has conducted a national survey to measure public support for one strategy on the table: a 36 percent cap on annual interest rates for consumer loans. The survey found high levels of support for...