A Victory at the Supreme Court
By Stephen Reeves
Yesterday, in a 7-2 decision the Supreme Court told payday lenders to take a hike.
Ok, maybe not exactly, but that’s what it felt like. After working for reform for almost 15 years such clear victories have been few and far between and yesterday, for me, was a day for celebration.
A solid majority of the court ruled that the way Congress chose to fund the Consumer Financial Protection Bureau is not unconstitutional. That means the CFPB can continue their mission of looking out for American consumers and regulating folks like predatory lenders.
The case began in 2018 when the payday lending industry, led by a Texas association, sued to block a CFPB rule meant to rein in the worst abusive and deceptive practices that create debt-trap loans and exploit the vulnerable. It was a rule for which I advocated for years. It has since largely been repealed, but since part of it remained in place the case continued.
The lenders were fighting to maintain the ability to repeatedly access a borrower’s bank account for automatic payments. They would do so multiple times a day racking up bank NSF fees charged to the already struggling borrower. Even Trump-appointed CFPB leadership thought this was unconscionable and did not repeal this provision.
The case made its way through the courts until the US 5th Circuit Court of Appeals ruled, rather incredibly, that funding of the entire agency was unconstitutional, jeopardizing its very existence.
Predatory lenders were fighting one tiny, somewhat obscure rule, and nearly brought down an entire federal agency. The CFPB was created in the wake of the 2008 financial crisis to help regular folks have a chance of fighting back against unfair practices of big banks, credit card companies, mortgage lenders, and other massive interests that wield enormous power over our financial lives, and in Washington DC.
I’ve fought for reform of predatory lending in the form of payday and auto title lending for over a decade because they profit from taking advantage of the poor and vulnerable at their most desperate moment. This is why usury is immoral. While folks with little access to credit sometime need money, no one needs a 400% interest loan. More often than not, the consequences of such a debt trap is far worse than not having enough money in the first place. When folks feel like they have little choice, predators don’t hesitate to profit from the vulnerable with loans that result in months or years of debt, or the loss of their vehicle. Their victims are also disproportionally Black, Latino, or single mothers.
I began advocating for reform when I worked in the Texas Legislature as a lobbyist for the Texas Baptist Christian Life Commission, continued at the national level when establishing the advocacy office of the Cooperative Baptist Fellowship, and will continue to do so with Fellowship Southwest. It is an issue that tends to unite faith communities across the political and theological spectrum and fits squarely within our focus on advocacy for racial justice.
For years I have served as a Co-Chair of the Faith & Credit Roundtable of the Center for Responsible Lending. You can read our press release following the ruling here.
While yesterday was a big win, there is still much more to do at the state and federal level. Join us!
For more on the issue, active coalitions, and organizations to follow, see the links below.
Payday Lending: A Christian Response
Payday Lending Reform Articles and Resources from CBF
CBF Blog Post of testimony at a CFPB Field Hearing in 2014
Faith for Fair Lending Coalition
The Center for Responsible Lending
The Ordinance – documentary film