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Rolled Over: How the Trump Administration is Failing to Protect Civilians and Military Service Members from Predatory Payday Lending

December 22, 2020

By Zack Martin

Introduction

The issue of payday loan industry regulation is not just of importance to the lenders within the industry and the state and federal agencies tasked with protecting borrowers; the general public has a keen interest in protection from predatory practices by payday lenders, *574 as well. This is particularly pressing because, often, members of society that fall on the lower end of the socio-economic ladder--including members of our armed services--are the ones who suffer the consequences when industry excesses are not checked by government regulations. This Note seeks to examine efforts by the Trump Administration to roll back protections from predatory lending practices for consumers--even the special protections created for military service members under the George W. Bush Administration. This Note then proceeds to recommend how subsequent administrations, as well as Congress, should restore and expand these necessary protections.


Part II of this Note provides background information about the payday loan industry and how it was regulated prior to the Trump presidency. This includes examining the usury practices of many payday lenders, which led to calls for regulation, and two decades of regulation at the state and federal level, including enforcing the preexisting Truth in Lending Act (TILA) against payday lenders, the passage of the Military Lending Act (MLA), and the creation of the Consumer Financial Protection Bureau (CFPB). Part II will also explore efforts by the Trump Administration to cut back on consumer protections, from industry insiders vying for positions as regulators, to the CFPB's lack of financial resources and gutting of proposed regulations, and proposals to roll back special protections afforded armed service members by the MLA.

Part III will examine the negative impacts unregulated payday lending can have on both military service members and the public-at-large.

In Part IV, this Note recommends future administrations not follow the Trump Administration proposal to cut back enforcement efforts of the MLA. This Note also recommends that Congress extend MLA protections to all Americans. Future administrations should also return the CFPB to its pre-Trump Administration budgetary, regulatory, and independent status. Further, this Note recommends the substance of the 2017 Payday Rule be maintained, and for Congress to amend the CFPB's structure to create a board of directors as opposed to one agency head.

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