DOGE's Destruction of CFPB Means States Matter More
Consumers can and should push state policymakers to enact essential protections
Elon and the Oligarchs have unleased the DOGE Death Star all across the federal government, including effectively shutting down the Consumer Financial Protection Bureau.
This will mean a Wild West climate in the financial marketplace - Big Banks and predatory payday scammers will have more freedom to rip off their customers.
But, there are state-level laws and policy enforcers that can help level the playing field.
If you have a complaint about a financial transaction, you can and should take action at the state level:
So, with CFPB shut down, what do you do if you have a complaint about a bad actor in the financial marketplace?
First, start with your state’s Attorney General.
Attorneys General typically have consumer protection divisions and can apply relevant state laws to your situation. Sometimes, if an AG asks, a company will answer.
Second, let your Member of Congress know. One, they may be able to assist with a resolution. But also, it is important for Congress to know their constituents value the work formerly performed by CFPB. Congress can rescue the consumer champion from the DOGE Death Star . . . if they want to.
A recent report on the increasing costs of short-term loans highlights the need for meaningful state-level policy:
Specifically: Since last year, Florida increased its interest rate cap from 30% to 36%, and allowed that rate to be charged for larger loans. Kansas also extended its highest allowable interest rate, 36%, to larger loans, while Mississippi extended a 59% APR, previously limited to loans of $4,000 or less, to loans of up to $5,100.
Oklahoma’s and Texas’s already high APR caps continue to increase due to annual adjustments and changes to the loan sizes for which higher interest is allowed.
To make the financial marketplace more fair, the National Consumer Law Center (NCLC) offers the following recommendations:
Cap APRs at no more than 36% for smaller loans, such as those of $1,000 or less, with significantly lower rates for larger loans,
Prohibit junk loan fees or strictly limit them to prevent junk fees from being used to undermine the interest rate cap and acting as an incentive for loan flipping,
Include all payments in the APR calculation, whether or not they are deemed “voluntary.” Some lenders have tried to disguise fees as purportedly voluntary “tips,” expedite fees, or donations,
Prevent loopholes for open-end credit. Rate caps on installment loans will be ineffective if lenders can evade them through open-end lines of credit with low interest rates but high fees,
Ban the sale of credit insurance and other add-on products, which primarily benefit the lender and increase the cost of credit,
Examine consumer lending bills carefully. Predatory lenders often propose bills that obscure the true interest rate. Get a calculation of the full APR, including all interest, all fees, and all other charges, and reject the bill if it is over 36% (or if it applies a 36% APR to more than the very smallest loans).
Include anti-evasion provisions to prevent lenders from laundering their loans through out-of-state rent-a-banks to evade state rate caps or disguising their loans as sales, “earned wage” payments, or other devices.
“Caps on interest rates and junk fees are the primary ways states protect consumers from predatory lending,” said NCLC’s Carolyn Carter. “We recommend a strict annual percentage rate cap of no more than 36% for loans of up to $1,000 in every state and significantly lower limits for larger loans.”
Advocate Andy now has more than 200 subscribers - thank you! If you aren’t yet a subscriber, consider becoming a free or paid subscriber today. Either way, take a moment to also like and share this post. Together, we can hold the robber barons at bay - a task more important now than ever.
...who break the law!
I'm scared of a world without the CFPB. AdvocateAndy's reporting is spot on! DOGE is anti-consumer protection and will make it easier to steal, grift, or scam a consumer's last dollar even if the consumer voted for the new president! We need guardrails against both banks and payday lenders