Payday loan

Of all the crazy things Donald Trump has done since he assumed office last January, he needs to be talked out of doing something even crazier, and that's his pledge to do away with the Consumer Financial Protection Bureau.

The CFPB, which was part of the Wall Street reforms passed after the financial meltdown of 2007 and '08, has been an unmitigated success in helping consumers even the playing field with big banks and other financial institutions.

Nary a month has gone by since its inception back in July of 2011 that the bureau hasn't helped consumers save millions in unfair banking fees, forced banks to stop putting customers at risk, uncovered fraudulent financial practices, put clamps on the payday loan industry and investigated thousands of complaints, including discriminatory lending, on the behalf of aggrieved consumers. In its first six years of operation, it has saved consumers billions of dollars. If ever there was a government agency that works on behalf of the "little guy," this is it.

Trump and several Republican members of Congress think that the CFPB and its director Richard Cordray are too anti-business and somehow hinder the "free market." During Trump's early days, he hinted that the bureau would have to go.

But, in recent weeks, the agency's foes have taken another path. Like with the Affordable Care Act, the aim is to weaken the bureau to make it ineffective. They've been using a law called the Congressional Review Act to get their way. The act allows Congress to stop a federal agency's rules with a simple majority vote.

Just a few weeks ago, for instance, Congress used the CRA to successfully repeal the CFPB's new rule prohibiting forced arbitration clauses in contracts, which have become a favorite of financial institutions because they make consumers fight their own individual battles over disputes rather than banding together in a class action. An individual consumer, obviously, has little chance taking on the lawyers for a big bank or credit card company. Nevertheless, and not surprisingly for this Congress, Congress sided with the big guys.

Now, the CFPB has come up with a long-overdue regulation on the notorious payday and car title lending companies. These lenders — there are now more payday loan stores in America than McDonald's restaurants, you should know — are experts at sucking low-income Americans into never-ending short-term loans at astronomical interest rates. In Wisconsin, these kind of lenders can charge as much as 515 percent annually.

For many, they are simply "debt traps" that are renewed on the borrower's pay day every two weeks and can ultimately go on forever.

Under the bureau's plan, payday lenders would be required to make sure a borrower can repay a payday or car title loan before taking it out, and there would be a cap on the number of times it can be renewed. The lenders would also have to offer long-term loans to give a borrower more than one pay day to come up with the money to pay the loan.

But now there's noise that Congress, again using the CRA, will stop the rule from taking effect.

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Surveys have long shown that Americans want restrictions on payday lending and the predatory practices so prevalent in that industry. They need to make sure their voices are heard by their representatives in Congress.

Just like with health care, Congress will listen if enough people speak up.

Dave Zweifel is editor emeritus of The Capital Times. and on Twitter @DaveZweifel

Editor's note: This column has been revised to correct an error in the CFPB's plan.

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Dave is editor emeritus of The Capital Times.