President Obama’s visit to Alabama highlights need to regulate payday, title loan lenders

President Obama’s visit to Alabama today to discuss proposals to rein in predatory lenders underscores the need to regulate an industry the SPLC has found traps low-income people in a crushing cycle of debt.

The Easy Money, Impossible Debt shows, they are far more interested in trapping their customers in a cycle of debt that only keeps them paying off the interest, week after week and month after month.”

When the SPLC investigated Alabama’s payday and title loan industry in 2013, it found that the state’s lack of protections for consumers has created a paradise for predatory lenders. It’s one reason Alabama has four times as many payday lenders as McDonald’s restaurants.

“These lenders have proven that they care only about profits – not ethics or fairness to consumers,” Brooke said. “The Consumer Financial Protection Bureau early on proposed rules are based on a simple principle: You should not offer loans to consumers unless they can afford to repay them. President Obama also recognizes the importance of these safeguards. They not only protect consumers, but can help stabilize and grow our economy.”

The rules, however, do not fully address the many abuses documented by the SPLC. For example, the current proposal still includes loopholes that could permit lenders to continue issuing loans with triple-digit interest to people unable to afford them.

“If the South is to benefit from these proposals, we must see even stricter regulations that will force these lenders to behave in an ethical way,” Brooke said.