Washington, D.C. – Senate Majority Leader Chuck Schumer (D-NY) today spoke on the Senate floor regarding the Senate vote on the Congressional Review Act resolution to repeal the Trump Administration’s True Lender Rule that permitted predatory lenders to exploit small businesses and hardworking Americans. Below are Senator Schumer’s remarks:
First, let me thank our chair of the Banking Committee, somebody who has fought against the abuses in the financial services industry throughout his career, Senator Brown. Let me also thank Senator Van Hollen, who again has been one of those leaders in doing great things to help people who are often taken advantage of.
Now, for millions of working Americans, one of the most dangerous things that can happen is falling victim to predatory lenders. Unscrupulous actors have always promised quick cash or credit to people with unexpected expenses or financial difficulties, only to trap them with crippling interest rates that can erase a person’s life savings or even claim their homes. They're in trouble, they reach out for the lifeline, and the lifeline is a trap. Often they’re trapped for years and even some for their whole lives.
And that’s why more than 40 states have passed laws that prohibit this behavior and place limits on interest rates made by non-banking lenders— these states run the gamut from liberal California to conservative Texas.
Inexplicably – inexplicably – the Trump Administration decided to give these predatory lenders a massive loophole to circumvent state law and once again prey on low-income Americans. Under the Trump Administration’s rule, so long as payday lenders found a bank to provide the cash up front and attach their name to the transaction, interest rates in the triple digits were suddenly OK, even if the state explicitly banned it. It’s despicable. So typical of the Trump Administration: not caring about average folks at all and just listening to the special interests.
It had devastating consequences for working families—and for small businesses. In New York, the owner of a Southern-food restaurant in Harlem took out a $67,000 loan from a fraudulent lender to make renovations to their restaurant. They fell behind on payments and tried to work with their lender when COVID hit, and realized that their loan had an APR of 268%.
Rather than work towards a solution, the lender went to the bank to try and foreclose on their property – their property into which they had put blood and sweat and tears – saying the Trump rule gave them the grounds to do so. It mattered little that under New York State law a 268% interest rates is blatantly illegal.
So today’s vote is simple. It would revoke the Trump Administration’s so-called True Lender Rule that permits predatory lenders to exploit small businesses and working Americans.
In the middle of a pandemic, the last thing we should be doing is perpetuating a rule that makes it easier for payday lenders to scam working people and business owners.
With today’s vote, the Senate stands up for working families and small business all across the country by repealing this terrible, essentially Scrooge-like rule pushed by former President Trump and his allies.
And one final point: for those out there who say elections don't make a difference, just look at this. Here was a rule protecting people, states protected people. The Trump Administration comes in and rips away those protections, leaving so many people bare and defenseless because they're desperate, they need the money.
Elections occur, a new Democratic president, a Democratic Senate, and this horrible, horrible rule change by the Trump Administration is undone, and we go back to giving some help and protection to working families and small business people. This story could be repeated not just with CRAs but up and down the line, up and down the line.
Elections do make a difference, and today's vote shows one of many examples.