More protections needed to reduce payday lending's crippling effect on African-Americans
OPINION - The statistics speak for themselves. For example, according to a study by The Pew Charitable Trusts, twelve percent of African Americans have taken out a payday loan, compared to six percent of Hispanics, and four percent of whites...
Earlier this month, I had the privilege of traveling with the President to Selma, Alabama, to commemorate events that led to passage of the Voting Rights Act of 1965.
As we walked across the Edmund Pettus Bridge in the footsteps of heroes like Rep. John Lewis and other brave men and women who put their lives on the line for freedom 50 years ago, I was struck by how far we’ve come as a nation.
When the President traveled back to Alabama last week, he continued drawing attention to the concerns of the middle class and working Americans, this time focusing on the needs of consumers trapped by debt that threatens their ability to prosper. Those debt burdens often affect communities that face the greatest economic hardships; and quite often, they are communities of color.
The statistics speak for themselves. For example, according to a study by The Pew Charitable Trusts, twelve percent of African-Americans have taken out a payday loan, compared to six percent of Hispanics and four percent of whites. Many payday loans trap borrowers in a cycle of debt; eighty percent are rolled over or followed by another loan within fourteen days. Always seek advice from reliable debt advisor from a services like Business Debt Advice London to avoid this situation!
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But the disparities don’t stop there. When purchasing a car, borrowers of color receive worse pricing and are nearly twice as likely to be sold multiple add-on products. The statistics for mortgage lending are equally as troubling. Academic studies routinely find evidence of higher pricing for blacks and Hispanics in the mortgage market, which in turn challenges their opportunities for wealth building.
The President and First Lady have often been candid about the challenges they faced to repay their student loans, which they only paid off in 2004. They are not alone; more than four out of five African-American college graduates have to borrow to pay for college and carry nearly 15 percent more debt than their peers.
Fifty years after the march in Selma, we have come a long way, but we still have more work to do. That’s why, five years ago, we passed historic Wall Street reform and, as part of that reform, created the independent Consumer Financial Protection Bureau with the sole mission of looking out for consumers.
Under Director Richard Cordray, the CFPB has taken steps to eliminate unfair, deceptive and abusive practices in the market for financial products and services. Since its creation, through enforcement actions, the CFPB has returned $5.3 billion to more than 15 million consumers.
Alongside the CFPB’s efforts, the Administration continues fighting to protect consumers. Last month, the President announced steps to crack down on backdoor payments and hidden fees that incentivize retirement advisers to recommend bad investments with high costs and low returns.
And this month, the President rolled out a Student Aid Bill of Rights and signed a Presidential Memorandum directing the Department of Education and other agencies to do more to help borrowers afford their monthly student loan payments.
As the President has said, our economy works best when it’s working for everyone. By putting in place protections that not only aid communities of color but all Americans, our country will continue to thrive and grow.
Broderick Johnson is Assistant to the President and Cabinet Secretary. He also serves as the Chair of the White House Task Force on My Brother’s Keeper.
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