The Fight for Consumer Protections Comes to a Check Casher Near You (Updated)

(Update: Please note the corrections on the actual vote below.)
Opinion by Gregory Lobo Jost

I have to admit it is downright depressing that Republicans in Congress are doing whatever they can to block the newly formed Consumer Financial Protection Bureau (CFPB) from fully getting off the ground.  The bureau came about as a response to the failure of the various protection agencies to do their job on subprime and predatory products in the decade leading up the collapse.  Many of these agencies had arguably been bought off by the industries they were supposed to protect us from.  These same industries are now working the politicians in Washington to keep the CFPB from having any teeth.

What may actually be even more depressing is that New York State is now considering a bill that will relax some of our own strong consumer protections – mainly the state’s longstanding civil and criminal usury laws, which cap interest rates on small loans at 25%.  The Senate Committee on Banks voted yesterday in favor of a bill that would exempt check cashers from this usury cap and allow them to make triple-digit interest rate short term loans.

New Yorkers for Responsible Lending, a statewide coalition of 151 groups (including University Neighborhood Housing Program where I work) called on the committee to withdraw this piece of legislation (S.3841 / A.7047) known as the "short-term financial services loan act", as it would likely open the door to predatory payday lending, which thankfully our state has long prohibited. Despite this strong public opposition from NYRL groups and others around the state, the Committee approved the bill yesterday morning, sending it to the Finance Committee for review.

(Updated/Corrected:) Both Bronx Senators Ruben Diaz, Sr. and Gustavo Rivera are on this committee, but according to footage of the meeting on YouTube (skip ahead to minute 30 for this bill) were not present for the actual vote.  They both submitted their votes, however, with Diaz voting in favor and Rivera against. Senator Rivera was in another meeting with the Department of Corrections (he is also on the Crime Committee) about the potential closing of downstate prisons, and his staff has made it clear that he is strongly opposed to this short term loan bill as it stands. Senator Liz Krueger of Manhattan was the lone Senator to raise questions about the bill at the actual meeting, and the final vote was 14-5 in favor, with Malcolm Smith, Neil Breslin and Carl Kruger joining Senators Rivera and Krueger in dissent.  Meanwhile, Bronx Assemblyman Carl Heastie is sponsoring identical legislation in the Assembly.