A public hearing on proposed federal regulations for payday loans drew hundreds of supporters and opponents to downtown Kansas City Thursday morning.
Church members, union workers and community groups chanted outside the Music Hall and made the case during a public comment session that Missouri’s lax laws allow payday and other short-term lenders to exploit borrowers.
Terrence Wise, who supports tighter regulation of the industry, said a $150 payday loan ended up costing him $400.
“They were calling my job and harassing me at work,” Wise said. “My employer told me I could be disciplined if they didn’t stop harassing me. I had papers brought to my home serving me to court. And all of these things, they make you feel degraded.”
The federal Consumer Financial Protection Bureau hosted the event to get feedback on the proposed rules, which were announced Thursday.
CFPB Director Richard Cordray said the bureau was aware of high interest rates and other troubling lending practices in Missouri.
He said the proposed new restrictions include a requirement that lenders to determine whether a borrower can afford to repay a loan.
He said the rules would not get rid of short-term lenders, only curtail abusive practices targeting borrowers who are vulnerable.
“Our objective is to allow for responsible lending while making sure that consumers do not fall into situations that undermine their financial lives,” Cordray said.
Kansas City Mayor Sly James also spoke in favor of the proposals. A panel of loan industry representatives and religious leaders who support the rules addressed the gathering and answered questions.
Also in the crowd were payday loan employees who defended the industry.
“We’re here to help people when other people can’t,” said Jennifer Doctor, who works for a payday lender. “A lot of those people, where are they going to go when they live paycheck to paycheck?”
Doctor said new regulations might force lenders to adapt but would not essentially change what they do.
Yolanda McGill, managing counsel for the CFPB, said the agency plans to stage similar public hearings in other cities in order to help it refine its proposals.