Springfield City Council last night approved a resolution to send federal regulators a message: It welcomes a proposed rule restricting the business practices of payday and title-company lenders.
Sponsored by Councilman Mike Schilling – and in support of calls for restrictions from residents and members of the Springfield faith community – the resolution will be sent to the Consumer Financial Protection Bureau as part of a public-comment period on industry rule changes ending Oct. 14.
The CFPB, which was established as part of the Dodd-Frank Act, is tasked with enforcing federal consumer financial law and ensuring all consumers have access to fair, transparent and competitive consumer financial products and services. Central to the
CFPD proposal, lenders would have to determine the consumer's ability to repay covered loans, which include payday loans, vehicle-title loans and certain high-interest installment loans. However, exceptions to the ability-to-pay provision apply.
In addition, the CFPB would limit the number of short-term or covered loans consumers could take out to three within 30 days of each other. Council voted 7-1 in favor of the resolution, with Councilwoman Kristi Fulnecky casting the lone vote in opposition.
Robert Perry, a retired minister for University Heights Baptist Church in Springfield, said the congregation has been working for a year to provide low-interest loans for people in need as an alternative to payday and title-company loans.
“Our church has raised about $28,000 to provide collateral to guarantee those lower interest loans through a local credit union,” Perry said. “One of the things that has become clear to me is that the predatory loan industry is out of control in Springfield and Missouri. As you drive around town, you can see 75 or 80 of these places.”
According to
Springfield Business Journal archives, CU Community Credit Union launched a short-term loan alternative with the help of a $2 million federal grant and several local nonprofits including Council of Churches of the Ozarks and Faith Voices for Southwest Missouri.
Mark Struckhoff, executive director of Council of Churches of the Ozarks, was among the nine public speakers last night who called for payday loan restrictions. No speakers stood opposed to the resolution.
Struckhoff said often those weighed down by payday loans come to the faith community for assistance.
“Our experience is that all too often we discover there is a payday loan continuing to drain precious resources from these families that are already struggling to make it,” he said. “We serve about 10,000 unduplicated people in Springfield annually, and I would estimate about 20 percent – so about 2,000 people – have these payday loans.”
With loans that can carry interest rates above 400 percent, Fulnecky said she understood the concerns of the speakers, but wouldn't vote in favor of the resolution without hearing from business owners that would be impacted by new regulations.
Calls for comment made to four area payday loan companies this morning were declined by representatives of two, with the others not responding by deadline.
