Tim Kaine is backing the Consumer Financial Protection Bureau (CFPB)’s attempt to rein in the payday loan industry with the very first federal regulatory framework for short-term, high-interest loans.
The Virginia Democratic Senator and Vice-Presidential candidate wrote in a letter to CFPB director Richard Cordray that he supports the proposal. He averred to the consumer federal watchdog agency that he thinks the new rules and regulations would better help consumers and protect the most vulnerable.
“The issue of predatory lending is not new nor will it improve without strong action from the CFPB. Too many consumers are stuck in high-cost debt traps. I applaud the CFPB for taking action to end these harmful business practices,” stated Kaine. “I remain encouraged by the CFPB’s focus on predatory payday lending and hope the final rule will be strong to protect consumers.”
Prior to the unveiling of the CFPB’s proposal, Kaine urged the CFPB to implement new payday loan rules. Kaine wanted the CFPB to prevent predatory lenders from taking advantage of the impecunious.
During his time as governor, Kaine had installed a payday loan alternative program in which several lenders catered to state employees. The initiative allowed Virginian workers to borrow low sums of cash at minuscule interest rates. This was lauded by state Democrats, while Republicans argued that it was unfair for non-public sector workers. The program is called the Virginia State Employee Loan Program, a unique partnership between the Virginia State Employee Assistance Fund and the Virginia Credit Union.
Kaine has also offered his support for updating the Military Lending Act (MLA). Hillary Clinton’s running mate endorsed the Department of Defense (DOD)’s plan to revise the MLA that would close loopholes that can shield military members and their families from so-called abusive financial practices. (http://www.kaine.senate.gov/press-releases/warner-kaine-back-plan-to-better-protect-military-families-from-abusive-financial-practices)
In December 2009, Kaine published an op-ed in the Wall Street Journal, encouraging the United States government to replicate the Mother of States’s actions on tackling the payday loan industry.
Here is what Kaine opined in the newspaper:
“One thing is clear: As lawmakers craft their proposals for reforming America’s financial system, payday lending should be part of the equation. In the meantime, the option remains open to employers both public and private to offer an alternative that guarantees a meaningful payoff for our families and communities.”
When President Barack Obama took office, one of his mandates was to restrict payday loans. Proponents have celebrated the U.S. president for this goal, referring to the concept that the impoverished are most affected by the industry because of high interest rates, excessive fees and other charges.
This past spring, the CFPB unveiled a payday loan proposal that would complement state initiatives. It received mixed reactions as some said it went too far while others said it didn’t go far enough. Those who crafted the 1,200-page rule noted that it could go into effect as early as next year. However, it has met some opposition from some members of Congress, who want it delayed by two years.