BIRMINGHAM, AL (WBRC) - Payday lenders are loving a new proposal that their critics hate.
The Consumer Financial Protection Bureau is proposing rolling back new regulations that were set to take effect in August. That includes an underwriting provision that would have made sure people could actually afford what they borrow.
Opponents feel one of the biggest issues with payday lending is the amount of interest that can eventually be charged.
In Alabama, some lenders charge up to 456%.
"If they can’t pay it back with their next paycheck, it will accrue way more and then they get into this cycle of debt where they are never able to pay it off,” said Ande Kral with the Better Business Bureau of Central and South Alabama.
"I am adamantly opposed to rolling back that,” said Senator Doug Jones (D-Alabama).
Jones says more regulation is needed for an industry that makes money on people who don’t have much.
"It’s not only targeting the poor, it’s propping up an industry that is just making money hands over fist at the expense of the poor,” Jones said.
However, C.F.P.B. officials contend this move will increase consumer access to credit.
One group representing short term lenders calls it “good first steps” and hopes all the rules are repealed.
But in Alabama, the industry still might face tough regulations at the state level.
“It’s wrong. It’s usury,” said Dr. Neal Berte, chairman of the Alabama Payday Lending Advisory committee. “We’re not trying to get rid of the option, but we are trying to reduce the terms in such a way that people have at least 30 days (to pay back the loan), like you pay your utility bill.”
The new payment window, along with other provisions, Berte says state lawmakers will consider in the upcoming session.