Obama backs consumer group as it proposes payday rules

WASHINGTON — President Obama will give a fixed invulnerability of a sovereign government’s consumer insurance watchdog in a debate Thursday, fortifying it opposite Republican bill cuts a same day a group is set to introduce tough new payday lending rules.

Obama’s debate will come 3 hours after a business convenes a conference on payday loans in Richmond, Va. At a hearing, CFPB Director Richard Cordray will outline a offer to moment down on payday lending practices that he says mostly outcome in “debt traps.”

Obama will pronounce in Birmingham, Ala., Thursday afternoon, a site of a Consumer Financial Protection Bureau’s initial open hearings on payday lending in 2012. The White House pronounced Obama would plead ways to “protect families from a forms of abuses that helped lead to a biggest mercantile predicament of a lifetimes.”

Rep. Terri Sewell, D-Ala., pronounced she expects Obama to disagree for some-more consumer protections and clarity while in her district. “I commend a need for puncture credit, though we contingency also safeguard that these products assistance consumers, rather than trap them to a incessant cycle of debt,” she said.

White House Press Secretary Josh Earnest declined to contend either it was a fluke that Obama was fortifying a CFPB’s bill on a same day a group was proposing payday lending rules. By law, a business is an eccentric group with a executive nominated by a boss though with a possess bill and regulatory power.

“I don’t consider there’s any basement for anybody to call into doubt a autonomy of a CFPB,” Earnest pronounced Wednesday. “Obviously, it is probable for a CFPB to be totally independent, though also have a chairman who is obliged for a origination of a CFPB to be unapproachable of their work.”

Obama is only as disturbed about CFPB’s autonomy from Congress. The House bill proposal, upheld by Republicans on a mostly party-line opinion Wednesday, would absolved a business of a involuntary appropriation from fees paid by a Federal Reserve Board. That, a Obama administration warns, would theme a group to narrow-minded budget-cutting and extent a independence.

The manners being modernized by a CFPB Thursday would umpire all forms of short-term lending — including products like payday loans and automobile pretension loans.

Lenders would have to establish during a opening that a consumer is not holding on “unaffordable” debt, and would extent a series of loans a borrower can take out in a year.

“Too many short-term and longer-term loans are done formed on a lender’s ability to collect and not on a borrower’s ability to pay,” pronounced Cordray.

The proposal, that a group is job a blueprint, contingency still be reviewed by a tiny business row and be open for comments before it starts an even some-more grave rulemaking routine after this year.

But some lenders are already backing adult opposite a proposal, observant it would extent options for people who don’t have entrance to some-more normal forms of credit.

“At a time when consumers are perfectionist choices for flexible, obliged credit products, we’re really endangered that this initial offer could exceedingly shorten their options,” pronounced Lisa McGreevy, boss of a Online Lenders Alliance, in a statement.

Consumer advocates are also expressing concerns. Mike Calhoun, boss of a Center for Responsible Lending, will attest Thursday that a offer still gives too most coherence to an attention that “has proven itself skilful during exploiting loopholes.”

Reporter Kevin McCoy contributed from New York. Follow @gregorykorte

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