Freedom Line Blog

We’ve often highlighted how federal and state regulators who target short-term lenders only end up hurting the struggling Americans they claim to be helping.

That dynamic is even more pronounced in times of increasing economic uncertainty like today.

According to a 2018 study from the federal government itself, nearly 40% of American families don’t possess sufficient savings to cover even a $400 emergency expense, including 51% of military service members living paycheck-to-paycheck.   For such people, credit cards aren’t always a viable option and traditional bank loans aren’t feasible because of the small amounts involved.

They can, however, access desperately-needed money for the short-term via consumer finance loans.   Unfortunately, the Biden Administration, the Pelosi-Schumer Congress, federal bureaucrats who think they know better and government officials at the state and local levels constantly pursue legislation and regulation to make consumer finance lending less available.  As a consequence, vulnerable Americans are forced to seek illegal loansharks, suffer overdrafts or simply fail to pay their pressing bills.

Our friends at National Taxpayers Union (NTU) commendably highlight the latest dangerous Biden Administration effort in a piece entitled “The Consumer Financial Protection Bureau Continues to Attack the Financial Industry”:

While taxpayers look for relief from out-of-control inflation, the Consumer Financial Protection Bureau (CFPB) continues to attack the financial industry, tipping our already unstable economy further over the edge…

As recently as April CFPB announced they would be invoking a long dormant authority to examine nonbank financial companies or ‘fintech’ companies.  CFPB inaccurately posits that these nonbank entities are harmful to consumers, however these companies often represent some of the only credit available to struggling Americans who have been continuously left behind by traditional institutions.  At a time when the economy is faltering and everyday Americans’ financial futures are so uncertain, the CFPB’s action seems misplaced.”

As NTU rightly concludes, “in many cases these institutions are doing the exact opposite of what CFPB claims, they are providing a lifeline to their users and breaking barriers to traditional institutions.” 

As our economy weakens due to the Biden Administration’s own counterproductive economic policies, the least it could do is avoid making matters even worse for struggling Americans increasingly desperate for a workable lifeline, non-traditional lenders.