Minority communities, beware of the Consumer Financial Protection Bureau (CFPB).
This week, U.S. Hispanic Chamber of Commerce President and CEO Javier Palomarez published an op-ed column explaining why the CFPB’s recent rulemaking on small-dollar loans ultimately puts minority entrepreneurs at risk. By imposing numerous restrictions on small-dollar lending, the rogue agency will inevitably make it more difficult for small business owners to secure the credit they need. In Palomarez’s words:
The United States Hispanic Chamber of Commerce (USHCC) has long warned the CFPB of the consequences of restricting access to small-dollar credit. The USHCC represents 4.4 million Hispanic-owned businesses, which create jobs and contribute more than $700 billion to the U.S. economy. USHCC members depend on access to capital to thrive, but in many cases traditional banking institutions don’t operate as extensively within minority communities. In fact, the number of small community banks declined by 14 percent between 2010 and 2014. Small-dollar lenders are therefore often one of the only sources of credit available within many communities.
Even the agency estimates that its rule would reduce small-dollar lending store fronts by nearly 70 percent. Other research pegs the number closer to 85 percent. This ultimately ends up hurting the employees and customers who depend on small business to survive and thrive.
Given the fact that nearly half of Americans cannot cover an unexpected expense of $400, the CFPB’s attack on credit is deeply troubling and destructive to the U.S. economy. Memo to the CFPB: Lay off the American people.