New Proposal Will Disproportionally Impact Minority Communities, Deprive Consumers of Small-Dollar Loans When They Most Need Them, Cost Americans Their Jobs
WASHINGTON, DC–(Marketwired – June 01, 2016) – U.S. Hispanic Chamber of Commerce President & CEO Javier Palomarez denounced the forthcoming Consumer Financial Protection Bureau (CFPB) short term credit rule, which would restrict access to small-dollar credit for millions of consumers and disproportionally affect minority communities.
Access to capital is fundamental to millions of American Dreams invested in small businesses that lead our economic recovery by creating jobs. Without access to capital, American entrepreneurialism is stifled and the country cannot continue to recover from the depths of the Great Recession. The CFPB’s arbitrary rule ignores the needs of consumers, reduces access to credit for millions and it harms small businesses and the millions they employ. Moreover, it overlooks disproportionate impact that the downturn had on Hispanic household wealth; and frankly, is downright disrespectful to the unrelenting patriotism that has driven the 4.1 million Hispanic-owned businesses to lead our national recovery by creating jobs right here in the United States.
The CFPB’s rule would harm the millions of consumers who use payday loans responsibly to manage unexpected and periodic financial difficulties. According to a recent report by the Federal Reserve, forty-six percent of Americans cannot pay for an unexpected $400 expense. By limiting access to credit, many would be unable to stave off financial emergencies or shortfalls and be forced into costly, less regulated options such as overdraft fees or late payments.
The CFPB’s rule also sets requirements that no small operator can meet. According to the bureau’s own estimates, these proposals will eliminate 84% of payday loan volume, which would result in a 66% reduction in the number of storefronts. These small businesses play a critical role for their employees and communities, leaving tens of thousands of employees without paychecks or health insurance, and leaving these communities with no source of short-term credit.
About the USHCC
The USHCC actively promotes the economic growth, development and interests of more than 4.1 million Hispanic-owned businesses, that combined, contribute over $661 billion to the American economy every year. It also advocates on behalf of 260 major American corporations and serves as the umbrella organization for more than 200 local chambers and business associations nationwide.
For more information, visit ushcc.com.