type: timeline_event
The Consumer Financial Protection Bureau finalized its payday lending rule requiring lenders to determine upfront whether borrowers can afford to repay loans, after five years of research and review of over one million public comments. The rule targeted payday loans, auto title loans, and other short-term loans that typically carried annual interest rates of 391% to over 600% APR, with some states allowing rates exceeding 400%. The payday lending industry charged $15-20 for every $100 borrowed, trapping borrowers in debt cycles where 75% of industry fees came from borrowers with more than 10 loans per year. The typical $375 loan resulted in borrowers paying more in fees than they originally borrowed. The industry had exploded from minimal activity in the 1990s to a multi-billion dollar enterprise exploiting state law exemptions from usury caps. Since 2013, payday lenders spent over $13 million on lobbying and campaign donations to at least 50 lawmakers. Political contributions peaked at $3.6 million in 2012, and lobbying expenditures jumped from $2.7 million in 2009 to $12.5 million in 2011 during Dodd-Frank implementation. House Financial Services Committee Chair Jeb Hensarling received $183,400 from the industry. The rule represented the CFPB's most significant action against predatory lending, but it was finalized just as Mick Mulvaney took over the agency. Mulvaney, a top recipient of payday lending cash, immediately delayed implementation and later proposed rescinding the rule's mandatory underwriting provisions, demonstrating textbook regulatory capture where industry money neutralizes consumer protection.