University business professor exposes short-term lending critics as hypocrites looking to make a buck

University business professor exposes short-term lending critics as hypocrites looking to make a buck

In a compelling blog post George Washington University School of Business Professor Jeffrey H. Joseph exposes the Center for Responsible Lending (CRL) for a having a financial interest in eliminating the short-term loans millions of Ohio consumers use and depend on.

In a blog post titled “The Unnecessary Death of Payday Loans” published in The Hill, a news site that covers Congress and Washington politics and policy, Professor Joseph accurately points out that “short-term loans help borrowers avoid bouncing checks (which can cost more than a payday loan) and help borrowers pay their bills.”

Professor Joseph also calls out the unseemly and hypocritical founders of CRL, Herb and Marion Sandler, who are among those pushing the Consumer Finance Protection Board (CFPB) to impose strict limits on short-term lending. Here are excerpts of the blog post:

Leading the charge for tighter regulation is the Center for Responsible Lending (CRL), a group founded by Herb and Marion Sandler. Though CRL says its mission is to stop “abusive lending practices,” the Sandlers earned their fortune by offering adjustable rate mortgages with monthly payments that ballooned by thousands of dollars. These adjustable and subprime mortgages led to massive defaults, as highlighted by “The New York Times”, “60 Minutes” and others, and have been blamed for significantly contributing to the 2008 financial crisis ….

It turns out the CRL has a financial interest in eliminating payday loans. CRL’s parent organization is the Self Help Credit Union, which also offers short-term loans. A recent POLITICO report states emails between CRL and the CFPB show CRL was “pushing CFPB to support its own small-dollar loan product with a much lower interest rate as an alternative to payday loans.”

The irony is shocking. CRL’s founders peddled junk loans to people who couldn’t afford them, contributing to the housing crisis and Great Recession. Now CRL is lobbying to curtail short-term lending to vulnerable borrowers under the guise of stopping “abusive” practices, which will eliminate CRL’s competition while it peddles its own short-term lending products.

Professor Joseph concludes the blog post by accurately arguing that more big government regulations will put some short-term lenders out of business and hurt the 12 million Americans who each day borrow money through a short-term loan.

“Without access to regular banks or payday loans, many will turn to less regulated options such as pawn shops and loan sharks, or they’ll forego Christmas presents altogether,” Professor Joseph writes.”CFPB’s regulations are a lump of coal American families don’t deserve.”

Read the full column at

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