Morning Consult, July 23, 2020: ‘It’s What We Call Reverse Redlining’: Measuring the Proximity of Payday Lenders, Pawn Shops to Black Adults
As the Black Lives Matter movement highlights the ways that racial inequality is deeply etched in Black neighborhoods, financial policy and consumer advocates have been calling attention to the targeting of Black Americans by high-interest, short-term lenders, such as pawn shops and payday lenders, as one of the most pervasive.
Regulators in the Trump administration are making it easier for payday lenders to exploit Black communities, consumer advocates say, pointing to the Consumer Financial Protection Bureau’s elimination of the “ability-to-repay” payday lending rule, which required that these lenders ensure borrowers have the means to repay a loan. Consumer advocates, who say these loans are predatory, argue that the CFPB’s rollback makes it easier for these lenders to trap borrowers in a cycle of debt.
New Morning Consult data highlights the ongoing issue that consumer advocates and some financial regulators are trying to address — the prevalence of high-cost, low-quality financial services in Black communities.