President Barack Obama warned Congress that he will veto any budget that changes the Wall Street reform passed in 2010.
In his speech Thursday in Birmingham, Alabama, Obama also criticized the bill for the federal budget for fiscal year 2016 valued at 3.8 billion dollars approved on Wednesday the House of Representatives, considering that seeks “a setback” in financial reform in 2010 and specifically attacks the CFPB.
“If Republicans in Congress sent me a bill that pushes back the reform of Wall Street, the veto,” he said.
Obama introduced in early February his budget proposal for fiscal year 2016, which proposed to increase public spending and tax reform for the wealthiest pay more taxes, two proposals flatly rejected by the Republican opposition.
In addition, the President held that an independent agency consider taking measures to protect consumers from predatory lending companies.
The Bureau of Consumer Financial Protection (CFPB), an agency created after the 2010 financial reform to protect consumers from abusive financial practices, announced plans to propose a regulation to predatory lending companies, known in English as “payday loans “.
Obama, expressed support for that announcement and deemed it necessary to regulate the sector, considering that many of these companies are “trapping in a vicious cycle of debt Americans who work hard”.
“If you lend money, you should first make sure that the user can afford to return,” Obama said.
The “payday loans” are extensions of credit that stakeholders agree to repay short-term, usually when they receive their biweekly or monthly payroll, and Obama acknowledged that “at first, may seem easy money”, but who fail to return soon see subject to enormous interest.
80% of these loans accrue interest or are followed by the application of another loan in the next two weeks, and the average user just being in debt for 200 days each year, the White House said in a statement.
“If you ask for a loan of $ 500 with the typical (from one of these companies) rates, paying just over $ 1,000 in interest and fees,” Obama said.
The rule that studies the CFPB would force companies to review the financial history and income of applicant for the loan to ensure they can return it on time, and establish a limit of $ 500 to the amount borrowed and within 60 days between the payment of a loan and grant other.
The Community Financial Services Association (CFSA, in English), which represents companies of “payday loans”, today defended such loans, and said that more than 19 million households in the country each year are turning to them.
“Consumers are moving when they have more choices, not fewer, and new regulations (corporate loans) should take this into account,” the CFSA in a statement.