BIRMINGHAM, Ala. — President Barack Obama traveled Thursday to Birmingham to build support for policies that he said would protect working families, including new proposed regulations for payday lenders.
In a speech at Lawson Community College, Obama said one way to make Americans' paychecks go further is "to make sure working families don't get ripped off." He told the crowd of more than 1,000 that Alabama has four times as many payday lenders as McDonald's restaurants. The speech came as the Consumer Financial Protection Bureau announced proposed rules for the short-term lenders.
Here are more details of Obama's visit:
WHAT HE SAID
"If you're lending to somebody, knowing they can't pay you back, and you're going to put them on the hook and just squeeze them harder and harder and harder and take more and more money out of them, you're taking advantage of them. ...
As Americans, we don't mind seeing folks make a profit. And if somebody lends you money, then we expect you to charge interest on that loan. But if you're making that profit by trapping hardworking Americans into a vicious cycle of debt, you got to find a new business model. You got to find a new way of doing business."
The rules proposed by the Consumer Financial Protection Bureau, among other changes, would require payday lenders to verify a borrower's income. There would also have to be a 60-day cooling off period between loans. To make another loan within the 60-day window, lenders would have to document that the borrower's financial circumstances have improved enough to repay a new loan without re-borrowing.
More than 1,000 people filled the gym at Lawson Community College to loudly cheer Obama. Tickets to the speech were available to Lawson faculty and staff.
Chemistry teacher Melody Kelley, 30, waited in a long line with her 8-year-old daughter Kiara, to see Obama. Kelley said she wanted her daughter to see the president, but she also had particular interest in his topic.
"I'm a working-class human being who from time to time indulges in the occasional payday loan," Kelley said. "It's incredibly hard to get out from under it." She said despite her advanced degree and job that it is still difficult at times to make ends meet.
Kelley said she recently had to turn to a payday loan to help pay an insurance deductible after a car accident. Kiara, who is the third grade, said she was excited to see the president.
Groups of people gathered along the streets along the route to the college, applauding and cheering and taking photographs as the presidential motorcade rolled by. Balloons and a "Welcome President Obama" sign were hung along the route.
The proposed Consumer Financial Protection Bureau rules were cheered by Alabama advocacy groups who have unsuccessfully sought new state regulations on payday lenders, but some said they didn't go far enough. An industry representative said it would be a death blow to the payday loan industry.
"These common-sense safeguards are desperately needed to protect consumers in Alabama, a state where many vulnerable residents have found themselves trapped in debt by abusive payday and car title lenders," said Sam Brooke, deputy legal director for the Southern Poverty Law Center.
Max Wood, owner of Cash Spot stores in Birmingham and Tuscaloosa, said the proposed regulations would be "so tight on the lenders" that many would close.
"It would be devastating to the traditional payday loan and title loan industry," Wood said.