Briefed by the Bell — Predatory Economy

The predatory economy is at work in Colorado. The question now is what will our policymakers do to stop it? Read our earlier briefs on wages, family security, and fiscal policy now.

What You Should Know About the Predatory Economy

Building assets and cultivating wealth — from a simple savings account or retirement plan to homeownership and investment accounts — is a critical and understated part of economic mobility. Those are the tools people need to weather temporary financial setbacks, avoid debt traps, and establish long-term financial stability.

Exploitative financial practices occur in all industries and make up what we call the “predatory economy.” The predatory economy eats at the wealth and income of many people, but it also hurts business in general. Predatory firms use exceptions and questionable practices to take advantage of consumers, all while trampling over legitimate businesses that play by the rules and serve consumers fairly. Looking out for consumers and checking predatory practices should be an essential government function.

With the dismantling of the Consumer Financial Protection Bureau (CFPB) — the agency created by Congress in the aftermath of the Great Recession — the federal government is failing to shield consumers from some of the most egregious predatory practices that plague consumers. In the past two years, the current leadership of the CFPB has declined to crack down on student loan servicers, investigate payday lenders, and discourages transparency in home mortgage agreements. That’s why it’s more important than ever for states to step up and help consumers.

In our latest Briefed by the Bell, we explore what actions Colorado’s policymakers can take to address the predatory economy and its practices. Specifically, we explore what can be done for payday loan rate caps, mitigating bad actors in the student loan servicing industry, addressing forced arbitration clauses, building wealth through retirement savings, and the possibility of a cabinet-level consumer department in Colorado.  

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