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For Black Americans, ‘Bidenomics’ should exclude bureau’s late fee rule

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As a Black American, I, along with other Black Americans, stood with and supported President Biden in 2024.

The fact remains that 66% of Black Americans approve of the job President Biden has done, while 34% believe his policies have helped further the demographic.

That’s largely because he kept his commitment to issues that are genuinely important to Black America and for the advancement of a more empowered Black community.

On Biden’s first day in office, he signed an executive order funding historically Black colleges. Promise made, promise kept! Since then, he’s made good on other priority issues like pushing for student loan forgiveness, pardoning petty marijuana offenses, and nominating 25 Black judges to the federal court system. Promise made, Promise kept!

Even the recently introduced Junk Fee Prevention Act is a breath of fresh air.

This bill is a direct response to President Biden’s call to action at this year’s State of the Union and would require typically hidden fees associated with buying concert tickets, hotel rooms, flights, and more to be made fully transparent. But while eliminating junk fees and other “Bidenomics” initiatives are winning issues to campaign on this election cycle, President Biden must be careful not to loop the Consumer Financial Protection Bureau’s proposed rule on capping credit card late fees in the same conversation. It’s a political loser that could unintentionally harm communities of color. However unintentional it may be, the harm it will cause would be a disaster.

The proposed CFPB rule creates more problems than solutions. Only 2.43% of Americans’ total outstanding credit card balances are currently at least 30 days delinquent.

But the ramifications of the rule will apply to everyone. Say no to such rule; however, if the rule is enacted, financial institutions have already signaled that they will make significant changes in response – increasing annual percentage rates, raising interest rates, tightening and/or eliminating credit lines, and discontinuing free checking – are all potential measures banks might take to mitigate the higher risk they will inevitably take on.

In fact, nearly 40% of member credit unions have already said they would charge high fees on other products to recoup losses. High charges, can we afford this? No way.

Problematic it is, but particularly and more so problematic for Black Americans, who already have a difficult time accessing adequate credit and are almost twice as likely to be credit invisible than white Americans. Building more barriers to credit via higher fees and reduced banking amenities will inevitably make communities of color more vulnerable to debt traps like payday lending – a practice that is still legal in 31 states. Victims of higher credit fees are inevitable.

Black Americans are already disproportionately targeted by these predatory lenders; while they make up approximately 13% of the total American population, they constitute 23% of all storefront payday loans. According to the CFPB, more than 80% of payday loans end up being rolled over into additional loans or followed within days by a new loan.

If they really cared about lifting minority communities out of financial sinkholes, the CFPB would address predatory lending, not self-inflicted credit card late fees.

As he heads out on the presidential campaign trail, now is the time for Biden to showcase the progress he and his administration have made for the Black community. Now is not the time for a CFPB rule that could, even if unintentionally, do more harm than good.

Read the Black Chronicle Black History Edition for Free! Click Below

Read the Black Chronicle Black History Edition for Free! Click Below

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