If policymakers are serious about supporting communities in North Carolina, they need to make it easier to break the cycle of crime and poverty. As a veteran and criminal defense attorney in Forsyth County, I’ve seen firsthand that access to credit and banking can drive real change by transforming communities and creating opportunities. However, federal regulators have made decisions that will do quite the opposite.

Recently, the Consumer Financial Protection Bureau (CFPB) finalized a rule to lower the maximum penalty on credit card late fees. While reducing late fees from the average $30 payment to $8 sounds good in theory, it will have severe repercussions for our community and the financial institutions that make a difference in people’s lives. 

Community banks and credit unions depend on responsible customers who pay their bills on time to offer credit products. If customers are disincentivized from paying their bills on time, smaller financial institutions will face an uphill battle in recovering the cost of extending credit. This would ultimately drive small lenders out of the market, reducing competition and access to credit and banking. 

We need small banks and credit unions now more than ever before. Over the last 10 years, more than 600 bank branches in North Carolina have closed. Underprivileged communities throughout North Carolina can’t afford to lose another bank to this rule. 

While some banks will be forced to close shop, those that can afford to continue operating will have to adjust their financial products to remain afloat by tightening account standards and hiking interest rates. This will make it even harder for North Carolinians who are struggling to make ends meet to afford essentials like rent, groceries, and health insurance. 

As affordable access to credit and banking declines, more people may turn to predatory alternatives to get by. This means a rise in lending services with high fees and interest rates like payday loans; check cashing; or worse, illegal lending from loan sharks. Too many times have I seen the vicious cycle predatory lending creates. Americans living paycheck to paycheck need the CFPB to protect them from these threats rather than feed them to the wolves. 

This rule should have been dead on arrival. Not only did the CFPB circumvent the Small Business Regulatory Enforcement Act’s requirement to examine the rule’s potential impact on small businesses, but it also failed to consider the US Small Business Administration’s Office of Advocacy’s comments concerning the rule.

This policy risks creating a severe ripple effect across North Carolina. I’d urge our congressional delegation to protect our community’s access to credit and work with their colleagues in Congress and the administration to overturn this rule.