BIRMINGHAM, Ala. (AP) — Embracing proposed new rules aimed at payday lenders, President Barack Obama on Thursday said working families need protections from heavy debt burdens and warned Republicans that he would veto attempts to unravel regulations that govern the financial industry.
Obama praised the Consumer Financial Protection Bureau for its proposal to set standards on a multibillion-dollar industry that has historically been regulated only at the state level.
"One of the main ways to make sure paychecks go farther is to make sure working families don't get ripped off," Obama told about 1,800 people at Lawson State Community College.
Obama's remarks come on the same day the consumer agency was announcing the proposed payday lending rules in a hearing in Richmond, Virginia. Payday loans provide cash to borrowers who run out of money between paychecks. The short-term loans carry high interest rates.
The rule would require lenders to make sure that borrowers can afford to pay the money back.
"If somebody lends you money then we expect you to charge interest on that loan," Obama said. "But if you're making that profit by trapping hard-working Americans into a vicious cycle of debt, you've got to find a new business model. You've got to find a new way of doing business."
Before his remarks, Obama met with community leaders working on lending protections and later praised bipartisan efforts to address potentially catastrophic debt loads on families.
"You have some very conservative folks here in Alabama who ... are reading their Bible, they're saying, 'Well, that ain't right," Obama said.
Obama says the Republican budget, a version of which just passed the House of Representatives, would make it harder for the Consumer Financial Protection Bureau to do its job. The budget is a nonbinding measure that serves as a blueprint for ensuing legislation.
"If Republicans in Congress send me a bill to unravel Wall Street reform, I will veto it," he said.
Obama also used his speech in Alabama for a broader attack on the Republican budget. He said Republicans aim to cut taxes for wealthy individuals.
"I don't think our top economic priority should be helping a tiny number of Americans who are already doing extraordinarily well, and asking everybody else to foot the bill," he said.