Free Republic

A court tossed out a regulation written by the Consumer Financial Protection Bureau for payday lenders last week, saying the agency's funding was unconstitutional and that it, therefore, lacked the ability to curb the industry. The U.S. Court of Appeals for the Fifth Circuit voided a CFPB rule that prohibited payday lenders from debiting the accounts of customers who miss a payment without getting their consent first. While the ruling applied just to that regulation, financial service attorneys say it muddies the agency's authority and has the potential to upend all of its rules. "The Fifth Circuit's ruling potentially calls...

The Consumer Financial Protection Bureau’s new rules for payday loans and car title loans have drawn the predictable cries of outrage from lenders, particularly small storefront operators who say the restrictions will put them out of business. And it’s an understandable complaint — after spending five years researching the market for high-cost credit, the bureau has fired a shot right at the heart of these lenders’ business model. But the outrage here isn’t what the regulators are doing. It’s the way these lenders have profited from the financial troubles of their customers. As the bureau’s research shows, payday lenders rely...

Millions of Americans need to continue taking out short-term loans in order to make ends meet for their families. This month, liberal bureaucrats have continued to prove that they are out of touch with the reality that average Americans are forced to face each day. Those who lean left believe that the purpose of government is to shelter the citizenry from self-inflicted harm. The problem is that, more times than not, their assessments are dead wrong. Case in point: the left’s recent assault on the short-term lending industry.

Despite Barack Obama’s Hope and Change promises to fundamentally transform the U.S., there remain a great number of Americans who live paycheck to paycheck (when they have work at all). Occasionally, they find themselves in desperate need of short-term credit to avoid a financial disaster, but they don’t have good credit. One of their options is to get a short-term advance from a “payday lender.” In the typical transaction, a storefront lending business provides a cash advance of a few hundred dollars to the borrower, who promises to repay within one or two weeks with a fee of 15 to...

President Obama is expected to discuss new regulations on payday lending during a trip to Alabama on Thursday, with the Consumer Financial Protection Bureau announcing the new rules before his speech.The CFPB will hold a field hearing on payday lending and car title lenders in Richmond, Virginia on Thursday. The administration is concerned that consumers fall into deep debt rapidly from the short-term, high-rate loans.

Call it predatory lending. Or call it financial service for the neediest. Either way, more Minnesotans are turning to high-interest payday loans and other services outside the mainstream banking system, controversial enterprises that operate through a loophole to dodge state restrictions. On a typical morning throughout Minnesota, customers stream into any one of some 100 storefronts where they can borrow hundreds of dollars in minutes with no credit check – at Super Cash on the north side of Bloomington, for example, at Ace Minnesota Corp. on Nicollet Avenue in Richfield and across the metro on Roseville’s Rice Street at PayDay...

Around one million Britons have taken out a payday loan to pay their mortgage or rent over the last 12 months, a survey reveals. It highlights the financial squeeze facing workers who are being pushed over the edge by soaring household bills, rising taxes and paltry pay rises, or pay freezes. The report, from the homeless charity Shelter, said a further six million people are being plunged into debt in other ways in order to pay these essential bills. They are using unauthorised overdrafts, personal loans or credit cards to pay their housing costs - rather than face being evicted...

California is a great place for studying the thinking — or lack of thinking — on the political left. The mindset of the left was recently displayed in a big, front-page story in the October 30th issue of the San Mateo County Times. It was an investigative reporter's exposé of the "payday loan" business and its lobbyists. According to the reporter: "In California lenders charge up to $45 in fees on a maximum $300 loan. This amounts to an interest rate of 460 percent, trapping some borrowers into a never-ending cycle of debt." Let's take this one step at...

For those who depend on taking out a loan in advance of a paycheck, life may soon get harder if Congress passes the Payday Loan Reform Act. The bill's sponsors, which include Rep. Luis Gutierrez (D., Ill.), say they want to clean up abuse in credit markets by clamping down on the prices lenders charge for payday loans. In reality, the legislation will reduce the supply of these loans and make borrowing more expensive. The reform is based on the false premise that consumers take out these loans without realizing how much they are paying. True enough, these loans are...

A recent editorial in the Arizona Daily Star takes the view that payday loans should be outlawed in Arizona, as scheduled, in 2010. Payday loans are very small loans that accept future paychecks as collateral and charge high fees and rates of interest. . While I agree with the Star that it's not good for people to be using payday loans on a regular basis, I think the choice should be left to individuals, not government. Generally, it's a bad idea to finance a business startup with credit cards. But I know a millionaire who did exactly that to get...

Hawkins seeks ban on payday lenders By Robert W. Dalton Published: Sunday, December 30, 2007 State Sen. John Hawkins is abandoning his efforts to impose stronger regulations on payday lenders. Instead, Hawkins wants to outlaw the industry in South Carolina. "They're making far too much money to accept any meaningful regulations," said Hawkins, R-Spartanburg. "I've come to realize they are similar to video poker in that regard, and they've used every trick in the book to fight real regulations." Hawkins - one of several attorneys who have filed suit against payday lenders claiming they knowingly make loans to people who...

SAN DIEGO (NNS) -- Navy officials said they will continue to pursue predatory lending legislation after California lawmakers significantly weakened language and then voted against Assembly Bill (AB) 1965 on the last day of session, Aug. 31. Lawmakers in the California Senate rejected a bill that proposed a 36 percent rate cap for payday loans, deferral of payments while deployed and a grace period for up to 30 days upon a service member returning from a deployment. “If you [a civilian] choose to find yourself in this situation, your job is not at risk, national security is not in jeopardy,”...

The Social Blessings of "Usury" by Glen Tenney [Posted on Wednesday, December 14, 2005] [To receive the Daily Article in your inbox, go to email services, and tell others too!] In a front-page article in the Birmingham News of November 22, staff writer Russell Hubbard reported that the Alabama Supreme Court has ruled that the high interest rates charged by payday lenders in Alabama from 1998 through 2003 were "usurious" and therefore illegal. Though high-interest payday loans have been legal in Alabama since 2003 (albeit with a cap on the actual rate charged) an attorney named Mike Skotnicki suggests that possibly...

America's military bases are under siege by an army of financial predators known as "payday lenders." Legislation in the U.S. House of Representatives, H.R. 97, called The Service Members Anti-Predatory Lending Protection Act, would protect our military from these fiscal parasites by capping outrageous interest rates. Unfortunately only a handful in Congress take the threat seriously. You'll find payday lenders in storefront offices and check-cashing outlets up and down East 22nd Street in Tucson right outside Davis-Monahan Air Force Base. They line the highways near the big Navy bases in Norfolk and Hampton, Va. And they surround the Camp Pendleton...

THE Illinois House last week passed reasonable rules for the payday loan industry. If the Senate follows suit, as it certainly should, some down-on-their-luck Illinoisans should be saved from penury. Payday loan shops provide a needed service - at an outrageous price. They provide small, short-term loans to people who can't get them elsewhere. Most are people shunned by credit card companies because of low income or bad credit history. If your car is broken down, and you need it for work, the payday loan store will provide money to pay the bill. But charges are steep, averaging $20 to...

WASHINGTON - Ever ready to find a crisis requiring expanded government authority, a score of states have passed legislation targeting "predatory lending." That is, politicians decide what is and is not fair when it comes to borrowing money. Often people of modest means need short-term loans and are willing to pay high interest rates to get them. At tax time, for instance, many people get loans from banks and even tax preparers in advance of receiving their income tax refunds from the Internal Revenue Service. The interest rates are high, but as many as 10 percent of Americans seek such...