Posted on 08/23/2019 1:28:15 PM PDT by Kaslin
This week could’ve been a terrible one for millions of low-income American consumers. If Consumer Financial Protection Bureau (CFPB) rules set up in 2017 had been allowed to proceed, lenders that provide short-term cash to help struggling Americans cover unexpected expenses would had to have cleaned out their offices by August 19 and shut their doors forever. Fortunately, the Trump administration reversed course and made sure that 19 million vulnerable Americans weren’t stripped of the vital financial services they desperately rely on. By trying to eliminate these much-needed financial services, the CFPB demonstrated just how out-of-touch elite bureaucrats are with the lives of working-class Americans.
When the CFPB was created in 2011, the bureaucracy quickly set its eyes on short-term lenders. Following a series of smaller actions against these businesses, the bureaucracy promulgated a rule in 2017 that would have effectively knocked payday financial services out of existence. Despite experts deeming this action as “one of the most detrimental regulatory actions ever taken by the Bureau,” the rulemaking process went undeterred.
Officials couldn’t be bothered to consider how regulations would exacerbate the daily struggles facing millions of struggling families. Almost 80 percent of Americans live paycheck to paycheck while 40 percent of Americans aren’t able to cover a $400 unexpected expense without borrowing money or selling something they own. Additionally, 91 million Americans have subprime credit scores or insufficient credit history to get a loan. And, due in large part to onerous Dodd-Frank provisions, 8.5 million Americans don’t have a bank account. These dire circumstances have persisted due to crippling regulations that have locked millions of Americans out of the financial system.
In order to be able to pay unexpected expenses without being forced to sell off vital household items, Americans rely on the small-dollar credit market to pay unexpected bills. In return for a flat fee, usually around $35, they receive a loan to be repaid when they receive their next paycheck.
None of these facts mattered to Obama-era CFPB bureaucrats, who ended up twisting data in their zeal for prohibition. When first announcing the rule, the CFPB relied almost exclusively on the research of Professor Ronald Mann from Columbia University. But Professor Mann repudiated the CFPB's summary of his work as "so inaccurate and misleading" that it was "unrecognizable." Given the CFPB’s gross negligence in dealing with data, it was a relief to millions of Americans that, in February 2019, the Trump Administration suspended the implementation of these rules and is considering ruling them out entirely.
This rollback is critical to the well-being of the tens of millions of Americans who regularly rely on these services. Absent regulatory reform, many consumers will be forced to go outside the system and use loan sharks that charge far higher interest rates. Some will be forced to visit pawn brokers or sell off valued family possessions. Some will even be forced to forgo groceries or the essentials of life.
Like many policies promulgated by out-of-touch politicians and bureaucrats, payday lending restrictions hurt the very people they are intended to help. The 80 percent of Americans who live paycheck to paycheck need access to emergency loans when something goes wrong. Squeezing out short-term lenders will only hurt struggling families.
An effective ban on short-term lending may make for a good soundbite, and a good fundraising ployfor ultra-liberal advocacy groups, but it does not make for good policy. The only danger Americans need protecting from is out-of-control paper pushers in Washington.
I have NEVER seen a flat fee for a payday loan.
The real charges seem like they were created by the Gambinos
Reader, shed a tear for the philanthropic loan shark.
These payday loan places didn’t really exist 30 years ago. There probably a similar percentage of folks without bank accounts then (I was one of them, as without Dodd-Frank Chicago banks still made getting a bank account hard for a struggling college student). The payday loan services today used to be done by the mob, and the rates were similar, though I guess the late penalties could be a bit more extreme.
I really don’t see the payday loan places as capitalist warrior heroes any more than I see Myrna’s Slot Machines on every other street corner in Rockford, Illinois as a sign of economic vitality.
Oddly, the article does not mention the interest rate charged by the payday lenders.
You would think the author of the article would have included that number.
payday loans are like going to a loan shark, only without the knee-breakers if you don’t pay up ... instead they’ll simply attach any wages you might be making ...their APR’s are typically in the 3-digit range and they prey on the poor and ignorant ...
“You would think the author of the article would have included that number.”
unless he’s a shill for the payday loan “industry” ...
The above figures are from 2 different 'pay day loan' offices around where I live.
That's where the real harm is. These 'loan sharks' popped up like mushrooms during the Obama regime. I never researched it enough to find out who in the democrat party benefited the most. I'm sure Dodd-Frank legislation was the vehicle by which these hucksters began operating.
I'd like to see a study on how many people have been harmed/bankrupted by these companies.
Yeah this article is a LIE!
And lol, that was a funny comment. :)
I have known gangsters who charge anywhere from 2 percent a week to 50 PERCENT a week!!
Some people are that desperate and figure they will worry about next week when it comes.
Probably paying off another loanshark :)
I have mixed feeling on this. On one hand, I know that people who have little or no access to credit sometimes need access to short term loans.
OTOH, the usurious interest rates and fees that these outfits charge mean that anyone using them stands to end up in even bigger financial difficulty after taking a loan from one of these places.
Is protecting people from their own (possibly bad) choices a conservative position or principle?
Absolutely agree. I wouldn’t spend a gram of political capital defending the esso bees. There is a line between what is legal and what is moral.
Who wrote this drivel? A lobbyist for Payday Lenders? A Marketing Guru for The Predatory Lending Association of America?
Agreed!!
It’s disgusting and this article is VERY deceptive.
When you see the TV airwaves loaded with ads for anything ... follow the money. Whether it be lawyers, payday loan / cash advances outfits. They are all scammers behind the counter. And of course the media won’t do any true reporting on the people scammed, hey the media makes millions on the ads.
Townhall is Salem Media, which portends to be Christian.
Somebody is gonna have an awful lot to answer for here.
Townhall.com USUALLY posts right thinking conservative articles.
This is not one of them.
Agreed and I’m glad quite a few FReepers seem to agree with me on this.
Or I agree with them, whichever :)
I KNOW we are a free country and i’m not smart enough to state why, if we are a free country, that this should be illegal.
I’m not good at putting together strong, comprehensive arguments.
I just know it’s wrong.
“”Consumer Financial Protection Bureau (CFPB)””
We can thank obozo and Elizabeth Warren for that fine agency. She pushed until she got what she wanted and obozo went along with it. Let’s make sure she explains just why it was so doggone important - a feather in her cap then but I bet she won’t claim any credit for it now. It’s an agency that wasn’t even needed...then or now!
The last I knew the building in DC that was going to house that agency was infested with whatever and uninhabitable so the work force couldn’t even occupy it. I believe it was a NEW building also.
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