Comments on: Payday lenders go to Washington A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: TinyOne Mon, 10 May 2010 19:11:29 +0000 felix, just because a behavior is made illegal does not mean it disappears. See, Prohibition, Alcohol, United States of America, 1930s.

By: HBC Mon, 10 May 2010 17:24:16 +0000 From the example of payday lenders’ response to potential regulation one can extrapolate backward what’s wrong with Dodd and his dithering, WWE-style sham battle “against” multiplex megabanks: the rules need to be kept no-nonsense, firm and plain-as-daylight simple.

If they are, it might all mean something to everyone. If they aren’t, they’ll be utterly worthless, with everyone but the banks still getting screwed.

By: Claremont1 Mon, 10 May 2010 14:45:16 +0000 How precisely is a federal consumer protection agency going to help the people who patronize payday lenders?

All the talk about what a potential CFPA will look like or how it will actually function in the real world is incredibly vague. The plan seems to be 1. “Establish agency with benevolent and positive sounding name”. 2. ?????? 3. Consumers don’t get ripped off by banks as much!

Specifically on the issue of payday lending, how will a protection agency help? Because the most likely suggestion, limiting APRs or rates charged, is extremely unlikely to be to the benefit of those who use these shops- in fact it will probably hurt them by reducing their access to credit, since lenders are likely to stop lending.

As for “making the terms of the loan clearer” or something along those lines, that doesn’t seem that helpful. While I’m sure people do sign agreements with clauses they don’t fully understand, and it would be an improvement if this didn’t happen, this is not the root of the problem- the root of the problem is that serving the “unbanked” requires high interest rates for it to be profitable, and a CFPA doesn’t address that.

So how exactly will a CFPA help these people? You have to establish that it can successfully accomplish this, and that weakening the agency will actually make a difference. I haven’t seen that anywhere, like I said the arguments behind a “strong” CFPA are incredibly vague and no one (particularly the authors of the legislation) seem to have a good answer, or at least I haven’t seen it.