Links in “Payday Lending/Money Services Businesses”

Dodd-Frank explicitly denies the CFPB authority to set usury limits, but the 36% rate trigger for the CFPB's payday loan proposal does just that. [4/3/15]

This article argues that most of the consumers that use payday lenders are truly “unbanked” because they don’t qualify for services from banks and credit unions.  In an interesting twist, the article suggests that rather than looking for alternatives to payday loans, we should be looking at alternatives to the way in which these individuals are paid, perhaps allowing them to access their pay on a daily basis as it is earned. [4/2/15]

Panelists, including CFPB Director Cordray and representatives of consumer advocate organizations, gathered in the "predatory lending capital of the East Coast" (Virginia) to condemn payday and auto title lenders. However, they failed to offer viable alternatives to help consumers who find themselves in need of money and with nowhere else to turn. [4/1/15]

The CFPB released its proposal for its payday lending rules in a press release, fact sheet, and outline. The proposal is sweeping. Here's the rundown of what the CFPB is proposing. And here's the NY Times' take on the proposal. [3/27/15]

At a CFPB hearing in Richmond, the credit union message stood apart from the message of other panelists, many of whom testified about the need for payday lending services.  Stan Leicester of Bayport CU testified that credit unions have two primary objectives; to get members off of the weekly payday lending cycle and to help them improve their credit scores. [3/27/15]

The CFPB's plan to require lenders to verify borrowers are capable of repaying a loan, restrict the frequency that the loans could be extended, and capping finance charges got President Obama's approval as a "common sense" measure that stops companies from "trapping hardworking Americans in a vicious cycle of debt." [3/27/15]

The CFPB is considering proposals to prevent and provide protection against payday debt traps related to short-term loans and longer-term loans. Prevention proposals would require the lender to determine at the outset of the loan that the borrower has the ability to repay the loan. Protection proposals would require lenders to provide affordable payment options. [3/26/15]

The CFPB's proposed revisions to payday lending are expected to include a payment-to-income ratio ceiling. This study shows why that may be a bad idea, as well as detrimental to the borrowers such a proposal is meant to protect. [3/26/15]

The CFPB is expected to release its proposal for sweeping reforms to the short-term loan business today. [3/26/15]

Payday loans may get the heat, but they play a small part toward the end of the overall timeline of a borrower's financial distress, according to a Columbia Law School professor's study. Another study finds that payday borrowers with sustained usage actually saw more positive changes in their credit scores than borrowers with fewer rollovers. Borrowers who experienced a decline in credit scores were most likely to live in states with greater restrictions on payday rollovers. [2/11/15]