Consumer Protection Agency Seeks Limits on Payday Lenders

[boutons_deux]

Obvious why the Repugs want to kill CFPB (along with Dep of Education and IRS).

Consumer Protection Agency Seeks Limits on Payday Lenders

In the world of consumer finance, they are chameleons: payday lenders that alter their practices and shift their products ever so slightly to work around state laws aimed at stamping out short-term loans that can come with interest rates exceeding 300 percent.

Such maneuvers by the roughly $46 billion payday loan industry, state regulators say, have frustrated their efforts to protect consumers.

Now, for the first time, a federal regulator is entering the fray, drafting regulations that could sharply reduce the number of unaffordable loans that lenders can make.

The Consumer Financial Protection Bureau, created after the 2008 financial crisis, will soon release the first draft of federal regulations to govern a wide range of short-term loans.

The rules are expected to address expensive credit backed by car les and some installment loans that stretch longer than the traditional two-week payday loan, according to industry lawyers, consumer groups and government authorities briefed on the discussions who all spoke on the condition of anonymity because the deliberations are private. Certain installment loans, for example, with interest rates that exceed 36 percent, the people said, will most likely be covered by the rules.

Behind that decision, the people said, is a stark acknowledgment of just how successfully lenders have adapted to keep offering high-cost products despite state laws meant to rein in the loans.

The federal regulations taking shape will most likely set off a new round of lobbying from payday lenders.

For now, with the prospect of federal rules on the horizon, some payday lenders have begun aggressively lobbying a number of states, including, Kentucky, Washington and New Mexico, tapping a former governor as a lobbyist in one battle, to weaken state laws restricting expensive loans or to quash new caps before they gain ground.

The lenders contend that if the federal rules are too burdensome, extending loans would become simply too expensive, choking off a form of credit that, while costly, is the only option for millions of Americans.

http://mobile.nytimes.com/blogs/deal...ayday-lenders/

"choking off a form of credit that, while costly, is the only option for millions of Americans."

as if payday lenders gave a flying about "millions of Americans"

what would be choked off are the payday lenders' profits for usury.

There was a move a few weeks ago to protect US military and vets from paydays lenders. My question was, why protection for only those two groups?

[CosmicCowboy]

Loans require a willing borrower and a willing lender. It is not like these lenders are going out and forcing people to borrow. The borrowers are going to payday lenders and asking to borrow money because they need money NOW and can't go to a bank because they aren't a good credit risk. You can quibble about the rates they charge for the service but not the fact that the borrowers wanted the loans they couldn't get anywhere else.

The historical option to payday lenders were loan sharks that broke your knees if you didn't pay.

[boutons_deux]

"It is not like these lenders are going out and forcing people to borrow."

it's more like the lenders sucker, prey upon the desperate borrowers by hiding how ing disastrous sums that payday loans can explode to.

And as with the mortgage lenders, the payday lenders know damn well a profitable number of borrowers simply can't pay back on time.

But no surprise, you right-wingers always absolve the corporations and criminalize the consumers, as if both parties had equal power and info in the deal.

[Wild Cobra]

What if you were desperate for $200 to get their car fixed. Without their car, you lose your job?

Take away the high rates loaners can get for high risk, and they will go bankrupt. Take away the incentive for them to loan to desperate people, and the desperate people get even more desperate when they lose their jobs.

[boutons_deux]

What if you were desperate for $200 to get their car fixed. Without their car, you lose your job?

Take away the high rates loaners can get for high risk, and they will go bankrupt. Take away the incentive for them to loan to desperate people, and the desperate people get even more desperate when they lose their jobs.

how about raising the minimum wage to a livable $15 or $20/hour, and raise the OT threshold to $75K, so 10Ms of people would be lifted out of poverty and off public assistance?

no, you right wingers and "God wants us to be rich" Christians want to punish the poor for being poor, blame them for causing all their own problems.

[CosmicCowboy]

"It is not like these lenders are going out and forcing people to borrow."

it's more like the lenders sucker, prey upon the desperate borrowers by hiding how ing disastrous sums that payday loans can explode to.

And as with the mortgage lenders, the payday lenders know damn well a profitable number of borrowers simply can't pay back on time.

But no surprise, you right-wingers always absolve the corporations and criminalize the consumers, as if both parties had equal power and info in the deal.

Boo, I'm neither defending or attacking. They loan in a high risk environment as the lender of last resort for people with bad credit. They charge high interest rates. It's a numbers game. They are going to have a high default/skip rate so they charge a high individual rate to cover the losses. It is what it is.

If you don't like it run a craigslist ad that you will loan money to people with bad credit and only charge them prime plus one and see how long you last.

[Winehole23]

payday lenders in Texas prosecute delinquent debtors for theft:

Consumer advocates say district attorneys and courts are—intentionally or not—acting as debt collection agencies for predatory lenders. A letter from a DA threatening steep fines, arrest and jail time can be a highly persuasive tool.

http://www.texasobserver.org/report-...sue-borrowers/

[Winehole23]

thematically related:

http://www.spurstalk.com/forums/showthread.php?t=204640

[CosmicCowboy]

payday lenders in Texas for prosecute delinquent debtors for theft:



http://www.texasobserver.org/report-...sue-borrowers/

Correct me if I'm wrong but only if they pay with a hot check, correct? How is this different than writing a hot check to HEB?

[Winehole23]

Texas law appears to prohibit it.

the article also describes payday and le companies using the threat of prosecution to elicit payment. it's my understanding that is illegal too.

[CosmicCowboy]

Texas law appears to prohibit it.

the article also describes payday and le companies using the threat of prosecution to elicit payment. it's my understanding that is illegal too.

Again, my understanding is if they write a hot check the prosecution is for the hot check. That is illegal no matter who it is written to.

[CosmicCowboy]

The moral of the story is, if you owe a payday loan company money tell them to off and don't write them a hot check. The DA will not prosecute over an unpaid civil loan. They will prosecute over a hot check.

[Winehole23]

that's not the only issue here.

[CosmicCowboy]

that's not the only issue here.

When the DA gets involved it is.

[Winehole23]

CC primly affirms the propriety of using state power to enforce the greed of payday lenders.

smh

[CosmicCowboy]

CC primly affirms the propriety of using state power to enforce the greed of payday lenders.

smh

No I'm not. Every single prosecution was for theft by check. That is writing a hot check. That is illegal no matter who you write it to. Is it greedy when HEB files with the DA on a hot check?

[MultiTroll]

And as with the mortgage lenders, the payday lenders know damn well a profitable number of borrowers simply can't pay back on time.

[MultiTroll]

It's a numbers game. They are going to have a high default/skip rate so they charge a high individual rate to cover the losses. It is what it is.

Isn't every loan they make covered by collateral in the form of either the persons paycheck or car?
So what risk are they taking, other then having to track the persons car down?
Perhaps a few pissed off people trash their car when they know the payday sharks hook up goons are coming.
Phoenix banned these payday 300% snakes and apparantly it's going much better for the consumer.

[CosmicCowboy]

Lets go back to Poor Pitiful Margaret in that tearjerker of an article. Margaret had to have $225 Right away. Poor Pitiful Margaret has ty credit. There is a company down the street that rents commercial space, hires employees, pays taxes and utilities, etc. Poor Pitiful Margaret With ty Credit goes to these people desperate for a $225 loan that no one will give her and promises to pay it back in a month. For giving her the $225 they agree to charge her less than $50 for a fee. Poor Pitiful Margaret doesn't pay them back in a month and eventually writes them a hot check. That company is greedy?

[CosmicCowboy]

Funny, and you guys don't blink an eye when Chase charges you a $25 late fee when you are 2 days late paying your $27.48 minimum balance. Calculate the APR interest on THAT.

[CosmicCowboy]

]Isn't every loan they make covered by collateral in the form of either the persons paycheck or car?[/B]
So what risk are they taking, other then having to track the persons car down?
Perhaps a few pissed off people trash their car when they know the payday sharks hook up goons are coming.
Phoenix banned these payday 300% snakes and apparantly it's going much better for the consumer.

The short answer is no.

[MultiTroll]

For giving her the $225 they agree to charge her less than $50 for a fee. That company is greedy?

I thought it said the company made $271 on top of the 225 she owed?
Manager Monty Burns refused to accept a payment plan.
Not like Margaret was trying to skip out.

Ya, i'd say that say that is very greedy.

[CosmicCowboy]

as far as Poor Old Pitiful Margaret....at what age is it OK to write hot checks? 60? 65? 70?

Just wondering where you guys draw the line and when it's OK for the rest of us to write hot checks.

[CosmicCowboy]

I thought it said the company made $271 on top of the 225 she owed?
Manager Monty Burns refused to accept a payment plan.
Not like Margaret was trying to skip out.

Ya, i'd say that say that is very greedy.

Then your reading comprehension is very bad. She borrowed $225 and promised to pay back $271 in a month so the fee was less than $50. What Poor Pitiful Margaret and the author of the article conveniently left out of the story is that Poor Pitiful Margaret gave them a hot check as payment so they were not only out the fee but the $225 cash they originally loaned her.

[boutons_deux]

Funny, and you guys don't blink an eye when Chase charges you a $25 late fee when you are 2 days late paying your $27.48 minimum balance. Calculate the APR interest on THAT.

A few years I read that the biggest banks made $37B/year from overdraft charges.

I had one digit wrong in my bank account number paying my CPS bill on line. "Bounced check", $25 charge.