A more nefarious theory is that banks currently make a lot of money on a payday-lending alternative that already exists-namely, overdraft protection
The rules should be formally proposed this spring, but the pushback-from the industry and from more-surprising sources-has already been fierce. ” All 10 of Florida’s congressional Democrats wrote in a letter to Richard Cordray, the bureau’s director, that the proposals do an “immeasurable disservice to our constituents, many of whom rely on the availability of short-term and small-dollar loans.” Representative Debbie Wasserman Schultz, the chair of the Democratic National Committee, recently co-sponsored a bill that would delay the regulations for at least two years.
“Payday lending brings up this meta issue,” says Prentiss Cox, a professor at the University of Minnesota’s law school and a member of the consumer advisory board at the bureau: “What should consumer protection be?” If most payday-lending customers ultimately need to fall back on financial support from family members, or on bankruptcy, then perhaps the industry should be eliminated, because it merely makes the inevitable more painful. Yet some consumers do use payday loans just as the industry markets them-as a short-term emergency source of cash, one that won’t be there if the payday-lending industry goes away payday loans Ohio Bluffton. But thus far, there are not.
Dennis Shaul, who, before he became the head of the industry’s trade association, was a senior adviser to then-Congressman Barney Frank of Massachusetts, accused the rule-makers of a harmful paternalism, rooted in a belief that payday-lending customers “are not able to make their own choices about credit
Along with reforming payday lending, Cordray is trying to jawbone banks and credit unions into offering small-dollar, payday-like loans.