The rules would cover a broad section of the $46 billion payday loan marketplace that serves the working poor, a number of whom have no savings and little use of conventional bank loans. The regulations would not ban high-interest, short-term loans, which are often used to cover basic expenses, but would require lenders to make sure that borrowers hold the resources to reimburse them.
2015, 8
The initiative -- whose outlines were the focus of a front-page article in The New York Times last month -- is an important measure while defending itself against fierce attacks from Republicans in Washington to get a consumer agency still striving to find its ground among other financial regulators.
On Thursday, Mr. Obama given his weight to the consumer agency's suggestion, saying that it would sharply reduce the number of unaffordable loans that lenders can make each year to Americans desperate for cash.
"If you lend out money, you must first make sure that the borrower are able to afford to pay it back," Mr. Obama said in remarks to college students here. "We don't mind seeing people make a profit. But if you are making that profit by catching hard working Americans into a vicious cycle of debt, you then got to find a new business model, you must seek out a brand new way of doing business."
The president's appearance at Lawson State Community College is a part of a campaign-style effort to depict Republicans as out of touch with the wants of middle-class Americans. In his remarks, he accused of backing a federal budget that might benefit the affluent at the expense of everyone else, Republicans. For seeking to terminate the automatic backing of the consumer agency, and he denounced his adversaries in Congress.
"This is only yet another way America's new consumer watchdog is making sure more of your paycheck stays in your own pocket," the president said. "It is one more reason it makes no sense that the Republican budget would make it more difficult for the C.F.P.B. to do its job." He vowed to veto any attempt that "unravels Wall Street reform."
Yet even patrons of the mission of the buyer bureau were crucial on Thursday, saying that the payday lending rules that are planned usually do not go far enough.
A chorus of consumer groups said that loopholes in the proposition could leave millions of Americans exposed to the expensive payday loans. Lenders have shown an ability to work around state regulations that were similar, they said.
Payday lenders say that they welcome reasonable regulation, but that credit should not be preserved by any rules, not choke away it. "Consumers boom when they have more options, not fewer, and any new regulations must bear this in mind," said Dennis Shaul, the chief executive of the Community Financial Services Association of America, an industry trade group.
The attacks from both directions underscore the challenges confronting the bureau, and its manager, Richard Cordray, as it works to satisfy its mandate while pressure grows from Congress and monetary industry groups.
In drafting the rules, the agency, according to interviews with individuals briefed on the issue, had to strike a precarious equilibrium, figuring out how to remove the most predatory forms of the loans, without choking off the credit entirely.
The effort to find that balance can be seen in the choice that lenders have in meeting underwriting requirements under the proposition.
Under one option, lenders would be required to evaluate other financial obligations, a customer's income and borrowing history to make sure that when the loan comes due, there will likely be adequate cash to insure it. The rules would affect specific loans backed by car titles plus some installment loans than 45 days.
Or the lender could forgo that examination and instead have safety limitations on the loan products. Lenders couldn't offer a loan greater than $500, by way of example.
Under this option, lenders would even be prohibited from rolling more than two times during a 12-month period. Prior to building the rules outline, a second or third consecutive loan, the lenders will have to offer an affordable method to get out of the debt.
For certain longer-term loans -- credit which is extended for more than 45 days -- the lenders would need certainly to put a ceiling on rates at 28 percent, or structure the loans to ensure that monthly payments don't go beyond 5 percent of borrowers' pretax income.
Driving the suggestion was an evaluation of 15 million payday loans by the buyer agency that found that few individuals who have solicited short-term loans may refund them. Borrowers took out a median of 10 loans during a 12-month span, the agency said.
Nearly 70 percent of borrowers utilize the loans, tied to their next paycheck, to cover basic expenses, not one time crises -- as some within the payday lending industry have promised.
In a past generation, law enforcement would detain and jail people for doing exactly what the payday lenders do. They were called loan sharks...
Payday loans aren't a valid kind of credit; they're simply a snare for the financially unsophisticated. Here's some basic monetary...
Payday loans were blocked by GA. They claim it is to protect GA citizens. Nevertheless, it hurts quite a few people. Banks is only going to lend you money if you...
Such rocky financial basis helps clarify how one loan can prove to be so difficult to settle. Borrowers who take more or 11 loans out, the bureau found, account for about 75 percent of the fees generated.
Until now, payday financing has mainly been controlled by the states. The Consumer Financial Protection Bureau's foray into the regulation has incited anxieties among some state regulators who worry that payday lenders will seize on the national rules to water down state limitations that were more demanding and consumer advocates. Fifteen states including New York, where the loans are limited at 16 percent, effectively prohibit the loans.
The rules, which is shown to a review panel of small businesses, will likely set off a fresh round of lobbying from your industry, said Senator Jeff Merkley, Democrat of Oregon.
Continue reading the primary storyContinue reading the primary storyContinue reading the main story
The hearing offered a rare glimpse at the forces aligning on either side of the cash advance disagreement. On a single side, there was an array of individuals contrary to the rules, from industry groups to happy customers, to heaps of payday loan shop employees -- many wearing yellow stickers that read, "Equal Access, Credit For All."
On the other, there were insolvency attorneys, housing advocates, consumer groups and individual borrowers, all of them calling for a genuine crackdown on the high-cost products.
Some told of stores forced to close, while others described how such loans had caused enormous pain and charges.
At one point, a woman wearing a neon pink hat who gave only the name Shirley burst into tears, saying that her cousin with cancer could be dead.
Martin Wegbreit, a legal aid lawyer in Virginia, called payday loans "poisonous," noting that "they would be the leading source of insolvency right behind medical and credit card debt."
2015, 8
The initiative -- whose outlines were the focus of a front-page article in The New York Times last month -- is an important measure while defending itself against fierce attacks from Republicans in Washington to get a consumer agency still striving to find its ground among other financial regulators.
On Thursday, Mr. Obama given his weight to the consumer agency's suggestion, saying that it would sharply reduce the number of unaffordable loans that lenders can make each year to Americans desperate for cash.
"If you lend out money, you must first make sure that the borrower are able to afford to pay it back," Mr. Obama said in remarks to college students here. "We don't mind seeing people make a profit. But if you are making that profit by catching hard working Americans into a vicious cycle of debt, you then got to find a new business model, you must seek out a brand new way of doing business."
The president's appearance at Lawson State Community College is a part of a campaign-style effort to depict Republicans as out of touch with the wants of middle-class Americans. In his remarks, he accused of backing a federal budget that might benefit the affluent at the expense of everyone else, Republicans. For seeking to terminate the automatic backing of the consumer agency, and he denounced his adversaries in Congress.
"This is only yet another way America's new consumer watchdog is making sure more of your paycheck stays in your own pocket," the president said. "It is one more reason it makes no sense that the Republican budget would make it more difficult for the C.F.P.B. to do its job." He vowed to veto any attempt that "unravels Wall Street reform."
Yet even patrons of the mission of the buyer bureau were crucial on Thursday, saying that the payday lending rules that are planned usually do not go far enough.
A chorus of consumer groups said that loopholes in the proposition could leave millions of Americans exposed to the expensive payday loans. Lenders have shown an ability to work around state regulations that were similar, they said.
Payday lenders say that they welcome reasonable regulation, but that credit should not be preserved by any rules, not choke away it. "Consumers boom when they have more options, not fewer, and any new regulations must bear this in mind," said Dennis Shaul, the chief executive of the Community Financial Services Association of America, an industry trade group.
The attacks from both directions underscore the challenges confronting the bureau, and its manager, Richard Cordray, as it works to satisfy its mandate while pressure grows from Congress and monetary industry groups.
In drafting the rules, the agency, according to interviews with individuals briefed on the issue, had to strike a precarious equilibrium, figuring out how to remove the most predatory forms of the loans, without choking off the credit entirely.
The effort to find that balance can be seen in the choice that lenders have in meeting underwriting requirements under the proposition.
Under one option, lenders would be required to evaluate other financial obligations, a customer's income and borrowing history to make sure that when the loan comes due, there will likely be adequate cash to insure it. The rules would affect specific loans backed by car titles plus some installment loans than 45 days.
Or the lender could forgo that examination and instead have safety limitations on the loan products. Lenders couldn't offer a loan greater than $500, by way of example.
Under this option, lenders would even be prohibited from rolling more than two times during a 12-month period. Prior to building the rules outline, a second or third consecutive loan, the lenders will have to offer an affordable method to get out of the debt.
For certain longer-term loans -- credit which is extended for more than 45 days -- the lenders would need certainly to put a ceiling on rates at 28 percent, or structure the loans to ensure that monthly payments don't go beyond 5 percent of borrowers' pretax income.
Driving the suggestion was an evaluation of 15 million payday loans by the buyer agency that found that few individuals who have solicited short-term loans may refund them. Borrowers took out a median of 10 loans during a 12-month span, the agency said.
Nearly 70 percent of borrowers utilize the loans, tied to their next paycheck, to cover basic expenses, not one time crises -- as some within the payday lending industry have promised.
In a past generation, law enforcement would detain and jail people for doing exactly what the payday lenders do. They were called loan sharks...
Payday loans aren't a valid kind of credit; they're simply a snare for the financially unsophisticated. Here's some basic monetary...
Payday loans were blocked by GA. They claim it is to protect GA citizens. Nevertheless, it hurts quite a few people. Banks is only going to lend you money if you...
Such rocky financial basis helps clarify how one loan can prove to be so difficult to settle. Borrowers who take more or 11 loans out, the bureau found, account for about 75 percent of the fees generated.
Until now, payday financing has mainly been controlled by the states. The Consumer Financial Protection Bureau's foray into the regulation has incited anxieties among some state regulators who worry that payday lenders will seize on the national rules to water down state limitations that were more demanding and consumer advocates. Fifteen states including New York, where the loans are limited at 16 percent, effectively prohibit the loans.
The rules, which is shown to a review panel of small businesses, will likely set off a fresh round of lobbying from your industry, said Senator Jeff Merkley, Democrat of Oregon.
Continue reading the primary storyContinue reading the primary storyContinue reading the main story
The hearing offered a rare glimpse at the forces aligning on either side of the cash advance disagreement. On a single side, there was an array of individuals contrary to the rules, from industry groups to happy customers, to heaps of payday loan shop employees -- many wearing yellow stickers that read, "Equal Access, Credit For All."
On the other, there were insolvency attorneys, housing advocates, consumer groups and individual borrowers, all of them calling for a genuine crackdown on the high-cost products.
Some told of stores forced to close, while others described how such loans had caused enormous pain and charges.
At one point, a woman wearing a neon pink hat who gave only the name Shirley burst into tears, saying that her cousin with cancer could be dead.
Martin Wegbreit, a legal aid lawyer in Virginia, called payday loans "poisonous," noting that "they would be the leading source of insolvency right behind medical and credit card debt."