The Consumer Financial Protection Bureau has just appointed a new director and hit the ground running. The agency conducted a “field hearing” about payday lenders; the payday lending industry is the first the agency will try to bring in line.
Hearing conducted in Birmingham
Richard Cordray was recently, and controversially, installed via recess appointment by President Obama. Cordray, former Attorney General of Ohio, has wasted little time since being installed in office as head of the Consumer Financial Protection Bureau.
One of the first activities Cordray has put on the CFPB agenda was a “field hearing,” conducted on Thursday, Jan. 19., in Birmingham, Ala., about the nature and status of payday lending in the United States, according to Bloomberg. Cordray and CFPB officials heard testimony from consumers during the hearing, according to MSNBC, about their experiences with payday loans and payday lenders.
The CFPB website has a section where comments can be left by the public.
No actions planned
Cordray has also said, according to the Huffington Post, that he and the CFPB will look at short term loans similar to payday loans or cash advances offered by banks as well as payday loans from non-bank lenders. Short term loans from banks, according to MSNBC, are often referred to as a deposit advance. Because they aren’t traditional bank loans, they fall under the CFPB’s purview. The agency, according to CBS, is mandated to look at non-bank credit products.
So far, Cordray has not said any action is forthcoming against any one lender or store. He has, however, said that the intent of holding the hearing and seeking public comment is to start finding instances of abuse of customers and breaches of the law, according to MSNBC.
The agency is mostly concerned, according to Reuters, with abusive practices and compliance with existing laws governing non-bank credit extended to consumers.
Lenders worried about counterproductive rules
Traditional store-front payday lenders have become increasingly concerned that rafts of new regulations will make it harder for them to operate and drive consumers to use online payday lenders, which aren’t as easy to regulate as store-front operations.
The demand for payday loans is incontrovertible; the industry is estimated to have lent $32 billion last year, according to Bloomberg, collecting $7 billion in interest and fees. Online lenders, according to Reuters, lent $10.8 billion in 2010.
Huffington Post: http://www.huffingtonpost.com/2012/01/19/richard-cordray-cfpb-bank-payday-loans_n_1216265.html