Regulators Will Stop At Nothing To Prevent

The rules would cover a broad section of the $46 billion payday loan marketplace that serves the
working poor, many of whom have no savings and little access to conventional bank loans. The
regulations would not prohibit high-interest, short-term loans, which are often used to cover basic
expenses, but would require lenders to ensure that borrowers have the resources to reimburse them.
Richard Cordray, the director of the Consumer Financial Protection Bureau, in
Washington.Consumer Protection Agency Seeks Limitations on Payday LendersFEB. 8, 2015
The initiative -- the outlines of whose were the focus of a front-page article in The New York Times
last month -- is an important step while defending itself against fierce attacks from Republicans in
Washington for a consumer agency still striving to get its ground among other financial regulators.
Driving the proposal was an analysis of 15 million payday loans by the consumer bureau that found
that few people who have solicited short-term loans can refund them. Borrowers took out a median
of 10 loans during a 12-month period, the agency said.
Almost 70 percent of borrowers utilize the loans, tied to their next paycheck, to pay for basic
expenses, not one time emergencies -- as some within the payday lending industry have asserted.
In a generation that is past, law enforcement would detain and jail people for doing exactly what the
payday lenders do.
Payday loans are not a valid form of credit; they are merely a trap for the financially unsophisticated.
Here's some fundamental monetary...
Payday loans were blocked by GA. They maintain it's to shield GA citizens. Nevertheless, quite a few
of us hurts. Banks will only give you money if you...
"If you lend out money, you need to first make sure that the borrower are able to pay it back," Mr.
Obama said in remarks to college students here. "We don't mind seeing folks make a profit. But
when you're making that gain by catching hard working Americans into a vicious cycle of debt, then
you got to find a brand new business model, you must find a new way of doing business."
The president's appearance at Lawson State Community College is portion of a campaign-style effort
to depict Republicans as out of touch with all the wants of middle class Americans. In his comments,
he accused of backing a federal budget that would benefit the wealthy in the expense of everyone
else, Republicans. And he denounced his adversaries in Congress for seeking to terminate the
consumer service's automatic financing.
"This is only yet another way America's new consumer watchdog is making sure more of your
paycheck stays in your pocket," the president said. "It's one more reason it makes no sense that the
Republican budget would make it more challenging 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 consumer bureau were vital on Thursday, saying that the
payday financing rules that are planned do not go far enough.

A chorus of consumer groups said that loopholes in the proposition could leave millions of Americans
exposed to the pricey payday loans. Lenders have previously shown an ability to work similar state
regulations around, they said.
Payday lenders say they welcome practical regulation, but that any rules should save credit, not
choke it off.
The attacks from both directions underscore the challenges facing the agency, and its own manager,
Richard Cordray, as it works to satisfy its mandate while pressure grows from Congress and sector
groups that are financial.
The bureau, according to interviews with individuals briefed on the issue, had to strike a precarious
balance, figuring out the way to eliminate the most predatory types of the loans, without choking off
the credit thoroughly, in drafting the rules.
The attempt to find that balance could be found in the choice that lenders have underneath the
proposition in meeting underwriting requirements.
Under one option, lenders could be asked to evaluate borrowing history, other financial obligations
and a customer's income to ensure that when the loan comes due, there will be adequate money to
insure it. Particular loans backed by car titles plus some installment loans than 45 days would be
affected by the rules.
Or the lending company have security limitations on the loan products and instead could forgo that
inspection. Lenders couldn't offer a loan greater than $500, for example.
Under this option, lenders would likewise be prohibited from rolling over loans more than two times
during a 12-month interval. The lenders would have to provide an affordable solution to get out of
the debt prior to making a second or third consecutive loan, the rules outline.
Such shaky fiscal footing helps explain one loan can prove to be so hard to refund. Borrowers who
take 11 or more loans out, the agency found, account for about 75 percent of the fees generated.
Until now, payday lending has mainly been controlled by the states. Anxieties have been incited by
the Consumer Financial Protection Bureau's foray into the regulation 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, are likely to set off a new round of
lobbying from the business, said Democrat of Oregon, Senator Jeff Merkley.
"They should instead reinforce this suggestion by positively ensuring it is free of loopholes that
would permit these predatory loans to keep trapping American families in a vortex of debt," he said.
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Mr. Cordray introduced the rules at a hearing in Richmond, Va., on Thursday, flanked by the state's
attorney general and consumer groups from across the country. At the start of the hearing,
Virginia's attorney general, Mark Herring, said the choice of place was clever, describing the state

as "the predatory lending capital of the East Coast," a description he said was black.
The hearing offered a rare glance at the forces aligning on either side of the payday advance debate.
On a single side, there was an array of individuals contrary to the rules, from industry groups to
happy customers, to tons of payday loan store workers -- many wearing yellow decals that read,
"Equal Access, Credit For All."
On the other, there were consumer groups, housing counselors, insolvency lawyers and individual
borrowers, all of them calling to get a genuine crackdown on the high-cost products.
At one point, a woman wearing a neon pink hat who gave just the name Shirley burst into tears,
saying that without the loans, her cousin with cancer will not be alive.
Martin Wegbreit, a legal aid lawyer in Virginia, called payday loans "hazardous," noting that "they're
the leading cause of bankruptcy right behind medical and credit card debt."