Post by ck4829 on Dec 6, 2016 12:00:49 GMT
Payday lenders have been up in arms in recent years over federal banking regulators attempting to put “death sentence” limits on the industry.
But these nonbank lenders could soon find themselves with more passive regulatory oversight under a Republican-controlled Congress and White House that could radically upend recent efforts to crack down on predatory lending practices targeting struggling, low-income Americans.
“We have a president-elect who recently settled for running a fraudulent for-profit university who is also going to be appointing people to oversee consumer protection,” Joe Valenti, consumer finance director for the left-leaning Center for American Progress, told Salon on Friday.
But for now, payday lenders are on the offensive against banking regulators they say are orchestrating a “back-room campaign” to nudge banks into severing business ties with them, according to an emergency motion filed last week by the Community Financial Services Association of America and the South Carolina-based Advance America Cash Advance Centers, one of the nation’s largest payday lenders.
...
Payday loans have been controversial for years. Typically issued in amounts of $500 or less, these loans are directed at low-income borrowers who typically don’t have access to regular lower-interest loans because their credit scores are too low or they haven’t built a credit history. These loans typically come due on the borrower’s next paycheck, but studies have shown that the average customers winds up taking out consecutive loans for months at a time at alarmingly high annualized interest rates of as much as 400 percent. The lenders argue these loans are the only way for poor working Americans to access credit for short-term needs, like paying bills.
Whatever the case may be, the volume of these types of loans has been declining in recent years as the country digs out of the 2007-2009 recession. Last year, payday lenders issued nearly $40 billion in loans, a 14 percent drop from 2013, according to financial advisory firm Jeffries. The federal Consumer Financial Protection Bureau estimates these lenders harvest $7 billion a year in fees and interest charges. And even though these loans are marketed as short-term ways to make ends meet, the average borrower winds up rolling over his or her borrowing from paycheck to paycheck for five months, according to the CFPB. They wind up paying an average of $520 to take out a series of consecutive $375 two-week loans over that period of time.
www.salon.com/2016/12/05/payday-lenders-may-soon-find-friends-in-washington/
But these nonbank lenders could soon find themselves with more passive regulatory oversight under a Republican-controlled Congress and White House that could radically upend recent efforts to crack down on predatory lending practices targeting struggling, low-income Americans.
“We have a president-elect who recently settled for running a fraudulent for-profit university who is also going to be appointing people to oversee consumer protection,” Joe Valenti, consumer finance director for the left-leaning Center for American Progress, told Salon on Friday.
But for now, payday lenders are on the offensive against banking regulators they say are orchestrating a “back-room campaign” to nudge banks into severing business ties with them, according to an emergency motion filed last week by the Community Financial Services Association of America and the South Carolina-based Advance America Cash Advance Centers, one of the nation’s largest payday lenders.
...
Payday loans have been controversial for years. Typically issued in amounts of $500 or less, these loans are directed at low-income borrowers who typically don’t have access to regular lower-interest loans because their credit scores are too low or they haven’t built a credit history. These loans typically come due on the borrower’s next paycheck, but studies have shown that the average customers winds up taking out consecutive loans for months at a time at alarmingly high annualized interest rates of as much as 400 percent. The lenders argue these loans are the only way for poor working Americans to access credit for short-term needs, like paying bills.
Whatever the case may be, the volume of these types of loans has been declining in recent years as the country digs out of the 2007-2009 recession. Last year, payday lenders issued nearly $40 billion in loans, a 14 percent drop from 2013, according to financial advisory firm Jeffries. The federal Consumer Financial Protection Bureau estimates these lenders harvest $7 billion a year in fees and interest charges. And even though these loans are marketed as short-term ways to make ends meet, the average borrower winds up rolling over his or her borrowing from paycheck to paycheck for five months, according to the CFPB. They wind up paying an average of $520 to take out a series of consecutive $375 two-week loans over that period of time.
www.salon.com/2016/12/05/payday-lenders-may-soon-find-friends-in-washington/