It could be another month or so before new payday lending industry regulations – being proposed by the Consumer Financial Protection Bureau – are actually brought to the table. That is not stopping those critical of the new regulations from weighing in on the subject. Many from the short term lending industry, along with members of Congress are already taking aim at the CFPB’s proposed legislation.
There are also battles going on between Democrats related to these proposed regulations. In fact, two of the most powerful elected Democrats – Representative Debbie Wasserman Shultz, who chairs the Democratic National Committee is currently at odds with Senator Elizabeth Warren over proposed changes to the nation’s payday lending laws. Wasserman Shultz is pushing to delay the new rules from going into effect, while Warren is trying to get the government to forge forward with the changes.
The regulations that are being proposed were created to fight the fact that some believe payday loans charge fees that are too expensive. Consumer advocate groups say that borrowers wind up trapped in debt, having to take out additional loans to pay off existing loans. These opponents of payday loans say that borrowers wind up paying more money in fees than they should have to, and that financial doom may soon follow suit for some of these American consumers.
Those in support of the payday lending industry beg to differ. They believe that these types of loans provide valuable alternatives for people who need to get quick access to emergency incomes. And some of the people who take out payday loans – namely those with lower incomes – often do not have access to financial services from traditional banks or credit unions.
The Consumer Financial Protection Bureau (CFPB) was created shortly after the economic disasters that took place back in 2008. The bureau took time last year to lay out a basic game plan and overview of the new rules that it wants to put in place for payday lending companies and other short term lenders. The CFPB is expected to hand down new rules that would force lenders to perform more in depth screening that would make sure people have the ability to repay their loans. The CFPB is also considering putting a prohibition in place that would stop lenders from giving out a new loan for 60 days if a borrower is unable to repay their original loan.
For some time now, experts have been expecting these new rules to be revealed some time during spring of 2016. The CFBP has announced that it will take time to listen to public comments before final decisions are rendered about the new rules and regulations. Critics of the bureau’s plans are already saying that the new regulations are representative of bad laws being created/enforced by a government agency that is already out of control; namely the CFPB.
According to Dennis Shaul the CEO of a group called Community Financial Services Association, “They have gone way further than they need to, to cure what we all agree is a problem — that people can stay (on a cycle of debt) too long and it could become injurious to them.” Shaul’s group is a coalition of leaders in the payday lending industry. They believe, along with elected officials in Washington, that the regulators should focus more effort on lenders who follow shady/illegal processes instead of trying to over regulate the entire industry across the country. The CFPB has without a doubt been on a tear as of late. However, it now appears that opponents of new payday lending legislation have powerful allies in D.C. who are willing to do what it takes to prevent, or at least delay these new regulations from becoming official.
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