PayDay Lending: New Course for CFPB or Kinder, Gentler Regulator?

by Brian Riley 0

PayDay Lending is hard money lending for desperate folks.  It is an ugly business with interest rates up to 400% on small loans up to $1000.  Critics call it outlandish, but if you need to pay a medical bill, or have to fix the car, it might be the only place that can help.

  • The watchdog agency said in a statement Tuesday that it intends to “reconsider” a regulation, issued in October, that would have required payday lenders to vet whether borrower can pay back their loans. It also would have restricted some loan practices.

  • If the rule is thrown out or rewritten, it would mark a major shift for an agency that had zealously pursued new limits on banks and creditors before Mick Mulvaney, President Trump’s budget director, became the CFPB’s acting director.

  • Tuesday’s announcement does not amount to a formal repeal of the payday lending rule. But it does cast doubt on whether it will ultimately be implemented.

This will be interesting to watch as it may indicate a shift between Obama protectionism and Trump free market control.  There are polar opinions on Payday Lending.  Some say it is predatory, other’s say it is optional.  Either way, a shift indicate extreme change in the CFPB.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

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