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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