Updated: 02.13.2012:
Payday loans provide consumers quick cash, but they also are notorious for terms that can equal an annual percentage rate of more than 400 percent.
Often, these small-amount loans must be repaid before the costumer’s next paycheck arrives.
The U.S. Consumer Financial Protection Bureau is seeking public input on payday loans. The agency what’s to hear about any issue you may have encountered with payday lenders.
“I want to be clear about one thing: We recognize the need for emergency credit,” said Richard Cordray, CFPB director. “At the same time, it is important that these products actually help consumers, rather than harm them.”
Cordray said the CFPB has started to gather data to get a “complete picture of the payday market and its impact on consumers.”
The agency is already seeking feedback on its websites from consumers on mortgages, credit cards and student loans. With President Obama’s appointment of Cordray this month, the CFPB can expand its authority into reviewing rules pertaining to nonbank lenders, including those that issue payday loans.
The CFPB was mandated by the 2010 Dodd-Frank financial reform legislation. It will have ultimate authority over rules governing the most common financial products to prevent abusive or deceptive lending practices.
On Thursday, Cordray spoke at the first “field hearing” in Birmingham, Alabama to discuss and collect information on payday lending.
“The goal of our field hearing is to listen, learn, and gather information to help us better understand the payday lending market so that we can choose the appropriate tools to balance the needs of consumers with the risks they face,” reads a statement on the CFPB website.
Also read: 365% APR: Bank Payday Loans Can Match Storefront Rates
See Cordray’s speech:
Pay Day loan lenders do charge absorbent fees but in all fairness they lend to borrowers that can’t obtain a personal loan within any other recognized financial market. I hope regulators target this lending market on a substantive basis that they do more harm than good rather than they have weakest lobby.