A Partial Payday Reprieve

The CFPB moves to help people get cash in a pinch.

See WSJ editorial. Excerpts:

"Yet some 40% of Americans say they can’t cover a $400 unexpected expense, according to a Federal Reserve survey. Many can’t get bank credit, and a payday extinction would leave them bouncing a check or resorting to loan sharks.

The bureau didn’t consider the alternatives because the outcome was predetermined. One example: The CFPB rule relied heavily on a single study of one payday lender in five states by Columbia professor Ronald Mann. Mr. Mann disputed the bureau’s characterization of his findings and said his results showed that those who take out payday loans tend to be realistic about when they’ll be able to repay."

"The biggest misconception is that payday lenders are a wild-west business that will extort people if the CFPB doesn’t intervene. Payday lending is already regulated by states. More than a dozen have banned payday lending and dozens more allow it with conditions.

Take Indiana, which sets a maximum loan amount of $550. The state sets a maximum interest fee, the conditions for a repayment plan, and a “cooling off” period for those who have taken out several loans. The CFPB in its new proposal notes that more state regulation may be why consumer complaints to the bureau about payday loans are on the decline—a mere 2,900 in 2017 versus 37,300 for mortgages and 26,700 for credit cards."

"Don’t buy the hype that the Trump crowd is “weakening” rules and leaving Americans susceptible to dangerous practices."