U.S. Senator Joins CFPB Fight Against Payday Loan Industry



By early next year, the Consumer Financial Protection Bureau (CFPB)’s new rules and regulations pertaining to the payday loan industry will likely take into effect. It’s only likely because there is growing opposition in Congress as many representatives want the proposal to be delayed by at least one or two years. But with President Obama finishing his term in a few months, he’ll sign it into law.

With an increasing number of congressional officials combating the CFPB’s federal regulatory framework, many leaders in Washington are taking a stand against the payday loan industry and supporting the CFPB’s mandate. The CFPB announced a number of changes early last month in Kansas City.

One of these is Ohio Democratic Senator Sherrod Brown, who supports anti-poverty organizations, consumer advocacy groups and the CFPB when it comes to financial reforms of “legalized loan sharks.”

Speaking at a press conference on Capitol Hill, Brown stood alongside Americans for Financial Reform American Federation of Teachers, the NAACP, Democracy for America and the Center for American Progress in support of the CFPB’s new provisions for payday loan businesses like Landmark Cash across the United States.

“Americans deserve protection from predatory payday lenders that have trapped many low income families in a vicious cycle of debt,” Brown said in a statement. “But the payday loan industry and its lobbyists will spend millions of dollars to try and roll back these protections.”

Brown added that he encourages consumers to make remarks to the CFPB’s 90-day comment period, which started on June 2.

The senator noted that there should be no loopholes added to the proposed regulations.

In addition to the U.S. senator, AFT president Randi Weingarten acknowledged that low-income consumers need access to other forms of credit, but she urged some common sense to enter into the conversation. She cited the fact that if someone needs to borrow money to pay for an unforeseen expense then it would be very difficult to pay back those funds 14 days later.

Despite the overwhelming endorsements for the CFPB’s 1,300-page rule, some feel that there should be a couple of additions to the initiative. Nick Bourke, director of Pew’s small-dollar loans project, for instance, recommended that the CFPB should insert lower prices, manageable installment payments and quick loan approval in its rules.

At the present time, the CFPB is putting forward a requirement that forces payday lenders to determine that borrowers can really repay the payday loan. The rationale behind the move is to protect consumers from entering a vicious cycle of debt because they were unable to pay back the loan.

CFPB director Richard Cordray has said that the federal consumer watchdog agency will likely announce more rules in the coming months. These additions will probably stem from the comment period.

Critics of the payday loan industry say these alternative financial products often send households into perpetual debt because of exorbitant interest rates and fees. Proponents of this niche argue that low- and middle-income need access to funds that they normally wouldn’t get from traditional modes of credit.

A new study found that personal finance habits of the U.S. population are horrible. It also discovered that black and Hispanic consumers are far more likely to use a payday loan than white and Asian clients.

Faith in Stocks at All Time Low



Today’s consumer is leery about investing in stocks. At least, that is what the current research shows. According to a recent news report on CNBC, most people in the US are following a 0% risk, 0% return type of mentality. In fact, a surprising number of Americans (about 54 million) said they preferred to save cash and avoid stock trading for any money they did not need for the next decade. That report recently was released by Bankrate.com.

Research shows that, overall, 25% of Americans said their most favored investment choice was real estate for long-term savings goals, followed closely by cash. Stocks and precious metals came in at a distant third while bonds were the least favored at 5%.

According to one chief financial analyst, “. . . [C]ash investments are entirely appropriate for short-term needs, such as an emergency fund. [However], they are completely inappropriate for long-term investment[s] . . . .” The Bankrate.com analyst added, “Returns on cash investments often trail the rate of inflation, with savers losing buying power as a result.”

According to the news summary, younger millennials, or individuals from 18 to 25 years old, selected cash as their preferred investment for any money they would not need for at least a decade. According to a separate finding from the Office of National Statistics in the UK, millennials are less likely to own real estate or a home because of the cost. Researchers found that older generations were more likely to choose real estate as their top pick for a long-term type investment.

Financial advisers add that a preference for real estate is helpful for long-term investment goals. However, stock market apathy is not good for anyone trying to achieve long-term financial objectives. The report indicates that, even with recent volatility in stock market trading, the S&P 500 has also gained 6% while cash investments have yielded, on average, under 1%.