payday loan

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As suggested by prior blog posts, I am no fan of the direction the CFPB, OCC and FDIC seem to be going with respect to payday and deposit advance loans. These agencies have all signaled a willingness to prohibit these loans without regard to Dodd-Frank’s definitions of the terms “unfair” and “abusive” and without applying the cost-benefit analysis required by the statutory language.… Continue Reading

We have been critical of the failure of the CFPB’s white paper on payday and deposit advance loans to address the very real benefits of payday loans or the question whether (and when) such benefits outweigh the costs.  Similar criticism was also voiced by the Community Financial Services Association of America (CFSA), a national trade organization for payday lenders, in a letter to the CFPB. … Continue Reading

Normally we do not post about private conversations we have with CFPB staff.  However, I have received CFPB staff approval to report on a few conversations I had last week concerning the CFPB’s payday lending studies. 

I infer from my conversations that the CFPB believes, preliminarily, that at least some meaningful conclusions can be drawn from online payday loan data provided by Clarity Services, including information from credit bureaus bearing on the creditworthiness over time of payday borrowers. … Continue Reading

The CFPB has announced that it will hold a field hearing on March 28 in Des Moines, Iowa on the Bureau’s consumer complaint system.  The CFPB’s practice has been to use field hearings to announce new initiatives.  Director Cordray is slated to give remarks, and we would not be surprised to see Director Cordray announce at the March 28 event that the complaint system has begun taking complaints about debt collection and/or payday and short-term loans.… Continue Reading

As previously reported, the Pew Charitable Trusts (“Pew”) released a payday lending report last month (the “Report”), the same day that CFPB Director Cordray made some harsh remarks about payday loan “debt traps” in a speech to the Consumer Advisory Board.  We have heard reports that news of the impending Pew Report may have spurred Director Cordray to get ahead of the issue in his speech earlier in the day. … Continue Reading

February was not a good month for payday lenders.  As previously reported, on February 20, CFPB Director Cordray expressed pointed concerns about payday and short-term loan “debt traps” in a speech to the Consumer Advisory Board. 

Perhaps not coincidentally—rumors abound that the events were linked—the Pew Charitable Trust released a new payday lending report later the same day. … Continue Reading

In the first action of its kind since the agency’s creation, the CFPB, Attorneys General from New Mexico, North Carolina, North Dakota, and Wisconsin, and the Hawaii Office of Consumer Protection joined forces to enjoin a debt-relief service provider from conducting business in violation of federal laws and the laws of the five participating states. … Continue Reading

We received an email from one of our readers, reporting on a recent meeting between CFPB Director Cordray and representatives of the South Dakota banking and credit union industries. We very much appreciate the report and encourage other readers to share their observations with us. Topics addressed in the meeting included the impact of consumer regulation on small banks and the ability to provide financial products and services; competition between community banks and credit unions and large banks; regulatory uncertainty regarding new products; the need for payday loans or payday loan alternatives; and preparations for going after payday lenders (presumably only lenders deemed to be in violation of UDAAP or other laws).… Continue Reading

Chris Willis’ recent post referred to the fact that Director Cordray during the Q&A session after his speech to NAAG disparaged Internet payday loans being made by certain Indian tribes. Here is an unofficial audio transcription of the exchange between the Colorado Attorney General, Director Cordray and Julie Brill, a FTC Commissioner:

John Suthers: In Colorado we have been fighting a seven-year court battle with frustrating results over online payday lending, where, companies, to avoid state regulation are affiliating, and I use that word loosely, with Indian tribes .

… Continue Reading

Coincidentally (or not), on the same day the CFPB launched its overdraft fee initiative, previously discussed, 250 national, state and community organizations and individual activists wrote the heads of the CFPB and the federal banking agencies to attack deposit advance products. Both the CFPB in its payday lending exam manual and the authors of this letter treat deposit advance loans as a kind of payday loan.… Continue Reading