A federal government agency is set soon to decide that it will protect consumers of short-term loans by regulating out of business many of the credit products that low-income and middle class Americans commonly use. Many American use payday loans and title loans offered by small-dollar lenders to meet short-term financial needs, and new regulations proposed by the Consumer Financial Protection Bureau (CFPB) threaten to put these providers out of business.
The CFPB is an out-of-control federal agency, created under the Dodd-Frank Act, that has authority to regulate a wide variety of financial services. The new regulations it proposes will apply to payday loans, vehicle title loans, deposit advance products, and other credit products typically offered by small-dollar lenders.
On March 26, 2015, the Richard Cordray, the Director of the CFPB announced “today the Consumer Financial Protection Bureau (CFPB) announced it is considering proposing rules that would end payday debt traps by requiring lenders to take steps to make sure consumers can repay their loans. The proposals under consideration would also restrict lenders from attempting to collect payment from consumers’ bank accounts in ways that tend to rack up excessive fees.”