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Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

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Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#261

Post by basementcat »

numbsafari wrote: post #32
andrewla wrote: post #22

Earlier quoted context omitted.

I saw a tweet [1] that followed a thread on the concept that paydays are not really a requirement any more -- it is totally possible with our existing banking infrastructure to pay salaries on a more continuous basis, but we've built up a huge amount of institutional momentum around the idea that running payroll is a complex and laborious process that we want to infrequently. By parallel in software engineering, bran…

Because the folks that use payday loans are most likely [a] not on a salary and [b] have very inconsistent wages due to inconsistent scheduling and [c] likely don't even have a bank account.

I think you need a salary (or regular deposit of funds, such as a pension) to qualify for a payday loan.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#262

Post by mrhappyunhappy »

threeseed wrote: post #92
rayiner wrote: post #85

Earlier quoted context omitted.

It’s not like there are lenders serving these demographics that don’t do whatever you think payday lenders are doing wrong.

The majority of lenders would not give loans to people who could not afford them.

In theory, sure, not in practice.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#263

Post by hoaw2 »

jdietrich wrote: post #257
hoaw wrote: post #220

Earlier quoted context omitted.

> If you have no access to better credit, payday loans are often the least-worst option. Just isn't a very relevant argument. The reason you regulate things are because they provide, often strong, value to one or multiple parties but overall negative effects. Either eventually to the parties themselves or society at large. It is essentially a way to control externalities. So you would have to argue that these benefit…

>If payday loans are legitimate there is unlikely to be a need for such a solution. Payday loans are often the least-worst option, but that doesn't prevent us from creating a better option. The best available option is not the same as the best possible option . I'm not opposed to regulation if it is sensible and proportionate, but there is a huge knee-jerk reaction against payday lending that strikes me as paternalis…

> Payday loans are often the least-worst option, but that doesn't prevent us from creating a better option.

It does. It isn't a realistic assumption that you as a society aren't going to regulate payday loans and at the same time be concerned about the well-being of those in need of them. Nations who care about peoples well being, also restrict access to things that hurt them. Because anything else would be working against that interest.

You do realize that there are any number of ways to have a bad time in the US. Payday loans aren't unique in any regard. It isn't therefor likely that this would be fixed sooner than anything else. The people who need payday loans already suffer from injustice. That payday loans themselves would also be unjust wouldn't be surprising, at all.

Why do you think people who can get fired, evicted, don't have health care or even die giving birth would suddenly be cared for when it comes to affordable credit, especially after legalizing unaffordable credit? Is the government is going to come in an fix this one issue in competition of the companies operating in the market?

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#265

Post by tptacek »

dragonwriter wrote: post #15
SpikeDad wrote: post #2

Big benefit for payday lending companies who charge obscene fees mostly in poor and minority areas of the country. Which consumers is the CPB protecting?

> Which consumers is the CPB protecting? (1) It's the CFPB (Consumer Financial Protection Bureau), the headline provided a description not a name (titlecase makes this ambiguous, though the body provides the correct name.) (2) It's not protecting anyone; the administration is hostile the CFPB mission. It is being neutralized from within.

I read through about half the CFPB rulemaking analysis that's being reported here and while I agree that the Trump administration is hostile to the CFPB, I don't think this is a fair summary of what's happening with the payday loan rules.

As I understand it, the Obama-era CFPB rules for short-term loans basically decimate payday lending. For instance: most payday loans (85+%) are repaid, but most also require multiple sequential loans to do that. The Obama-CFPB rules set a low threshold on consecutive loans, eliminating the mechanism through which most borrowers financed them. The Trump-CFPB calculated that the Obama-CFPB rules would break something like 60% of all loans.

Meanwhile, there are fairly extensive state-level regulations surrounding payday loans: many states bar them altogether, while others set rate caps so low that they can't viably be offered. There's ample evidence that states are actively engaged in making decisions about how they want lending to work.

So the basic argument boils down to:

If you want to end all payday lending nationwide, even for states like Illinois that have decided they should be available, then Congress should pass a law that does that. What shouldn't happen is an obscure CFPB rulemaking process that monkeywrenches the industry without a vote.

I'm not a fan of payday loans and would support a congressperson who voted to ban them federally, but I understand the logic CFPB is using.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#266

Post by Arbalest »

neveroffensive wrote: post #244
Arbalest wrote: post #109

Earlier quoted context omitted.

Stating that still assumes rational actors. It is based off the premise of "freedom" above all else. The problem with freedom is that the way it is defined really depends on what you want to achieve. Infinite choice is the simplest form of freedom, but in this case, you are enabling market forces to remove the ability for people with poor judgement to lose any capacity for future financial freedom, a form of freedom…

There is no such thing as "financial freedom". Financial freedom is a concept that arises from personal beliefs and practices. There is only one universal freedom, the freedom of chioce. I think this is more important than any 21st century pay day lending problem. We need to preserve free choice not just for our generation/set of problems, but for all time. Edit: Don't confuse living a long, healthy, happy life with…

No, absolutely not. Choice in its purest form is and always was an illusion. People are driven by their circumstances and their environment, they do not have a consciousness that is capable of perceiving and acting apart from the world they live in. Jean-Paul Satre make a very cute case for Radical Freedom, but it is little more than a thought experiment.

Ultimately people would prefer to know that things are going to get better, but perhaps they don't have the tools and know-how to do it. Much like telling a depressed person they have a choice to not be depressed, someone desperately poor doesn't have the simple choice to not be poor.

Financial freedom can be thought of at many levels, some all the way up to super rich and able to subvert laws at their whim. In this context, I am meaning freedom from the emotional distress caused from being incapable of being secure in the knowledge that there is a high probability they will have a roof over their head and food to eat for at least a couple of months. In turn, this allows for forward planning, and forward planning is the manifestation of being capable of exercising choice with regards to that persons/family's future development.

So, considering that people are constrained by their environment, our "generation/set of problems" is absolutely relevant, suggesting there is some universal otherwise which can be preserved with impunity is akin to suggesting there exists/can exist a form of universal justice.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#267

Post by rayiner »

threeseed wrote: post #102
rayiner wrote: post #59

The rules were misconceived to begin with, by people who mistook the symptoms for the problem. There is a ton of competition in payday lending—there is zero reason to believe that payday lending rates are higher than the efficient amount. There is no hint of market failure, systemic risk, or any of the other criteria that typically justify regulating financial institutions. That means this rule wasn’t really a consum…

Pretty extraordinary to be defending the most insidious form of business around. Payday lenders do not remotely provide the same duty of care that more established lenders like banks do. And as such they need to be regulated to ensure that they aren't lending to people who are not in a financial position to repay the loans. Ignoring the impacts to consumers it is a systemic risk to the economy to allow this behaviour…

In pretty sure Facebook, Google, and Youtube peddling advertising to kids ranks higher on the “insidious” scale than payday lending. Talk about taking advantage of people without capacity to make rational decisions.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#268

Post by numbsafari »

basementcat wrote: post #261
numbsafari wrote: post #32

Earlier quoted context omitted.

Because the folks that use payday loans are most likely [a] not on a salary and [b] have very inconsistent wages due to inconsistent scheduling and [c] likely don't even have a bank account.

I think you need a salary (or regular deposit of funds, such as a pension) to qualify for a payday loan.

From what I have seen, they typically only ask for your most recent pay stub.

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#269

Post by jopsen »

viraptor wrote: post #199
jopsen wrote: post #173

Why don't other countries have problems with payday lending? My guesses: - People aren't as desperate - Lending can only happen though banks - Loans can't be given to you can't prove reasonable chance of repayment - You can't garnish people paycheck below a certain amount, so payday lender would never get any money. Any other explanations?

> Why don't other countries have problems with payday lending? Why do you think they don't?

I live in Denmark... I haven't seen any payday lenders.

Sure you can get a loans from companies that seem sketchy, but the amounts are more in the range of 2-5k USD, not a few hundred dollars..

Re: Consumer Protection Bureau Aims to Roll Back Rules for Payday Lending

#270

Post by leetcrew »

darkpuma wrote: post #72
seibelj wrote: post #56

There is still no law against spending your entire paycheck on lotto tickets, nor taking out a loan and spending it entirely on lotto tickets. The government seems to pick and choose what mistakes they allow their citizens to make.

With modern advances in law enforcement techniques for dealing with organized crime, the legality of state run lotteries should be revisited. The continued operation of numbers games in immigrant communities probably has more to do with inadequate policing in those communities than it has to do with lack of awareness for state lotteries.

if you can only funnel people into the state sanctioned lottery by increasing enforcement in immigrant communities, doesn't that imply the numbers games in those communities are offering better odds than the state implementation? if so, what exactly is the state monopoly protecting us from?
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