Since the Consumer Financial Protection Bureau (CFPB) announced that it was working to establish a federal regulatory framework for the payday loan industry, consumers, politicians and businesses have been waiting anxiously to find out what exactly will happen. Well, now everyone will find out.
On June 2 at 10 a.m., the CFPB will propose a new rule to limit payday loan lending. This will help produce the very first federal regulation for the payday loan industry that will be instituted by all states. The new rule would cover not just payday loans that come with 300 percent interest rates, it’ll also cover installment loans and auto title loans.
CFPB officials say that auto-title loans have become more of a pressing issue in recent years. The federal organization notes that 20 percent of auto title loan borrowers have their vehicles seized for failing to repay debt. Moreover, a majority of auto title loan revenues stem from perpetually indebted consumers.
It’s quite apparent that the CFPB is certainly putting forward sweeping regulations.
The consumer watchdog agency confirmed Wednesday that it will host an event in Kansas City, Missouri. The event will see representatives from consumer organizations and the payday loan industry as well as public officials discuss short-term lending. This is where the new proposal would be unveiled.
According to the CFPB, the event will be open to the general public at the convention center in the downtown core, but you will need to reserve a seat online. This may be the first hearing of many so if you miss this one you could catch another one.
With 18 states prohibiting payday loans, one consumer advocate thinks this is a great opportunity for decision in Kansas, rest of the state and the entire country.
“We can bring reform not just to Missouri and not just to Kansas, but across the country,” said John Miller, an attorney and representative from the Communities Creating Opportunity to fight predatory lending practices, in an interview with a local news affiliate. “And if we can be a major part of that, we would love that opportunity.”
You can bet one person will be front and center of the hearings in Kansas City next month.
Elliot Clark has first-hand experience with website that say they offer the best payday loans. Clark, who says there are more payday loan stores in Missouri than McDonld’s, Starbucks and Wal-Mart stores, wants more regulations on the industry. Failing to receive a loan from his financial institution, he was forced to use a payday loan.
From there, his troubles would begin: he took out five payday loans for a grand total of $2,500. However, for five years, he ended up paying $61,000 in interest alone. He said he had no other choice for his family.
Consumer advocacy groups have urged the CFPB for years to impose tougher rules and regulations for payday loan businesses. Payday lenders argue that any new rules and requirements would prevent them from extending credit to impecunious consumers who don’t have access to bank loans or credit cards.