Some payday lenders welcome consumer protection bureau

Payday loan store

People thought the Consumer Financial Protection Bureau could help get rid of payday lenders, but some in the payday loan industry welcome the attention. Photo: diaper/Flickr/CC-BY-SA

When the Dodd Frank Act passed, it created a Consumer Financial Protection Bureau that will regulate consumer financial products from credit cards to payday loans. Some consumer advocates were hopeful that the CFPB was going to help to regulate payday loan firms out of existence. However, at least one major payday lender welcomes the bureau.

Advance America exec says company has nothing to hide

Consumer advocates were enthralled with the prospect of the creation of the Consumer Financial Protection Bureau because the government body could help restrain credit products that some people oppose, like payday loans. Opponents have called for the product to be regulated out of existence and the CFPB seemed a good vehicle with which to do that. However, at least one payday loan company executive welcomes the CFPB. William Webster, Chairman of Advance America Cash Advance Centers Inc. has said he welcomes federal scrutiny, according to the Wall Street Journal. He says there’s nothing that the government will dig up that the company doesn’t already disclose.

Praise for Elizabeth Warren

Webster has also gone on record praising Elizabeth Warren, according to the Huffington Post, for setting up the bureau to crack down on overdraft fees. Granted, overdraft loans and payday loans are competing products. Webster and many other loan companies have maintained for years that payday lenders disclose fees at the point of the transaction and avoid the customer abuses that the CFPB is supposed to look into. Payday loan firms have advocated for responsible legislation that works for both consumers and lenders for years, including the already enormous online lending market. Online payday lenders can skirt laws more easily than a brick-and-mortar store can, which is why Webster argues that online lenders and overdraft loan programs should face far more scrutiny than they already do.

Cloudy future for bureau

The CFPB does not have a clear future. Congress is not making it easy for the bureau to begin its work, and three recently introduced bills would change the structure of the agency or delay it from beginning operations. Any payday loan firms dreading the bureau opening its doors can rest easy, as the July 21 deadline to hire a director is a couple of months away, and given that Congress can’t decide if it should have one director or five, according to CNN, it may not start regulating anything for some time to come.

Sources

Wall Street Journal

Huffington Post

CNN

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