Mississippi Congress stalls on payday loan legislation
The Mississippi state legislature has stalled a bill that would further regulate payday loan lending in the state. States have increasingly passed legislation regarding payday lenders, usually to reduce interest rates. The new regulatory bill is stalling as legislators cannot agree on terms.
Payday loan regulation bill stalls in Mississippi legislature
The state legislature of Mississippi, in session in Jackson, has stalled in passing a new law that would put further regulations on payday loan lending, according to Bloomberg. The new bill would extend repayment periods and cap interest rates on payday loans in the state. However, the new payday loan law is not going anywhere until both houses can agree. The Mississippi House of Representatives passed a version that would allow borrowers 21 days to repay cash advance loans less than $200 and 28 days to repay loans of $201 to $500. The Mississippi Senate version gives borrowers 21 days to repay loans of $300 or less, and 28 days to repay loans of $301 to $500. The current laws in the state regarding payday lenders expire in 2012.
Other states are going through similar processes. It will be interesting to see how this plays out in Mississippi and with payday loans in PA.
Consumer Financial Protection Bureau may target payday lenders
It has been anticipated for some time that the Consumer Financial Protection Bureau may end up going after payday lenders, but that may not be the case. The Bureau was created as part of the Dodd-Frank Act and is headed by Elizabeth Warren, who was appointed to the post by President Obama. The agency has yet to do anything, as it isn’t an active agency yet, but it may not do much with the payday industry, according to the Motley Fool. The CFPB can’t cap interest rates, but it can call for greater disclosure from lenders.
Disclosure works in payday lenders’ favor
Greater amounts of disclosure would likely act more in the interest of payday loan and cash advance firms than banks. Given the number of fees that credit card and other accounts have tied to them, and the scant fees assessed by payday lenders, more people may end up taking out a payday loan. Most payday loan lenders already disclose all fees upfront due to the Truth in Lending Act.