Currently regulation for the payday loan industry is up to each individual state or U.S. territory. The only federal regulation that exists concerns lending and usury caps to military personnel and their families. Under the new Obama-sponsored creation of the Consumer Federal Protection Agency or the CFPA, Wall Street along with alternative loan product lenders, such as payday lenders, will be subjected to the new but independent financial agency.
The hotly debated CFPA is being opposed by almost every financial institution in the country. Bringing long-term enemies such as banks vs. credit unions, traditional vs. alternative financial markets together in a fight to keep their business unregulated by the “government”. In modern America, everything seems to be regulated by the government yet financial products and decisions have been able to roam-free since the formation of the Americas.
The CFPA was an idea that became widely debated after the bank bailout crisis of 2009, following the crash and burning of the home mortgage industry. Taxpayers wanted answers to why their money wax going to bailout billionaires and their companies. And instead of letting it happen again the idea of the CFPA was brought about by Harvard Professor Elizabeth Warren. Her goal was to set-up regulatory practices before America’s financial system ever was faced with this “type” of issue again.
The biggest problem that the personal loan industry has with the CFPA, is the fact they are getting lumped into new regulation, based on a problem that they didn’t cause. Payday loans were NOT the downfall of the American Economic banking system, it was the traditional loan industry that caused the crash of our market. Payday loans deal with “main street” customers NOT “wall street” and feel that regulation on their industry is uncalled for and unjust.
What do you think about the new CFPA