The Trump administration says hooray to payday loan debt traps
One of the Obama administration’s signature consumer-protection actions was to write a long-awaited, badly needed set of rules for payday loans that the Consumer Financial Protection Bureau issued in November 2017. So it was hardly surprising Wednesday when the Trump administration, which has devoted so much effort to erasing its predecessor’s accomplishments, came to the rescue of the payday lenders that monetize the desperation of financially strapped Americans.
It’s a reprehensible move. And in laying out its reasons for easing up on payday lenders, the administration signaled its unwillingness to regulate predatory lending in general.
Payday lenders offer relatively small short-term loans to anyone with a paycheck and a bank account, regardless of his or her financial health. It’s precious close to no-questions-asked lending. The catch is the loans have to be repaid in full within two to four weeks, and the fees charged — most commonly $15 per $100 borrowed — are the financial equivalent of a triple-digit annual interest rate. About 15 states have usury laws that block payday lending; the rest cap such loans at $300 (as in California) to $1,000.
These loans are so costly for consumers, no one with access to a Visa card or a home equity line of credit would ever dream of taking one out. That’s why the loans are considered a last-resort form of borrowing for people with few assets or bad credit — in other words, for the financially desperate.
https://www.latimes.com/opinion/editorials/la-ed-payday-loan-rules-20190208-story.html
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