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Getting a complete picture of the payday market

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Yesterday, Director Cordray kicked off our field hearing on payday lending in Birmingham, Ala., by explaining why he was there and what the Bureau wants to learn from consumers about payday loans.

I want to be clear about one thing: We recognize the need for emergency credit. At the same time, it is important that these products actually help consumers, rather than harm them.

A lack of supervision at the federal level means there is a lot we do not know about some of the inherent risks associated with payday products. Through forums like this and through our supervision program, we will systematically gather data to get a complete picture of the payday market and its impact on consumers. This assessment will allow us to better choose among the tools we have available at the Consumer Bureau to balance the needs of consumers with the risks they face.

We want to hear from you, too. Tell us your story. You can also leave a comment below.

  • Prest_r

    Thank you for being available to me, I listened to the Director on these loan sharking operations called pay day loans that many of my friends have to use to stay alive. Please regulate them because once you start using them you can’t get away because of the interest charges, and most users are welfare recipients and low income earners. My interest is what I have been able to recherche at who and how the Federal Reserve is using tax money to fund banks without public awareness even when the were getting TARP funds, why because they use to work for Goldman Schas, and according to Matt Taibbi a writer for the Rolling Stones political arm make you know why the system is broken for the 99%. If half of what I read and not just Rolling Stones is true it will be like killing a terminal cancer and I know about that. I am very interested on what you find and if you can read Matt’s column. I wish you all the luck because you will find a hostile Congress, so I hope the President wins this election.  thank you
    Richard Prest   

  • eshaw

    So glad that you can start to do the great work that need to be done for the citizens that need it the most.

  • John T.

    The real convo is happening in the “Hearing your stories on payday lending” post.

    Funny that there hasn’t been back-lash on Director Cordray’s appointment during the recess – even after the initial rejection by Congress.

  • http://babypro.co/baby-monitor-motorola-digital-video-baby-monitor-with-2-8-inch-color-lcd-screen/ Baby Monitor

    The Consumer Financial Protection Bureau (CFPB) is continuing its
    commitment to hear from consumers around the country about their
    experiences with financial products and services. Last month, the Bureau
    heard from consumers in Minnesota, and our next stop will be Ohio.The Bureau will be holding a town hall event in Cleveland on
    Wednesday, December 7. We are looking forward to your participation, so
    be sure to save the date!

  • Zap

    I am having trouble understanding why you are involved in this.  If someone needs money, they are aware of the terms of the money they are borrowing.  Then  what is the issue?>

    I am NOT a pay day lender.  But  I have gut feeling that these are very risky loans for the lender, thus the high terms.  Everyone wants something for free.  I am very sorry Dorothy we are not in Oz.

  • MWilson

    I’d like this to be an area where the CFPB not only learns and regulates a certain space (payday lending), but perhaps starts all the way back at the consumer need and works with the industry to find a better solution.
     
    Payday loans almost always require the borrower to have a checking account.  So the borrower already has a banking relationship, and they have a short-term need for capital, but their financial institution isn’t meeting the need.  Banks admittedly aren’t the most creative companies in the world when it comes to new products, but here is a case with millions of potential customers and plenty of wiggle room in the numbers between profitability and usury.  There has to be a way for a consumer’s main financial relationship (bank or credit union) to step up and help people before they get stuck in the payday lending trap.

    If our nation can provide liquidity to investment banks and the Eurozone, it can find a way to provide it to its own citizens.  Make it a formal, regulated product with standardized rules (and perhaps even financial literacy components in the qualifying requirements) and put the onus on banks to meet what is clearly a genuine need for many Americans.

  • Andy

    While citizens understand that the federal government would like to have control over everything, don’t pretend to be doing us any favors as you limit choices for consumers. This country is about distributed authority and limited regulation, otherwise we would have been happy having a king.

    • Prest_r

      Hi Andy, I’m 65 yrs on this planet and it use to be that your employer would make sure you had a good life, because you would say how good you have it, that would make your employer look good to someone who was looking for a permanent job. We stayed at our jobs for a long time, we built the best country in the word that everyone wanted to be like. Today you are chattel your intellectual property is not yours, they took your medical away, any pay raise remember those and then take you intellectual property and make it in China. Something happened in the reason for work that we like to do, for all the BS I have to go through just to apply so some young person throws your app away after you leave. My heart goes out to the young of to day, most have a college degree and may not get a job ever. All because the Corporation made it about the bottom line instead of people. So good luck to you young people.
       

      • Tothepoint

        Hi Mr. Prest_r

        I am 53 yrs on this planet and there are some simple truths that you seem to have not discovered yet.

        Number 1. Its is not up to your employer to make sure you have a good life, it is up to you. Take responsibility, that is what freedom and liberty is all about. An employer’s responsibility is not to provide you with a job. It is to use capital wisely to sell goods and services to the public, and if they are successful, they are rewarded with profit and the ability to offer work.

        Number 2. Pay raises have to be paid from someone’s pocket. Either higher costs to consumers or lower returns to the investors who put the capital up at risk. The other options is to keep prices the same and reduce expenses. Thats the way it works.

        Number 3. The bottom line is what it is all about. It is what created our nations wealth and is the foundation of our liberty. Having served in the military for 10 years during the cold war, I was very familar with the “socialist” perspective of the the Soviet block. It fails because governments will never know whats in the best interest of an individual than the individual themselves.

  • http://juegosdemariofree.com/ juegodemario

    I join in saying ”
    So glad that you can start to do the great work that need to be done for the citizens that need it the most.” 

  • Jason Ernsting

    Besides the outrageous intrest these pay day lendors charge, the bigger issue is when someone gets so far in debt because of these high intrest rates, they end up just letting them go into a collection status.  That is where the issue takes on a new level.  The account will be sold, then sold again, then sold again, and on and on.  When you try to dispute and ask for verification and a copy of the original agreement, nothing happens.  Yet the credit bureaus, especially Experian will continue to report something that has never been validated or the amount of excessive intrest or fee’s have never been justified.
    You need to focus as much on the Credit Bureaus and the collection agencies as well.

    • Meibis

      A $200 loan costs on average $34 in fees. I’m sure $34 put people in a “cycle of debt.” People put themselves in the “cycle” as does our government, but hey, do as I sat and not as I do. 400 percent makes headlines, $34 doesn’t. Limiting consumer choices isn’t the answer. Create more choices and let the consumenr make their own decisions.

    • Tybirdbb

      Jason –
       
      Payday lender’s don’t pull, or report to, credit bureaus’.

  • sue

    I am glad pay day loans are gettig attention. I want the director to add the most important “approach” to the problem which is consumer financial education.   Our public education system is as much to blame about the financial crisis as Wall Street is to blame.  Why are we keeping our children ignorant in this area only to grow up as ignorant adults?   Please help stop the ignorance in consumer finances and personal responsibility.  Why are we not teaching them how to read loan documents, read mortgage and notes, teach them what a Truth In Lending mans, adjustable, compound interest, budgeting, what is equity, what is “upside down”, what is the true definition of living beyond one’s means, how much a car really costs, a house,  a boat, a family??  Come on and get the people educated!!!!

    • Zap

      Sue, you feel the government should educate children about financial matters.  Really???  The government is $15 trillion in debt with another $65 trillion in unfunded obligations.

      I have a crazy idea.  You are responsible for your actions and those of your children.  Thats it, I said it.

      • sue

        ZAP,
        I don’t have any children, but I deal with the ignorant masses in the financial industry every day.  Education from the government is where the majority goes to school and if the government is going to be invade our lives (which is not my preference), the least they can do is educate in an arena that help.   

        • Zap

          So you think a mega government agency will be able to educate?  Have you ever called a goverment agency to try and get an answer to something?  Have you ever heard of the internet?  Someone can google a financial topic and get all of the information needed to make an educated decision on anything FOR FREE.

          It sickens me that everyone turns to the government for a solution.  Has the government ever solved anything??????

  • Visonquest

    Mr. Cordray’s reference to the great work of Dr. Martin Luther King struggle for civil rights equality somehow being similar to the government’s payday oversight is misplaced and offensive to the civil right’s activists. 

  • Cecilia

    Great video. I would suggest for the CFPB to educate our young. We need to teach our children the importance of managing money at a early age. The CFPB should consider visiting High Schools, Community Colleges, Universities and even PTA meeting to educate the public about finances. 

    • Zap

      You are askling a government agency from a government that is $15 trillion in debt with another $65 trillion in unfunded obligations to teach our young about finances.  Are you serious????  You want the CFPB to travel the county and go to the thousands and thousands of schools and “educate”.  Do you have any idea how much that would cost the taxpayers to do? 

      Teach your own kids about money and finances.  Beleive it or not if you have kids, you are responsible for them.  Dont pawn your kids on me.

  • Lisasmith828

    I feel that Payday lending is a very good option for people that need this service, if used correctly it is very helpful to people those people who have such a strong opinion against what Payday lenders do really do not have all the information on how it really works.If they really new how helpful this service is to people they might fell different.I have been in this industry almost 15 years and my clients are grateful and very thankful I am here to help them

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