by Jeff Sovern Last week, the Senate Banking Committee held a hearing on Alternative Financial Products. The American Banker account is here, albeit behind a paywall. I found most interesting the payday lending discussion, and in particular the arguments made against regulation. At one point, a Senator (I think Toomey, Republican of Pennsylvania), questioned a witness, Stephanie […]
Category Archives: Predatory Lending
Larry Kirsch, Roert N. Mayer and Norman I. Silber of Hofstra have authored, The CFPB and Payday Lending: New Agency/Old Problem, 48 Journal of Consumer Affairs 1 (2014). Here's the abstract: The Dodd-Frank Act of 2010 brings nonbank payday lenders under federal regulation for the first time. The question of precisely how to regulate the payday […]
Susanna Montezemolo of the Center for Responsible Lending haas written Car-Title Lending. Here is the abstract: Provides an overview of car-title lending and its impact on U.S. households. Car-title lending — making expensive loans secured by the title of a vehicle a borrower owns outright — has become a multi-billion dollar industry in the U.S. […]
The Wall Street Journal has the story here.
Robert L. Clarke of Bracewell & Giuliani LLP and Todd J. Zywicki of George Mason University (Zywicki notes in an "about the authors" that he is a former director of the FTC's Office of Policy Planning but omits his links to the industry) have written Payday Lending, Bank Overdraft Protection, and Fair Competition at the Consumer […]
Last week, the CFPB filed an amicus brief in the Second Circuit in Otoe-Missouria Tribe of Indians et al. v. New York Department of Financial Services, a case in which online tribal payday lenders are challenging regulation by New York State. The CFPB's brief takes issue with the lenders' argument that Title X of the Dodd-Frank Act and […]
Paige Marta Skiba of Vanderbilt has written Tax Rebates and the Cycle of Payday Borrowing. Here's the abstract: I use evidence from a $300 tax rebate to test whether receipt of this cash infusion by payday borrowers affects the likelihood of borrowing, loan sizes, or default behavior. Results from fixed-effects models show that the rebate […]
by Jeff Sovern As I have noted before, payday lending and deposit advances present a conundrum for me: how to permit those who genuinely have a short-term borrowing need and who can't get the money elsewhere to borrow without creating a long-term debt trap. Recently I listened to hearing held by the Senate Special Committee […]
David Ray Papke of Marquette has written Perpetuating Poverty: Exploitative Businesses, the Urban Poor, and the Failure of Liberal Reform. Here's the abstract: This article scrutinizes the rent-to-own, payday lending, and title pawn businesses – all of which target and exploit the urban poor. Each type of business has developed a sophisticated business model that […]
by Jeff Sovern Deposit advance loans are banks' answer to payday loans. Just like payday loans, they tend to be for short periods and high interest rates. And just as with payday loans, consumer advocates fear that consumers get trapped in them, in the sense that many borrowers can't come up with the money to […]