Category Archives: Predatory Lending

NCLC Report: Misaligned Incentives: Why High-Rate Installment Lenders Want Borrowerrs Who Will Default

Here.  Here's the beginning of the Executive Summary: Lenders normally want borrowers who will pay back their loans in full. This seems obvious—otherwise, won’t the lender lose money? Yet in the high-rate installment loan market, the normal incentive to make affordable loans does not work. When loans have high interest rates, lenders may seek out […]

Can Mathematical Modeling Help Create Payday Lending Regulations?

Daria Roithmayr of USC, Justin Chin, a USC law student, and Bruce Levin, an Emory biology professor, have written Cat and Mouse: A Dynamic Analysis of Predatory Payday Lending.  Here's the abstract: Legal actors and the regulators who pursue them often engage in a co-evolutionary game of cat and mouse, as each innovates to out-compete […]

SCOTUS Takes FHA Cases: Do Cities Have Standing to Sue for Discrimination Under the FHA?

SCOTUSBLOG coverage here and here. Reuters reports here. The Reuters lead reads: "The U.S. Supreme Court on Tuesday agreed to decide whether Miami can pursue lawsuits accusing major banks of predatory mortgage lending to black and Hispanic home buyers resulting in loan defaults that drove down city tax revenues and property values." HousingWire has more […]

House Financial Services Committee Chair Hensarling Releases Bill To Cripple Consumer Protection

by Jeff Sovern Hensarling calls the bill the Financial Choice Act.  Make America Great for Banks Act is closer to the truth. Based on a quick look, the bill would give bank lobbyists power over the CFPB by subjecting it to the appropriations process, increase the likelihood of deadlocks by turning the Bureau into a commission, […]

House Appropriations Committee Votes to Cripple CFPB

by Jeff Sovern Yesterday the House Appropriations Committee reported out a bill that would convert the Bureau to a commission, subject it to the congressional appropriations process, and delay (perhaps forever) the adoption of the arbitration and payday lending rules.  More information on the Committee's web site.

David Zaring: Payday Lenders’ Fight Against Regulator Would Be a Long Shot

In the Times's DealBook.  Excerpt: Conservative lawyers have been muttering about the constitutionality of the Consumer Financial Protection Bureau for years, but their best argument is pretty novel. It is a “death by a thousand cuts” separation of powers claim. The idea is that if you count up all the ways that the Consumer Financial […]

Regulation, Access to and Costs of Financial Services, and the Payday Lending Example

by Jeff Sovern Critics of consumer protection regulation routinely assert that such regulation reduces access to credit and increases consumer costs.  For example, here is what Todd Zywicki wrote in his recent testimony before the Senate Banking Committee (footnote omitted): By imposing a regulatory regime that substitutes the judgment of bureaucrats for consumer decisions, Dodd-Frank […]

Elizabeth Warren’s Devastating Cross-Examination of Leonard Chanin at the Senate Banking Committee Hearing

by Jeff Sovern On April 5, the Senate Banking Committee held a hearing titled Assessing the Effects of Consumer Finance Regulations.  I've been listening to the hearing, which has three witnesses–selected by the GOP majority–who spent much of their time attacking the CFPB, and one witness- chosen by the Democratic minority– who supported the CFPB.  […]