After decades of work by advocates across the country, national policymakers are — at long last — poised to take action on payday loans.
If done right, the national regulations could ensure that consumers will be protected from payday lenders' worst practices, regardless of where they take out a loan.
But if regulators miss the opportunity to create comprehensive rules, lenders could continue exploiting loopholes and trapping borrowers in a long-term cycle of debt. The Consumer Financial Protection Bureau needs to ensure that this doesn't happen.
Payday loans were in the national spotlight recently at a CFPB field hearing in Nashville, Tenn., and at a Senate Banking Committee hearing on alternative financial products. At the field hearing, the CFPB released a white paper finding that the vast majority of payday loan borrowers take out multiple loans in a row.
The data fly in the face of claims that industry representatives made at the hearing that payday loans are used for one-time emergencies.