TLP: Payday Lenders Seek to Avoid Getting Hit in the Eye by Financial Reform
The Lazy Paperboy once knew a guy who worked at a payday lender. It wasn't clear that he had much experience in finance, but maybe was hired more for his size and bearing, kind of a behind-the-counter bouncer. It was a sketchy storefront gig with an even sketchier clientele. And paying the rent for that storefront meant one thing: collecting on those loans and the killer interest that bought them.
But the joint survived, which means not only was TLP's friend a smart hire, but that the place provided a service. "You want the money? I've got the money. Fuck you, pay me."
The language was no doubt more tactful, but lobbyists for payday lenders and check cashers hit Capitol Hill last week in an effort to remain outside federal regulation as financial reform measures move through Congress.
The Washington Post:
During the "Hill Blitz" organized by the Financial Service Centers of America, a trade group, about 40 industry executives pushed to exempt check cashing from the purview of a proposed bureau that would oversee consumer financial products. Meanwhile, Democrats launched a new effort to contain the industry by limiting the number of payday loans that consumers can take out.
"There is a sense of urgency to get something done," said Eric Norrington, head of government affairs for Ace Cash Express. "We're sort of asking the question: Why are we even a part of this?"
That has become a common refrain in recent months as Congress considers the most extensive overhaul of the country's financial system in at least a decade. Though the bill, now under debate in the Senate, was crafted in response to the collapse of big banks, the wide-ranging reforms it would implement could touch a much wider array of businesses.
The bill is particularly significant for payday lenders and check cashers because it could bring the bulk of their operations under the eye of a federal watchdog for the first time. According to a study by the Federal Deposit Insurance Corp. released in December, about a quarter of American households have little or no access to banks or other traditional financial services; many rely instead on payday lenders and check cashers.
The lobbyists argue that they are heavily regulated, and in some cases banned, by states. They worry that federal oversight would increase costs and drive some companies out of business. Plus, the argument goes, it discriminates — against both the sketchy demographic that can't qualify for loans or credit as well as people who think banks suck.
Taking the other side is the Obama administration, which wants the legislation to cover any firms that provide financial services to the public.
More Washington Post:
"The consumer financial protection bureau needs to be able to require companies to provide clear, understandable information so that Americans can make financial decisions that work best for them," the Treasury Department said in a statement.So what makes more sense? More paperwork or day jobs for bar bouncers?