Government Is the Problem, Not the Solution, on Payday Loans

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Government Is the Problem, Not the Solution, on Payday Loans

The Obama administration has targeted a number of unpopular industries, such as gun shops and small-dollar lenders, for excessive restrictive regulations designed to put them out of business. While it is popular to hate small-dollar lenders, who offer title and payday loans to consumers who are unable to access other forms of credit, the growing number of such lenders in most towns and cities prove customer demand for their services.

About 12 million mostly lower-income Americans have the need to use payday loans to meet their financial needs, yet the administration and some liberal politicians in Congress want to eliminate entirely access to these credit services.

Draconian regulations proposed by the Consumer Financial Protection Bureau, a new almost unaccountable federal agency created under the Dodd-Frank financial regulations law in 2010, would put most if not all payday lenders out of business. The regulations would impose on lenders a strict credit analysis of consumers applying for payday loans, would limit the loans to no more than two extensions, and would also add countless other restrictions. The burdensome regulations would make the business of small-dollar lending almost entirely unprofitable, and cause most payday lenders to close their businesses.

By: Dean Chamhers