More on Sheila Bair’s remarks
October 27, 2009 | federal legislation, industry | Comments (1)Huffington Post has a good video while this particular comment caught our eye:
“In looking at indecipherable credit card statements and documents, mortgages you can’t understand and APRs from payday loans and high overdraft fees, I don’t see how anyone can say we’ve done a good job protecting consumers from financial services.”
This is the epitome of nanny-statism. Ms. Bair, consumers need access to credit and can make their own decisions about financial services.
Comments»
The significance of the APR is proportional to the term of a loan. For a 30-year home loan at 6% APR, adding one percent to the APR increases the total cost by over 20%, whereas with a two-week payday loan at 400% APR, adding one percent to the APR increases the total cost by less than a quarter of a percent.
APR caps are unscientific, eliminate short-term loans from the marketplace, and hurt consumers who only qualify for short-term loans by cutting off their access to credit, even in emergencies, or driving them to the dangerous black market.