We love the reasoning of this Reason Magazine article on the CFPA:

In contrast to the complex instruments that helped bring about the financial crisis, payday loans are astonishingly low tech: Applicants bring in a stack of paper showing that they have a job and a bank account, write a paper check in a physical store for the amount they will owe when the loan comes due, and walk away with a handful of cash. These localized, low-key transactions are hardly the stuff of innovative high finance, but that hasn’t stopped Congress and the president from purposefully conflating ordinary, everyday financial practices they deem unsavory with those that caused a global financial meltdown.

How else are you going to get them to participate in the FDIC’s “Small Loan Program”?

That’s House Financial Services Chairman Barney Frank’s mantra on the CFPA.  From a briefing he held this morning:

U.S. Rep. Barney Frank promised Friday morning that the consumer protection agency approved the day before by a House committee would take a hard line on enforcement.

Frank, D-Mass., pointed specifically to services often aimed at lower-income people, including payday lending and check cashers, as targets of increased monitoring.

“There will be no more unregulated consumer activity,” Frank said at a conference on financial options for people without bank accounts. “This bill explicitly empowers them to impose regulations on payday lenders, check cashers and people who send remittances.”

The Wall Street Journal’s coverage is always worth reading:

Lawmakers made several significant changes to the White House’s original proposal during a week of debate, particularly in response to lobbying from business groups. For example, they voted overwhelmingly to exempt automobile dealerships from any scrutiny by the new agency, a major win for dealerships that rake in high fees from auto financing. That change may not make it into the final version of the legislation.

The agency would be charged with policing consumer financial products and practices, such as mortgages, credit cards, and overdraft fees, regardless of whether they are offered by banks, finance companies, or most any other type of firm. Democrats have argued that a lack of consumer protection helped fuel the financial crisis, pointing to the defaults on subprime mortgages that nearly toppled Wall Street.

This is the woman who conceived of the CFPA and who may be in charge of it if it becomes a reality.

Actually, a comment yesterday regarding the CFPA  markup:

That’s good news. Thanks for the up-to-minute coverage!

At least this San Jose Mercury News editorial didn’t mince words.  These people clearly understand that a  36% rate cap is a ban.   They also have the honesty to not pretend that there are other options.    It’s pure “we-know-better” nanny-state drivel, but it’s honest.

The lead of the LA Times coverage of the CFPA markup:

A House committee voted today to create a federal agency to protect consumers from predatory financial products, such as subprime mortgages and payday loans with extremely high interest rates.

No, the concept of the agency was to ensure that industries directly related to last year’s economic meltdown–mortgage lenders, “too-big-to-fail banks” etc.–would be more tightly regulated.

CFPA passed the Committee with no payday lending amendments.  Heads to the floor next.  Here’s the first article.

The Washington Post can hardly contain its excitement over a new federal agency being created:

A U.S. congressional committee is likely on Wednesday {sic} to endorse the creation of a financial watchdog agency to protect consumers, with large banks likely to feel its bite worst.

The proposed Consumer Financial Protection Agency (CFPA), a linchpin of the Obama administration’s plan to tighten regulation after the worst financial crisis in decades, has been under attack from bank lobbyists and Republicans.

Over months of debate, the agency’s scope and scale have been cut back through the bill-drafting process in the U.S. House of Representatives Financial Services Committee.