Off the mark
February 2, 2010 | alternatives, federal legislation, industry | Comments (0)This Huffington Post columnist sums up the argument FOR the CFPA. But the argument collapses under scrutiny:
A new CFPA would limit the availability of highly risky consumer financial products–credit cards, payday loans, and not least of all mortgages. The new agency would thus protect not only consumers, but the stability of the economy generally, given the reverberating effects of mortgage defaults. This is not nanny-state regulation. While there is nothing wrong with protecting vulnerable consumers from financial products they do not fully understand, a CFPA would help stabilize the housing and credit markets. Good for everybody.
Mortgages average $1700 per month. The average credit card debt per person is $7500. To lump payday loans and in with these other products is silly. Mortgages and credits have a macro impact on the economy given their ubiquitous nature and large dollar amounts involved. Payday loans on average are $345 and used by a small minority of Americans. And consumers fully understand payday loans. Payday loan applications are not like mortgage or even credit card applications.
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