Warren on payday loans
January 31, 2011 | CFPB, CFPB Nomination, Elizabeth Warren, federal legislation, Financial Reform Bill - CFPB, Payday lending | Comments (0)In an interview with the Associated Press:
Q: Another area the CFPB will be reviewing is services for people who don’t have a bank account. How do you regulate services like payday loans and still ensure people have access to small loans?
A: Well you know, access to small dollar loans is critical to many families. The notion that we somehow try to eliminate that, it’s just not going to happen.
It can force people into unregulated markets, including “Jimmy the Leg Breaker,” which is not where we want people to be.
So it is important from a regulatory standpoint that people are not at the mercy of lenders who build business models around fooling people. They’re drawn in the front door thinking they’re going to pay one price and then beat about the head and ears, financially speaking, so that they’re paying much, much more.
On the other hand, there’s a real problem. And that is how to get good, small dollar lending started in areas where there’s great need.
Sometimes that’s going to be by community banks. Sometimes it’s going to be by non-bank lenders and sometimes it’s going to be innovations and new technology that’s going to open up markets for the currently underserved population.
Of course, all payday lending customers have bank accounts.
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