Yesterday, a debate hosted by the Federal Reserve of Kansas City concerning the merits of payday lending spurned some interesting conversation about the industry and its regulation. Much of the discussion was centered on the Fed’s senior research  economist, Kelly Edmiston’s recent study, “Could Restrictions on Payday Lending Hurt Consumers?“. Here’s a taste of what Edmiston concluded from his research:

Edmiston’s study “suggested” that low-income consumers had less access to credit and all consumers generally had poorer credit where payday lending was banned. It may be they have no alternatives or are making costlier choices such as bouncing checks, exceeding credit-card limits or turning to loan sharks.

 

Will Warren be made head of the CFPB via a recess appointment? Maybe not.  Treasury Secretary Geithner had this to say at a Politico event earlier:

“We want to put up people who can be confirmed,” Geithner said. “We want to put up talented people who can do those jobs.

Sen. Al Franken (D-MM) is urging President Obama to make Elizabeth Warren the director of the CFPB via a recess appointment.

“Since the president appointed Elizabeth Warren to set up the Consumer Financial Protection Bureau she has proven she can stand up to Wall Street,” Franken wrote in a letter that will be circulated by the Progressive Change Campaign Committee on Wednesday. “Now, it’s time for a permanent leader to be appointed and, because Republican senators have vowed to block anyone, it’s up to President Obama to use his power constitutional power to bypass Republicans and make a recess appointment.”

The Washington Post’s Katrina vanden Heuvel urges the president to appoint Elizabeth Warren as CFPB head, but also addresses why having no director in place could be debilitating to the new agency’s rulemaking process.

By July 21, a director needs to be in position or the agency forfeits powers over non-bank financial institutions until one is in place. Purblind Republican obstruction liberates the president to do the right thing. Given the GOP’s threat, no nominee for the CFPB can be confirmed by the time the bureau can begin instituting rules. It would be a true disservice to Americans — and a craven cave-in to the bank lobby — to allow this to happen. Obama can either make a recess appointment — or be trapped in an endless no-win negotiation with those who have opposed the bureau from the start.

The demand for short-term credit is there, and there’s no hiding it. According to recent research, nearly half of Americans say that they definitely or probably couldn’t come up with $2,000 in 30 days.

The survey asked a simple question, “If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?” In the U.S., 24.9% of respondents reported being certainly able, 25.1% probably able, 22.2% probably unable and 27.9% certainly unable.

One thing to consider, according to the research, is that “financial fragility is not limited to low-income groups.”

“The more surprising finding is that a material fraction of seemingly ‘middle class’ Americans also judge themselves to be financially fragile, reflecting either a substantially weaker financial position than one would expect, or a very high level of anxiety or pessimism. Both are important in terms of behavior and for public policy.”

CNBC reports on the McHenry/Warren “spat” and provides commentary on the usually “boring events”.

Many stories are circulating about the hot seat Elizabeth Warren faced yesterday as she testified before Congress. This New York Times article gives its readers a look at what went down during the awkward moment (an argument about the hearing time) that the Payday Pundit was referring to yesterday.

“Congressman, you are causing problems,” Ms. Warren said. “We had an agreement.”

“You’re making this up,” Mr. McHenry replied, eliciting gasps from the audience. “This is not the case.”

As Mr. McHenry and Ms. Warren traded accusations, a senior Democrat, Representative Elijah Cummings of Maryland, tried to smooth things over. “Mr. Chairman,” he said, “I’m trying to be cordial here — you just accused the lady of lying. You need to clear this up with your staff.”

Mr. McHenry did not back down. After the meeting broke, he said in a statement: “I was shocked by Ms. Warren’s blatant sense of entitlement. She was apparently under the assumption that she could dictate a one-hour time limit for her testimony to Congress, and that we were there at her behest instead of the other way around.  This is just further example of her disregard for Congressional oversight.”

 

Elizabeth Warren faced a “hostile” environment today during the “Who’s Watching the Watchmen” House hearing, according to CNNMoney. McHenry and a couple other GOP members of the House subcommittee questioned Warren on the veracity of two of her statements before Congress.

McHenry accused her of hiding the truth the last time she went before Congress, when she said bureau staff had provided advice to state officials negotiating a settlement with mortgage servicers that improperly foreclosed on homeowners. …

Warren responded that she was simply providing information requested by Treasury Secretary Tim Geithner, saying he had asked her to put the packet together for the Iowa attorney general.

This just in: Adam Levitin, one of the expert witnesses in panel two of today’s House hearing, just made reference to financial literacy being ineffective … to which Rep. McHenry replied: That is by far one of the most absurd things he’s heard today. What do you think? Let the discussion commence.