Traditional banks are allowed to hold government deposits where they pay minimal interest rates and make a sizeable profit. And as we have seen if the traditional bank makes a bad decision the government bails them out. So if those concerned offer no solutions, don’t close the door on the last hope for those locked out. While the poor and credit-challenged appreciate your sympathy, if you can’t help, don’t hurt.

Another false remedy is a new Bureau of Consumer Financial Protection housed at, and financed by, the Fed. The new bureau will write rules for every type of financial service, most of which (such as payday loans) have no conceivable connection with the crisis. Yet another false remedy is a new Office of Financial Research at the Treasury that will look into systemic risk. The unrealistic hope here is that it will somehow do a better job than the Fed, which already had that responsibility leading up to the crisis.

The bill also has the wrong focus, attacking gift cards and payday lenders while refusing to consider any reform of Fannie Mae and Freddie Mac. The two failed mortgage giants have already cost the American people $147 billion, yet Democrats disappointingly claim they are “too complicated” to address here.

 Additionally, at a time when unemployment is hovering near 10%, this bill does nothing to create the jobs our economy desperately needs. Instead, it makes credit — especially small-business credit — less available and more expensive by creating a new federal loan czar with the power to ban and ration consumer credit products.

While the 36 percent APR sounds reasonable, at such a rate the total fee charged on a $100 two-week advance would be $1.38. Payday lenders would not be able to cover the cost of originating a loan, let alone meeting employee payroll and benefits.

A proof point of this is that Goodwill, a non-profit, tax-exempt charity, is charging customers $9.90 per $100 borrowed (252 percent APR) for their “Good Money” payday loans. And this is only to break even.

These {payday lending} bans have not improved the lives of low-income individuals. The Federal Reserve Bank of New York compared the finances of households in Georgia and North Carolina with the rest of the country. They find that there was no improvement, and that personal finances were actually worse off, “Our findings will come as no surprise to observers who have noticed that payday credit, as expensive as it is, is still cheaper than a close substitute:  bounced check ‘protection’ sold by credit unions and banks …the protection can be quite expensive.”

Prof. Stango compared credit union short-term loans to payday loans in terms of both fees and convenience. His research — compiled from data from credit unions, the National Credit Union Administration and payday loan customer surveys — found that credit union rates are generally equal to or higher than those of traditional payday lenders, particularly on a risk-adjusted basis, and that the loans are less convenient for borrowers.

Nor, Prof. Stango noted, do credit unions compete effectively with payday lenders on non-price terms, such as hours of operation or protection against damage to a borrower’s credit score from default.

The bill does include endless pages of costly regulations, but heavily regulated banks employ entire departments to navigate rules. Yes, the new regs will shave off profits, but the real burden—including that of the infamous new Consumer Financial Protection Agency—will fall on their smaller credit competitors, who didn’t cause the crisis and don’t have the financial cushion to absorb these costs. Anyway, if the regulations are too onerous, the big players can shift more business overseas. It’s always big business that is best able to deal with big government.

As a former payday loan customer, I believe we should all have the right to make our own financial decisions. Our members deserve — just as much as CRL — to take part in the debate about the financial options available to them. Good public policy comes from real, honest debate. Let the consumers speak for themselves. Why does CRL want to silence them?

An Obama Treasury department official behind the consumer protection language in the proposed financial reform legislation is a former head of the Center for Responsible Lending (CRL), the advocacy wing of a non-profit community development lender funded by none other than John Paulson — the billionaire who worked with Goldman Sachs to package bad mortgages into securities and offer them on the market.

President Obama’s deputy assistant secretary for consumer protection Eric Stein served as senior vice president of CRL. He also served as the President/SEO of CRL’s parent network, the Center for Community Self-Help.

The economic consequences of the Dodd bill are a direct result of an ideology that replaces a respect for the free choices of individuals with a Washington-knows-best attitude.

Most of what passes for “consumer protection” in the bill is nothing more than an attempt to eliminate consumer products that the left hates.

Yet payday loans, check cashiers and title loans are already subject to oversight by the Federal Trade Commission. Anyway, none of them had anything to do with the financial crisis.

The Dodd bill would push the government into the business of dictating the terms at which consumers and businesses can contract. This has nothing to do with protecting consumers and everything to do with replacing consumer preferences with bureaucrats’ choices.