“Payday loans needed”
July 30, 2009 | Wisconsin, industry, regulation | Comments (0)Great guest column in the Wisconsin Herald Times Reporter:
Placing a 36-percent fee cap on the short-term loan industry will take away a worthy consumer choice, as lenders would no longer be able to provide financial services to consumers in tight monetary situations.
A study by Federal Reserve Bank of New York Research Officer Donald P. Morgan concludes that the elimination of payday loans results in increased credit problems for consumers. This is because consumers would have to choose between bouncing a check or overdraft protection, incurring late fees on routine bill payments, borrowing from friends or family or taking out a cash advance on a credit card. All of these products have a cost associated with them.
Regulated short-term loans help hard-working individuals meet unforeseen expenses and manage short-term financial difficulties. A short-term loan is sometimes the only financial option for a consumer, especially since banks and credit unions generally do not provide loans of less than $500.
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