The New York Times picks up an AP story. My favorite passage:

”There’s still high demand for our product but we won’t be able to feed it,” said Joe Brown, general counsel for the Check Masters chain. The new law ”will push people to other forms of short term credit, turn to sources that are not subject of regulations, such as online lenders that operate off shore.”

Brown said he expects the new law to hit smaller chains and mom and pop outlets — like Weaver’s — harder. He said the profit margin for the payday industry is not high, and smaller chains won’t be able to sustain a cut to their customer base.

Exactly.  Reduced competition has never benefited the consumer.

PDLindustry blog picked up on the Wall Street Journal  op-ed we discussed yesterday and found a great comment.

To begin 2010, the Payday Pundit will have a new look and will be on Twitter and Facebook.   Keep checking in.  We hope to launch the new look next week.

BusinessWeek calls the financial reforms “watered down.”  If you’re an industry that is going to get hit with onerous costs because of the CFPA, it doesn’t seem that way.

From the story:

In the past year, card issuers have rolled out or expanded their use of other ways to collect millions more in fees each year, many of which are hidden to consumers, according to the Durham, N.C.-based Center for Responsible Lending’s Dec. 10 report, “Dodging Reform: As Some Credit Card Abuses Are Outlawed, New Ones Proliferate.”

“Credit card issuers are going to more than ever try to find ways to make extra profits,” says Joshua M. Frank, a senior researcher with the Center and author of the report. New charges and changes to the way fees are calculated are adding to the balances of a growing number of cardholders. While some of the practices were instituted after the Credit CARD Act was approved in May, others were quietly being put in place earlier as a result of the recession. The one thing they have in common, says Frank, is that “none of them are explicitly prohibited by the Credit CARD Act.”

New law takes effect January 1.  From the story:

Washington’s new state laws to curb payday loan abuse are equally tough on both short-term borrowers and their high-interest lenders. Starting January 1, no one can take out a payday loan that totals more than $700 – or one-third of their gross monthly income – and lenders can check the borrower’s loan history on a statewide database. The maximum number of payday loans that legally can be issued per person in a 12-month period is eight.

And the new credit card rules aren’t helping.  From the story:

Mitchell, whose nine-year-old company employs 15 workers, said she scrutinizes her credit card bills when they arrive, calls the issuer when she finds discrepancies and frets when clients are slow in paying for her company’s services.

“I’m hypersensitive when getting my credit card bills paid on time for the business,” she said. “But sometimes you have to deal with larger companies that aren’t as timely.”

But Mitchell doesn’t think the federal government should have an agency whose goal is to make the institutions that issue credit cards and provide financial services more transparent when dealing with consumers. Risk, she said, is part of the entrepreneurial experience, and credit card use and dealing with the terms of those cards goes with the territory.

Virginia Governor Tim Kaine is so proud of the “Virginia State Employee Loan Program” he’s bragging about it in the Wall Street Journal:

Virginia’s pilot program offers small loans ranging from $100 to $500 to state employees. The loans are offered at an annual percentage rate of 24.99% and are repaid via direct withdrawals from employee’s paychecks over a six-month period. While there is no penalty for early repayment, employees are limited to one outstanding loan at a time and may apply for only two loans per 12-month period. Most significantly, to help keep state employees on sound financial footing in the future, the loan requires borrowers to become a member of the Virginia Credit Union and complete an online financial fitness course on money management or checkbook management.

So let’s get this straight.   The loan is only offered to state employees.  It’s a six-month, not a tw0-week loan.   You have to be a member of the Virginia Credit  Union and complete an online financial fitness course.   All this to get a $100 loan?

Fastlendinghelp.com is unhappy about the label.

It’s cold out there.  Good time to start thinking about CFSA’s annual meeting at La Quinta Resort, March 3-6.   Click here for details.