So-called “consumer” groups are attacking Senator Dodd.  From the Huffington Post:

Consumer advocates are reacting harshly to a compromise Consumer Financial Protection Agency being proposed by Banking Committee Chairman Chris Dodd (D-Conn.).

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Consumer groups also wanted a presidentially-appointed head of the agency and an independent funding stream. Dodd’s proposal includes both of those. But without independence, the agency loses its ability to write or enforce strong rules.

They mean without independence the agency loses its ability to operate  an ideological point of view.

From the Toledo Blade:

STANDING to lose $15 billion to $20 billion in annual revenue from overdraft fees, banks nationwide are embarking on campaigns to preserve or replace that money. One avenue is to urge customers to give the required “opt-in” approval to keep charging overdraft fees and another is to push short-term products similar to “payday” loans. In recent weeks, Chase bank, a part of JPMorgan Chase Co., has been sending letters to consumers with an offer that it urges them not to refuse.

Who can argue with that?  From a piece by the Wisconsin Coalition for Consumer Choice:

Last week the Wisconsin State Assembly voted to pass Substitute Amendment 1 to Assembly Bill 447. This is payday lending regulation that places a cap on the overall loan amount for short term loans, prohibits rollovers, and bans consumers from seeking more than one short term loan at a time.

Proponents of the bill will tell you that this is a consumer protection bill, that it was drafted to protect Wisconsin consumers from an industry’s predatory loan practices. What they don’t tell you is that the bill limits choices and in reality hurts consumers who depend on access to credit via short term loans.

First, at a time when access to funds is already limited, Wisconsin does not need additional regulations restricting individual’s access to personal finances. In a consumer’s time of need, the bill limits the amount consumers can borrow. The amount arbitrarily sets a cap of $600 (including principle and interest) or 35 percent of gross income. This cap establishes Government (not the private sector) in determining who is loan worthy (at what amounts) and who is not. This “big brother” approach to consumers’ private financial decisions is unnecessary and unwanted in Wisconsin’s financial marketplace.

of a good anti-business diatribe.     From the Aurora (CO) Sentinel:

The reality is that the average payday loan is about $350, and the average borrower has to pay about $570 in interest in fees to get the loan, according to the state attorney general.

That’s NOT the reality. That’s a lie.   They are making the assumption that the average borrower is rolling over an original loan instead of getting new credit.

I won’t even comment on it.   Same old, same old in a letter to the St. Louis Post Dispatch.

Hats off to Vincent Carroll at the Denver Post:

Still, what’s the alternative for these serial borrowers, and for the many others who use payday loans as an occasional cushion against an unexpected expense or to pay a bill that can no longer be ignored? These people have jobs and checking accounts, otherwise they wouldn’t qualify for a payday loan. They’re not mentally incompetent. They make choices involving money all the time.

And they are far better aware of their actual options — excruciatingly aware, no doubt — than lawmakers or the average voter.

The Bell Policy Center, an ardent opponent of payday loans, lists what it considers options to payday loans in its 2008 report, “The Truth About Payday Loans.” They include “borrowing from family and friends,” “using a cash advance from a credit card,” “using overdrafts” and “receiving money from a charity or church.”

However, consumers also pay dearly for cash advances and overdrafts. According to a USA Today analysis last year, bank overdraft fees applied to two weeks of credit are equivalent, on average, to an APR of 696 percent — far higher than the APR for a payday loan.

From today’s New York Times:

The chairman of the Senate Banking Committee on Friday proposed creating a Bureau of Financial Protection inside the Treasury Department to regulate mortgages, credit cards, payday loans and other consumer products.

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The Dodd proposal would require the bureau to consult with other regulators before issuing rules and to make public any objections raised by those regulators, along with an explanation of how the bureau addressed the concerns. Those regulators also could appeal the proposed rule to a new interagency council tasked with detecting systemic risks.

It’s going to be an interesting few months.

H. Harrison Cochran, the publisher of the Aurora Sentinel in Colorado, says this in a misguided, uninformed column today:

“Why is the payday loan industry growing at such a rapid rate? And why are the most savvy financial minds entering this “loan shark” business segment? The answer, of course, is the TREMENDOUS PROFITS

Where are the tremendous profits?   The industry in fact makes very modest profits.

This time the Bloomberg story appears in the Pittsburgh Post Gazette:

Banks including Fifth Third Bancorp, Wells Fargo & Co. and U.S. Bancorp already are making such loans, charging $10 for every $100 borrowed for 30 days — the equivalent of an annual interest of 120 percent. The loans, which they call “checking advance products,” are comparable to those made by so-called payday loan stores, which target customers who generally don’t have credit cards to bridge the gap until their paychecks come.

“The smarter banks are trying to resell overdraft protection to consumers as a different product,” said Elizabeth Rowe, group director of banking advisory services at Mercator Advisory Group in Maynard, Mass. They don’t call the advances “payday” loans because it’s a “very tarnished, negative brand.”

A handful of States Attorneys General are gathering in Washington on Monday to push the CFPA.     We don’t wish them luck.