The fatal flaws of the bill
April 22, 2010 | federal legislation, industry, research | Comments (0)From the Heritage Foundation:
Limits financial choices of American consumers. The bill contains a new “Bureau of Consumer Financial Protection” with broad powers to limit what financial products and services can be offered to consumers. The intended purpose is to protect consumers from unfair practices. But the effect would be to reduce available choices, even in cases where a consumer fully understands and accepts the costs and risks. For many consumers, this will make credit more expensive and harder to get.
The end of cheap credit
April 11, 2010 | alternatives, personal finance, research | Comments (0)From the New York Times:
Americans have assumed the roller coaster goes one way,” said Bill Gross, whose investment firm, Pimco, has taken part in a broad sell-off of government debt, which has pushed up interest rates. “It’s been a great thrill as rates descended, but now we face an extended climb.”
The impact of higher rates is likely to be felt first in the housing market, which has only recently begun to rebound from a deep slump. The rate for a 30-year fixed rate mortgage has risen half a point since December, hitting 5.31 last week, the highest level since last summer.
Polls are irrelevant
April 9, 2010 | federal legislation, industry, research | Comments (0)On an issue as complicated as financial reform, how you ask the questions can skew poll results. Nevertheless, pollsters keep polling. From The Hill:
Consumer protection
The polling is mixed on new consumer financial protections. Some analysts argue there is strong support for a new federal agency over products like home loans and credit cards, but the polls vary greatly in how they ask the question.Pew: 86 percent of respondents support giving consumers better information to make decisions on financial products.
Zogby: 59 percent of those polled said a separate Consumer Financial Protection Agency is neededYouGov: Only 12 percent of those polled said the goal of financial reform should be creating a new agency with rules about how banks treat customers.
Must read!
April 8, 2010 | industry, research | Comments (0)A new study by the Hispanic Institute, “Thinking Outside the Bank.” Link can be found here. Some highlights:
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Using the term ―predatory‖ for an industry that serves working class families makes no more sense than saying that stores located in malls prey on suburban families.
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Calling fees excessive is also a subjective term, because in our view, there is also no accepted demarcation line of where a fee starts or stops being excessive. It can generally be understood that ―excessive‖ is a relative term. In economic terms, this is the opportunity cost, ―the value of the next-highest-valued alternative use of that resource.
- Consumers make rational decisions based on their circumstances and within the context of their environment, ―street smarts
Wait, I thought industry was booming
April 6, 2010 | customers, industry, research | Comments (1)From the article:
The payday loan industry is seeing a steady decline in the number of borrowers as a result of high unemployment rates, reports Phoenix lender, 1-Stop Check Cashing. Families are instead turning to car title loans for quick funds.
The payday lending sector experienced a surge when families crippled by the economic recession found it more difficult to make mortgage, car, and debt payments in addition to paying for their basic daily needs. The rise in unemployment rates in Phoenix has made eligibility for payday loans decline, leaving many families for search for alternative loan methods to keep up with their bills.
The media can’t get its story straight. We’re booming, we’re declining, blah, blah, blah.
Priorities
March 30, 2010 | alternatives, federal legislation, industry, research | Comments (0)So what do the American people want Congress to focus on? From the latest Pew Research:
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Where is the consumer credit?
March 30, 2010 | alternatives, federal legislation, industry, research | Comments (0)The Gerson Lehrman Group explains:
The available supply of consumer credit has dwindled due to credit card lines being dramatically reduced or eliminated and home equity lines being frozen or reduced because of falling home values.
What is the role of Alternative Financial Service providers to meet the demand?
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The Alternative Financial Services (AFS) space – payday lenders, pawnshops, rent-to-own stores, and auto title lenders -lenders – are all sources for low-dollar/short-term credit.One source of unsecured credit to meet this demand is the payday loan industry. In states that permit payday loans, households with checking accounts pay up to 13% less in overdraft and insufficient fund fees than in states that prohibit payday loans.
Check it out
March 26, 2010 | alternatives, research | Comments (0)2010 Trend Survey over at PawnShopsToday.com
Overdraft rules hit banks
March 25, 2010 | alternatives, industry, research | Comments (1)According to Moebs $ervices, a reduction in overdraft fees will mean banking institutions could lose $1.95 billion of their incomes this year. That represents a 5 percent drop when compared to last year.
Michael Moebs, CEO of the company, said that new regulations and the effect of potential financial reforms from Congress will affect the ability of banks to make money from overdraft fees.
Starting this summer, a new rule from the Fed will require that banks get customer permission before enrolling them into overdraft protection programs. The idea behind the programs is to allow transactions to go through even if consumers don’t have enough money in their account.
Tennessee action today
March 23, 2010 | Tennessee, industry, research | Comments (0)Haven’t heard much about this, but we’ll keep an eye on it. From the story:
Today, legislators in the Tennessee House Utilities and Banking subcommittee will have the chance to stand up for working men and women in Tennessee by saying 100 percent APR is enough for predatory payday lenders.
A 100% APR equals a $3.84 fee. In other words, it’s a ban.
