Are you one of those that relies on cash advance loan frequently? Then, here’s a news for you which will make you fall into tension. The Consumer Financial Protection Bureau (CFPB) is here with some new rules. They intend to project it into the market so that they could have a considerable hand in controlling the loan origination in the market.
This step is sure to shut down several financial institutions from their daily business. In fact, the Bureau itself has agreed to the reports that 75% of the existing payday loan companies will cease in action. But the Bureau does not agree with that point that they are creating a problem for the consumers. They are of the view that they are here to help the common lot. This shows a total lack of understanding of the CFPB and the government of the state. They have failed to understand the economic standing of the state. The state where the majority of the people belong to the middle-class society. They are without any saving and often lives from paycheck-to-paycheck. They are commonly called the “underbanked”. This system, if it comes into effect, will make life difficult for the people. So, it is more of a harm than good for the people.
The economic condition of a person here is such that one of their biggest expenses they consider is buying a house. But in today’s scenario where the education prices are high, and the incomes are low, it is becoming constantly difficult to own a house. Thus, taking a loan to realize the dream becomes the best option for an average middle-class American. The role of CFPB in the matter has not been even worthy to mention in respect to improve the condition of the people.
As per the new rules, only lesser number of people will be able to receive loans. This is because the money lenders will have to verify all details and credentials before they could initiate the loan process. People who are on the margin and will be found unfit to repay the debts will be barred from getting the loan. These kinds of people are more in number. As a result, financial companies whose major profit comes from the people who are on the marginal line will cease to continue with their functions.
The people from the “underbanked” class use a system of prepaid debit cards. The CFPB interference is making the system very complex. Now the people will face difficulties in acquiring such a kind of credit card. Approaching the banks will be a costly option for them.
On the other hand, people think that CFPB should concentrate more on the frauds like Equifax data breach, Wells Fargo upselling scandal, etc. it had been thoroughly inactive when these instances took place. They have earlier said that companies will be required to produce reports, the “companies will be subject to review of compliance systems and procedures, on-site examinations, discussions with relevant personnel”. It was also heard that the Bureau was supervising the Wells Fargo but they were unable to find out what actually was going on under their nose.
The Bureau should further consider the cessation of any further scandals which are a way to exploit the country’s economy instead of hassling the common mob. The huge fine that they levy on the financial companies will be of no use if scandals don’t stop.
Instead of harming the people with their new regulations on the cash advance loan the Bureau should be finding out more ways by which the people on the banking margins will get helped. Only then they will be called to have used their powers in a harmonious way.
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