As the 2016 summer weather has continued to heat up so, too, has the drama surrounding payday loans, car title loans and other types of alternative financial services. From the most popular news websites to popular talk shows, payday loans are being discussed quite a bit. Why so much attention right now? Because in June the Consumer Financial Protection Bureau (CFPB) officially published its proposed rule to regulate payday loans, title loans and other types of alternative loans. The CFPB has even asked the public for feedback on the proposed rule.
Financial experts have even been tasked with looking the rule over and letting the public know what they think about it. Though payday loans have been a hot topic, financial experts have repeatedly stressed that the general public still lacks a fundamental understanding of payday loans, and the alternative financial services industry in general. Being as most media pieces on payday lending rules seem to be centered on the CFPB, it is easy to understand why some people tune out when they hear this topic being addressed. Understanding the new rule, what the CFPB is trying to do and how the payday lending industry could be affected by the rule are all things that American consumers should pay closer attention to.
The CFPB is officially recognized as an ‘administrative agency. What the heck does that mean? Essentially, an administrative agency is a lawmaking organization that specializes in a particular area. For example, the Environmental Protection Agency is one such agency that makes laws related to the environment, and the IRS (boo!) is the best known administrative agency related to revenue processing. The CFPB is a relatively new administrative agency. It was created as part of Dodd-Frank back in 2010. The Bureau was given the power to make laws related to consumer financial issues. It does this by creating rules. Once those rules get finalized they become federal law. The public is being given the opportunity to review the rules the CFPB creates, and we can also comment on any proposed rules. The official name of the newest rule is the “Payday, Vehicle Title and Certain High Cost Installment Loans” rule. It proposes to implement new consumer “protections” that the CFPB states will prevent consumers from getting into long term cycles of debt.
It is important for people to check out the rule and provide feedback. This is especially true for people who operate payday lending locations, work at them or enjoy having the ability to take out the types of loans that they want to. The proposed rule is currently available to look at on the CFPB’s website. Be warned, though, like other laws and federal rules, the new rule is very wordy and reading all of it could take a good chunk of time. Don’t let that dissuade you from at least giving it a look and deciding for yourself what you think about the proposed rule.
Going online for most folks may be more about checking out news sites and social media sites, but that doesn’t mean that you shouldn’t take a bit of time out of your day to check out important stuff, like this proposed new rule. A lot of opponents of the CFPB have accused the agency of running roughshod as of late. Looking at the new rule and then finding out what opponents of the rule believe will help you to be better informed about this important topic. Just because an administrative agency has the power to do something that does not necessarily mean that it should. Take a look for yourself and let the CFPB know what you think.