CFPB’s Hand in Controlling Payday Cash Advance

The Consumer Financial Protection Bureau on October 5, 2017, announced that it is going to add new rules to the payday cash advance loans.  This step is right to cut a hole in the pockets of the middle-class Americans. Do you know why all this are happening? Did you hear that Richard Cordray, the Consumer Financial Protection Bureau’s first director is going to resign from his post? Well, there are rumors going the round and we are not sure whom to believe until recently we heard that Richard Cordray has flipped down his plans to enter the 2018 Ohio governor’s election the day when our beloved Mr. Donald Trump has won the presidential elections.

Earlier Richard Cordray did hope to run the race if Hillary Clinton had won the elections in 2016. As the Democrats no more retain control over the agency he changed his plans. He knew all about the Republicans and that they would uncover all the truths about the Bureau. Let us remind you that the Bureau had failed to investigate the Well Fargo case and other scandals. In the Well Fargo case, the Bureau was the advisory body. It was not found out what was going on until the California regulators and Los Angeles Times have reported them. If Cordray resigns, there will be no power that will protect such detrimental facts about him.

He, on the other hand, did not think of backing out from his Ohio plans at first. He thought that if the president will remove him from the post he will go along with the plan. Nothing like that happened and on Nov. 18, 2016, the Bureau petitioned the court to rehear the case where earlier the Bureau’s structure was found to be unconstitutional with the statement that the director had no plans to step down until July 2018.

Trump, if wanted, could have dismissed him from the post. But he didn’t, and the experts feel that his reason was mainly academic. If he would have done that the legal remedy for the unwarranted removal would almost be back pay. The administration waited that if the court denies the petition then that will put an end to any further controversy.  But the reverse happened. The court granted the petition. Later it was heard that the president’s chief economic adviser, Gary Cohn dined with Cordray and discussed his plans to enter the campaign. It is said, that the director of the Bureau was given the offer of not being fired if he agreed to resign after a certain date. The director neither gave his assurance nor denial and made Cohn understand that the rumors were true.

Before any further action was taken by the Republican government Cordray made the CFPB attorneys complete a rule banning the contracts of the consumers so as to resolve clashes. Now, it has come out with new rules for small dollar loans. The common people who have a tough time managing their expenses will be at problem. People who depend on their small income often have to turn to small loans for help. No assessment check was performed to get the loans. Thus, the process to obtain was easy and fast. Now, with the new rules, the lenders will have to verify all their background details. This will raise the origination costs.

Having said that, it is quite clear that the people on the marginal line will not be able to approach for the loans. This will put a pressure on their financial management and also make several private financial companies cease to exist. Putting new rules on the payday cash advance is altogether not a solution. If at all the Bureau wants to control the economy, they should first look into stopping all the scandals and frauds that are taking place right under their nose.

Luann Abel posted at 2017-12-5 Category: Payday Advance