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After long delay, new agency uses up role overseeing pay day loans

Monday, January 27th, 2020

After long delay, new agency uses up role overseeing pay day loans

Through the 2008 presidential campaign, Barack Obama promised to “cap outlandish rates of interest on pay day loans and also to enhance disclosure” for the short-term, high-interest loans. The administration has essentially achieved its goal after years of partisan wrangling.

First, some background. “Payday loans are small-dollar, short-term, quick unsecured loans that borrowers vow to settle from their next paycheck or income that is regular,” in accordance with the Federal Deposit Insurance Corporation. “Payday loans usually are coming in at a fee that is fixed-dollar. Mainly because loans have actually such brief terms to readiness, the price of borrowing, expressed as a yearly portion price, can range between 300 % to 1,000 %, or maybe more.”

The important thing to maintaining this vow had been the creation of the buyer Financial Protection Bureau, a brand new agency that is accountable for composing brand new guidelines on monetary customer items, including pay day loans. (more…)