A narrow escape was pulled off as senate rejected an amendment to the financial reform package that would have tightened regulation on personal loan company Wednesday. What was rejected was the legislation that sought to exert federal restrictions on an industry regulated at the state level. Provisions within the pay day loan amendment within the financial reform bill would have limited consumer access to very same day cash loans and prohibited cash companies from offering additional products and services.
Debate on the Financial reform bill
The Senate financial reform package includes a new consumer protection agency with a very broadly defined authority that has aroused many concerns all across the financial industry, from giant Wall Street banks to car dealers who help customers with loan applications. The Wall Street Journal reports that the payday loans no faxing amendment in the financial reform bill, introduced last month by Democratic senator Kay Hagan of North Carolina, would have stopped personal loan companies from selling or providing any services or products within the very same location they give payday loans at. It would have also limited consumers to only receive six payroll loans a year. The cash industry would be controlled by the Federal Reserve Board.
Payday loans offer timely credit
Payday loan lenders offer advances on paydays for those who may need short-term help for such things as unexpected car repair, emergency room charges or the possibility to take advantage of a special offer. Usually, the borrower pays it back after receiving their next paycheck. The Chicago Tribune reports that cheaper methods for covering expenditures when cash is short aren’t as readily accessible — including credit cards — and are a lot tougher to get now, especially following the financial meltdown.
Payday loan lenders and also the gap bridged
Payday lenders are doing well these days because they’re satisfying a consumer need while conventional banks leave many consumers high and dry with no other alternatives. According to the Tribune article a recent government report found that 9 million U.S. households do not have a checking or savings account, and millions more don’t use them regularly. Even though payday borrowers and lenders have escaped federal restrictions, the industry is regulated by states with a hodgepodge of rules and outright bans.
Dismissed is the payday loan amendment
Senate has been debating on the financial reform package for weeks. When she tried to put her amendment for debate Tuesday afternoon, Senator Hagan needed unanimous consent for discussion. The payday loan amendment could be left out of the financial reform bill for now because she failed. The stock market made a comment about the senate’s rejection on Wednesday. Cash The United States International Inc. was up 4.1 percent to $ 36.82, Ezcorp Inc. rose 3.4 percent to $ 18.76, Advance American Cash until payday loan Centers Inc. climbed 6.8 percent to $ 4.72 and First Cash Financial Services Inc. was up 2.3 percent to $ 21.86.
Additional details at these websites
Wall Street Journal reports
http://online.wsj.com/article/BT-CO-20100519-712661.html?mod=WSJ_latestheadlines
Chicago Tribune reports
http://newsblogs.chicagotribune.com/burns-on-business/2010/05/lawmakers-target-payday-loans.html
