Payday Borrowing’s Debt Spiral to Be Curtailed
Source: New York Times
The payday loan industry, which is vilified for charging exorbitant interest rates on short-term loans that many Americans depend on, could soon be gutted by a set of rules that federal regulators plan to unveil on Thursday.
People who borrow money against their paychecks are generally supposed to pay it back within two weeks, with substantial fees piled on: A customer who borrows $500 would typically owe around $575, at an annual percentage rate of 391 percent. But most borrowers routinely roll the loan over into a new one, becoming less likely to ever emerge from the debt.
Mainstream banks are generally barred from this kind of lending. More than a dozen states have set their own rate caps and other rules that essentially prohibit payday loans, but the market is flourishing in at least 30 states. Some 16,000 lenders run online and storefront operations that thrive on the hefty profits.
Under the guidelines from the Consumer Financial Protection Bureau — the watchdog agency set up in the wake of 2010 banking legislation — lenders will be required in many cases to verify their customers’ income and to confirm that they can afford to repay the money they borrow. The number of times that people could roll over their loans into newer and pricier ones would be curtailed.
Read more: http://www.nytimes.com/2016/06/02/business/dealbook/payday-borrowings-debt-spiral-to-be-curtailed.html?_r=0
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FIRE DWS!
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Payday lenders get a new ally.
http://www.huffingtonpost.com/entry/debbie-wasserman-schultz-paylenders-cfpb_us_56d4ce38e4b03260bf77e8fc
Zach Carter
Senior Political Economy Reporter, The Huffington Post
03/01/2016 11:04 am ET | Updated May 17, 2016
WASHINGTON — Payday lenders have been gunning for the Consumer Financial Protection Bureau since the day President Barack Obama tapped Elizabeth Warren to set up the new agency. They’ve had plenty of help from congressional Republicans — longtime recipients of campaign contributions from the payday loan industry. As the CFPB has moved closer to adopting new rules to shield families from predatory lending, the GOP has assailed the agency from every conceivable angle — going after its budget, attempting to tie its hands with new layers of red tape, fomenting conspiracy theories about rogue regulators illegally shutting down businesses and launching direct attacks on payday loan rules themselves.
To date, the GOP blitz has resulted in a few close shaves for the young agency, but no actual defeats. But the industry has cultivated a powerful new ally in recent weeks: Democratic National Committee Chair Rep. Debbie Wasserman Schultz (D-Fla.).
Wasserman Schultz is co-sponsoring a new bill that would gut the CFPB’s forthcoming payday loan regulations. She’s also attempting to gin up Democratic support for the legislation on Capitol Hill, according to a memo obtained by The Huffington Post.
LISTEN to HuffPost’s analysis of the bill in the latest episode of the “So That Happened” politics podcast below. The discussion begins at the 53:35 mark:
FULL story and video at link.
Why can't regular banks cash people's paychecks? For free? Why can't employers cash their checks for free if the employee doesn't have a bank account? I hope these "businesses" go out of business because someone comes up with a way to provide banking services for the less privileged in our society.
It's legalized usury. Loan Sharking.
I need to google this. I have too many questions. 
I've heard about the Post Office proposal and think it should be passed. And Hillary is against it? Has anyone on this blue dot questioned her about that position? What the heck has she got against it? What's her solution to the sad situation?
I did finally find a vague date for the beginning of the present-day payday loan "business." Coincidentally it begun in the early nineties. Remember the early nineties? GHWB and WJC were Presidents in the early 90s. Isn't that special? 
...
No person should be living so close to the financial brink that he or she has to borrow against future wages just to pay the bills.
This is not the kind of debt people take on to improve their earning potential, like a business or student loan. This is the kind of debt people take on because their tanks have hit empty, and there's nowhere else to turn.
And more people are finding themselves in that situation more often these days. Here are three things that have happened in conjunction in America over the past decade: Debt loads have increased. Real earnings have stagnated. And payday lending has exploded -- while storefronts have declined from a high of 22,000 in 2007 to about 18,000 today, online lending has tripled in volume, to almost equal the $5 billion that flows through brick and mortar establishments.
https://www.washingtonpost.com/news/wonk/wp/2014/03/26/payday-loans-arent-the-problem-the-problem-is-poverty/
Note the need - not so much for "emergencies", but to get enough food for the next couple weeks, to pay a gas bill or the mortgage. This was written in 2014, and conditions are worse today for more people, and these loans are thus more necessary for more.
We should get rid of the profit, but it would hurt millions of people to remove this safety valve. On the other hand, unregulated loan sharks love it, 'cause they know no one will legislate the need away.
The problem is not payday lending, it is poverty. The answer is not to visit deprivation and hardship on those who it will hurt the most, instead of standing up to those who won't invest in American workers, our neighbors.
As far as withdrawals were concerned, my bank (Bank of America) didn't charge anything to me when I withdrew cash from one of their ATMs or when I visited a teller. I had an ATM in my office building where I could withdraw up to $700 per day. If I needed to withdraw more (which was a rare event) all I had to do was walk about 60 yards across the parking garage to see a teller since they were in a tower nearby. They did not charge anything for using my debit card for my transactions at stores and the only time that I ever paid a transaction fee was when I used an ATM that was not in their network.
You could also pay your neighbor with cash instead so that it isn't so much trouble for you to demand that they waive the $8 fee? I'm certain that your neighbor would appreciate not having to make a special trip to the bank to cash your $25 check, nor would she need to be concerned about losing the check, having the check bounce or having to explain those checks if she had her taxes audited.
I am glad that you are concerned about your poor neighbor being ripped off with an $8 fee on a $25 check, but if that is the case why are you continuing to cause both her and yourself so much frustration when there are other ways to alleviate that aggravation? If you know that you need to pay her for a debt or even to give her a gift for such a small amount then taking out a little extra cash (2% of $25 is 50 cents) is certainly easier and probably safer since your neighbor has to travel home with the cash anyway whether they are walking (which makes the neighbor prone to muggers) or using a vehicle (which is costing your neighbor the price of gasoline)?
I guess that it is easier to blame the bank instead. 
Good luck finding another bank that can provide you better service. 
You realize all banks charge a fee to people to cash checks. And it seems like their tellers get that fee as bonus. Enjoy your ATM limit, it's the same for most banks. There are only 5 or is it 6? major banks in the USA, they're all similar with fees.
We used Bank of America for many years for a small business. Make a deposit every month of checks through the drive through, teller scans checks through & you get your receipt, like many other small businesses do.
One day a week later, check the balance and the deposit is not in my account balance. Call the bank and turns out the bank got robbed of 'canceled' run through check deposits. BOA took the deposit out of my account & didn't even call me. It took two months of dealing with Bank of Americas 'security witch' in California to get that money back.
I had to list every clients name/address, phone contact information and check amount to verify a deposit the BOA had scanned in & already had that information. Once the money was back, I moved all accounts to Chase. They have the same fee structure anyway for everything.
Too much info about my dislike for banks, sorry.
My point is people without much income are dunned by Americas banks for the most fees. Millions of Americans are forced to carry cash because even a $180 a year basic checking account fee is a hardship for many people. I don't want to be forced to carry cash either, it's not safe for anyone.
It is easiest to blame the banks, they are at fault
p/s and yes edited to add, my neighbor, yes I use cash now even though she has a bank account for her ss check deposit.
but usually they say that I've applied for a payday loan. They are getting desperate if they are calling for me since I'm part of the long-term unemployed and in the process of applying for SSDI. When I lost my job I paid all of my loans off from my severance check since I didn't want to have any outstanding debts remaining and I know that I didn't apply for any loans afterwards. 
