A recent Forbes article examined what Hillbilly Elegy, J.D. Vance’s bestselling memoir, has to say about payday lending.
The article highlights Vance’s personal experiences with payday loans and asserts that many people fail to understand the everyday realities of hardworking Americans. As a result, short-term lending regulations often undermine the needs of the people they are supposed to help. From the Forbes article:
“To the list of people who should read Hillbilly Elegy, add the state legislators and the regulators at the Consumer Financial Protection Bureau seeking to cripple the payday lenders, oblivious to the ways lower-income Americans benefit from their services.”
The Consumer Financial Protection Bureau (CFPB) has proposed rules to limit consumers’ ability to access payday loans and essentially eliminate regulated short-term lending.
According to the article, Vance recounts a time when he used a short-term loan:
“On that day, a three-day payday loan, with a few dollars of interest, enabled me to avoid a significant overdraft fee. The legislators debating the merits of payday lending didn’t mention situations like that. The lesson? Powerful people sometimes do things to help people like me without really understanding people like me.”
Like Vance, millions of Americans prefer short-term loans to the exorbitant fees associated with bank overdrafts and the inflexibility of other credit options. Yet too often, bureaucrats who have no need for payday loans lead the charge to eliminate them, while dismissing the rational actions of those who value the service.
Unfortunately, customer satisfaction has not been fairly considered in the CFPB’s push to eliminate the regulated-short term lending industry. Recently, it was discovered that the CFPB buried over 12,000 positive testimonials that payday loan customers submitted as part of the Bureau’s “Tell Your Story” initiative. Of the 12,546 comments submitted, more than 98 percent praised the industry and its products and services, while less than 2 percent were negative. Of all consumer complaints raised to the CFPB, payday lenders account for less than 2 percent, further highlighting that the Bureau is ignoring consumer needs and using its ideology-driven opinions to drive regulations.
Hillbilly Elegy hits the nail on the head. Regulators at the CFPB are out of touch with the financial lives of the millions of consumers who rely on or once relied on short-term credit to survive.
Read the full article online here.