Wall Street Journal – Editorial: A Partial Payday Reprieve
The Obama Administration too often crushed legal industries that aren’t politically fashionable—for-profit colleges, for instance. So it’s welcome news that the Consumer Financial Protection Bureau is unwinding parts of a needlessly punitive rule on payday lenders, though a wholesale rewrite would be better.
The bureau rolled out the payday rule under Richard Cordray, the former director best known for refusing to be fired. His goal was to put out of business lenders who offer short-term loans at high interest rates to customers in a pinch. By the bureau’s own estimate, the underwriting requirements, payment rules and other restrictions would have all but eliminated the industry.
Mr. Cordray and friends imagined themselves defenders of the poor who are preyed upon by usurious lenders. Yet some 40% of Americans say they can’t cover a $400 unexpected expense, according to a Federal Reserve survey. Many can’t get bank credit, and a payday extinction would leave them bouncing a check or resorting to loan sharks.
The bureau didn’t consider the alternatives because the outcome was predetermined.
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