Payday loans are in the news. The editors of the New York Times and Hillary Clinton’s campaign staff are occasionally regularly in lockstep, and yesterday was no different:
Abusive payday lenders have preyed on Americans for too long. @CFPB's new rule will protect families; the next president should do the same.
— Hillary Clinton (@HillaryClinton) June 3, 2016
Yesterday, Elizabeth Warren’s pet agency, the Consumer Financial Protection Bureau, proposed new regulations that would essentially put out of business most storefront “payday” lenders. So naturally the editors of the Times and Hillary Clinton would be all excited and stuff (although the former does not believe that the proposed regs go far enough).
Now, we can hear you saying, “Blueberry Town isn’t going to defend payday lenders, is he?” Well, no, but we are going to attack the people attacking them!
Our first questions for the anti-payday loan crowd are these: Do they believe that the borrowers they seek to protect are too stupid to understand the very high interest rates that they pay? Or, alternatively, do they believe that these borrowers have no other lawful alternative? What would be a third possibility?
If Hillary Clinton believes that these borrowers are too stupid to be given the choice of borrowing money at these rates, can she suggest a public agency charged with educating people that might provide a solution? You know, public schools, maybe. Or do we have to impose these regulations because the government has utterly failed at teaching the most basic requirements of modern life?
If Hillary Clinton believes that there are alternative lenders for these loans who are not the Mafia, who are these generous lenders and can she please connect them with the people who she thinks are too stupid to make their own decisions?
Anyway, icky as the payday loan business is — and it is icky — what will happen to the customers if we regulate it out of business? One doubts they will be getting loans from JP Morgan — even if Jamie Dimon were so inclined to do, federal bank examiners would lose their minds. My guess is that a lot more poor people will get evicted or have their cars repossessed (and lose the jobs they can not longer commute to) because they cannot get a bridge loan to their next pay check.
Unless, of course, they go to their local loan shark.
If Elizabeth Warren’s favorite agency had a sense of humor — that alone is a hilarious idea, come to think of it — it would call its proposed regs the “Tony Soprano Full Employment Act.” Of course, that would not be truthful, because no legislator will ever have a chance to vote on the proposal so it can’t be an Act, but you get our point. The CFPB will act, as it were, entirely on its own, and when violent loansharking makes a big comeback the “progressives” will claim that this obvious consequence is “unintended.”
1 Comment
This will just drive payday lending underground. Then we will have a different problem of “illegal predatory lenders”, which will then by targeted by increased law enforcement spending and a generous block of money to go toward “public education” on the dangers of underground lenders. Government doesn’t grow by some sort of bureaucratic metastasis, it grows by a form of financial photosynthesis. The more money you give it, the bigger it gets and the more money it needs.