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Potential Backlash in New York to Proposed CFPB Federal Payday Rules

The Consumer Financial Protection Bureau (CFPB) has been granted the official powers to act as a watchdog group over the landscape of consumer financial products. The CFPB also happens to have recently released a draft of new federal rules for the payday lending industry. Some opponents of short term lending have said that the new rules are a great start in helping to regulate (some might say over-regulate) the burgeoning consumer lending industry. In New York, though, some financial experts and consumer groups are warning people to take a stand to protect their already effective consumer protection laws. Like New York, there are 13 others states along with Washington D.C. that have laws that cap the interest rates on payday loans. Opponents of payday lending in those states have said that the caps help to prevent payday lending companies from running profitable businesses. Regulators in New York have worked aggressively to stop payday lenders from getting around their laws. Some lending companies have opened operations on tribal lands, or via websites. So far, the regulators in New York have been successful in their bid to keep payday lending out of the state, for the most part. Some payday loans do get made in the state, though. Being as some state leaders seem to detest the payday lending industry, though, these exceptions to the rule are being confronted regularly. Other states, like Missouri and Wisconsin, have more relaxed stances on payday lending. In some of these states there are more payday lending locations than there are McDonald’s or Starbucks locations. The new rules that the CFPB has proposed are not supposed to preempt any existing state laws. However, there are some powerful groups of payday lenders that have made the argument for New York to roll back the state level regulations in order to be consistent with the current federal guidelines. Opponents of payday loans in New York believe that the new federal rules are not as effective as the protections already in place at the state level. These payday lending opponents have started to rile their supporters to make the… Read More