The Consumer Financial Protection Bureau To Oversee Payday Lending

After the gravest mortgage collapse has overshadowed all similar ones over past decades, the concern about future of financial sector is arising. It is thought that a new agency will be sufficiently effective to regulate the financial sphere to prevent the recent crisis from recurring. The agency in question is called CFPB or the Consumer Financial Protection Bureau. Initially supposed to be independent body, the CFPB is expected to bring changes in the financial sector. The changes are likely to cause current financial landscape transform in a way that consumer credit options will never be the same.

However, not all businesses are considered of the CFPB jurisdiction. Small auto-dealerships offering credits to their customers were supposed to be regulated by the CFPB in the beginning. Yet strong opposition of car industry businesses though profound lobbying managed to prevent enactment of the regulation in respect of 18,000 auto dealers. Nothing but a loophole as thought from the CFPB supporters' point of view is considered a tangible victory for small auto-dealerships.

As for financial analysts, many of them argue that the essence of the regulation isn't actually intended to protect consumers from complicated and ambiguous financial terms and language, though which some businesses happened to cheat their customer. The regulations are thought to bring about terrible consequences for small financial businesses. Without financial options being available, a lot of people will actually loose many opportunities to stabilize their finances. Different kinds of emergency expenses and pending bills may lead to household decline. The availability of competing small financial businesses is vital for the country in general. What is more, the regulations will evidently result in wide job losses in the industry. Taking into account these consequences the consumer protection seems a bit more complicated that just limitation of certain financial options. As a matter of fact, abovementioned "tricky language" is currently less topical for a lot of finance options, which pledged to disclose fully the terms of the loans.

Payday loan industry is one that suffers most from new regulations. Payday loan lenders are almost the only finance option for those with bad credit score. Working honestly and openly payday loan lenders pose no threat to financial stability of individuals. Still the CFPB regulating payday industry is a bad news for payday loan lenders already regulated by State laws. Lenders right across America are keeping up to payday loan news to get clearer image of the state of things.

It is worth mentioning that the Treasury has authorized creation of a program that will provide credit options similar to payday loans in one hour. These credit options will be provided those who currently have no other option, but cheap payday loans.

The implementation of the program may interest instant payday loan lenders, as there definitely are weak points in setting up such financial options. What will be the APR? How effectively will it cover loan defaults?

Whatever purposes the CFPB is trying to fulfill, we will obviously have to deal with its impact on the financial industry for years to come. We do hope the result of the CFPB will be positive for individuals and economy.