If the Payday Lending Industry Goes Out of Business, What Will Replace It?

Experts predict both good and bad consequences.
News Story (Missouri)

Geoff Williams
U.S. News & World Report
October 14, 2016

Tags: Consumer Protection, Predatory Lending

Organizations mentioned/involved: Legal Services of Eastern Missouri (LSEM)


“The stories are always the same. These are not loans of convenience. These are loans taken out of desperation,” says Swearingen, who works at Legal Services of Eastern Missouri Inc., a nonprofit that provides free civil legal assistance to low-income individuals and the elderly in eastern Missouri.

For several years, the federal Consumer Financial Protection Bureau, or CFPB, has been studying the industry and crafting new rules that will eventually regulate payday lenders and other high-cost, short-term financial products. In June, the agency announced its proposed rules, and invited public comment until Oct. 7. The industry as a whole isn’t happy, saying that the regulations are onerous and will cause payday lenders to shut down, leaving cash-strapped consumers without a way to get a loan. Alarmist? Here, we examine these proposed rules, when they will go into effect and what the consequences could look like.