As Our states, due to the subprime mortgage crash a new financial agency is to be established in order to control all the types of consumer financial products and to avert the possibility of another economic collapse. This agency is called the Consumer Financial Protection Bureau (CFPB) and was supposed to be independent institution in contrast to the certified bureau which is short of regulation power. But still CFPB is likely to entirely change the consumer credit market, to change it in such an extent that no person could forecast.
Originally small car dealers, who provide their customers with the credit options to finance the buying of the car, were proposed to be controlled by this bureau. But because of the high power and authority of lobbyists in the automobile industry, more than 18,000 car dealers were able to stay away from the regulation of the agency. A lot of people protested against this gap, but after numerous agreements and negotiations the car industry has won and avoided the regulation.
Although the establishment of the new agency and strong regulations are “aimed at” safeguarding customers against unfair terms and conditions of credit institutions, many financial experts state that in reality the new bureau will bring huge negative affects to the economy. For example, it may push a great number of small companies out of the credit market, which will make impossible for borrowers to take a short-term loan for financing braces or buying an old cheap car. Analysts predict that as a result we can see not only a dramatic increase of job losses in such sectors as payday lending or auto industries, but also limited finance alternatives for customers, who are already suffering from the lack of credit options. Many types of short-term credit are regulated by legislative acts and all conditions of lending these loans are entirely revealed to customers.
Payday lending industry is one of the industries that couldn’t avoid the regulation of the CFPB. Payday loans are loans which are given to the borrowers with bad credit record in order to provide them with short-term credit for financing their urgent purchases till their payday. Paydayloanjr.com and other direct payday companies are considered to operate reliably and fairly with their customers. But in spite of this fact cash advance loans, which are already under the State regulation, now are to be monitored by both the new institution and the State legislative acts. This news about coming changes is widely discussed among the payday loan lenders from all the States in the country.
The most interesting feature of this regulation is the requirement, given by the Treasury, to provide those borrowers who don’t use the bank services and are only able to take payday loans with the credit alternative, under which a customer don’t have to have a banking account. I wonder what credit option will be proposed and how it will work. And it’s definitely very important what annual percentage rates will be set in order to prevent loan defaults.
We don’t care much what purposes the new law pursues, but it’s obvious that in a few years we can see what effects the creation of the CFPB has had on industries. Hopefully, the agency will bring benefits to customers and the whole economy in future.