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.

Senator Dodd is sure that the new bill will prevent a possible economic recession and will enable consumers to get rid of unfavorable terms and difficult financial language, which credit companies use when they offer short-terms loans to the borrowers. If Mr. Dodd’s statements will be supported by other Senators, he intends to establish a new institution, the Consumer Financial Protection Agency (CFPA), which will impose additional financial regulations over the lending industry. It is going to be an autonomous government bureau with great power and authorities to oversee financial products, used by customers, including loans for cars and in-house credit services, offered in furniture stores. Other Senators propose CFPA to be controlled by the Treasury. Otherwise, if acting as a stand-alone agency, CFPA will have boundless power and can regulate the whole financial sector, and nobody will manage to restrain it.

Even though the majority of Senators consider that the new regulation is the only possible way to escape another crisis, a lot of financial experts don’t agree and think that the financial reform is likely to negatively affect the national economy rather than improve the situation in the long-term prospect. The most obvious drawback of the reform is the increase of unemployed people due to job losses. A lot of small businesses, including sellers of used cars or dentist offices provide their clients with in-house credit options. “In-house” means that a customer can get a short-term loan from a lender not going out of the office or the store of the seller. But if these businesses face regulations, they won’t be able to adapt to the changes and will have to leave the market.

The regulation will affect even reputable and secure direct payday lending companies like Paydayloanjr.com, which offer short-term credit. Many financial analysts believe that the ban of short-term loans (paycheck advance loans) will in fact worsen the economic situation in America. It can be proven by the reports, issued by the states, which have already prohibited payday lending operations at the local level.

A lot of small businesses have already stated that they are going to stop offering credit options to customers. They don’t want to be subjected to the strict legal rules just to work in accordance with the new laws and continue conducting currently unprofitable operations. By banning payday lending, which enables families with low income to make purchases and thereby increases sales, most economists forecast a great reduction of working places in the industries, affected by legislation. The majority of these industries didn’t have any attitude to the beginning of the economic collapse, but still have to cope with possible restrictions. What is definitely clear is that customer demand for short-term loans will not decrease in any case.