Financial Overhaul Gives States Wiggle Room on Title, Payday Loans

St. Louis Post-Dispatch
August 1, 2010
Hathaway, Matthew

According to the Center for Responsible Lending, the new Consumer Financial Protection Bureau created by the recently passed financial reform legislation will not have the power to regulate title and payday loans, thus leaving them under the purview of individual states. This does not bode well for residents of Missouri, where weak laws allow lenders to exploit borrowers. Other states are capping interest rates and making certain types of loans illegal. However, Missouri continues to allow usurious lenders to do business. Diane Standaert, an attorney with the Center for Responsible Lending, said the state is unrivaled when it comes to the success of the title-loan industry avoiding laws specifically designed to regulate their products. She added that the lenders' efforts to evade the laws are somewhat ironic given the fact that Missouri's title-loan law is relatively weak to begin with compared with other states' laws. "But car-title lenders are still going out of their way to evade a law that gives them a lot of freedom," Standaert concludes.
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