Richard Cordray Should Go After Payday Lenders

San Francisco Chronicle
January 5, 2012
Pender, Kathleen

With President Obama's unorthodox installation of Richard Cordray as the new head of the Consumer Financial Protection Bureau via recess appointment, the new watchdog finally is able to exercise its authority over nonbank entities -- including payday lenders. While this lending niche is a priority for many consumer advocates, they have not lost track of other key issues that they hope the regulator will address as well. Travis Plunkett of the Consumer Federation of America, for instance, hopes that the CFPB will rein in not only payday loan outfits but also mainstream banks that now are offering similar short-term, small-dollar loans. "Bank payday loans are slightly cheaper than traditional payday loans but can have steep late fees that payday loans do not," the National Consumer Law Center noted in a report. Plunkett also would like to see Cordray train the regulatory spotlight on financial abuses targeted enlisted persons, improper mortgage servicing and foreclosure, and unfair and expensive overdrafts. The National Association of Consumer Advocates' Delicia Reynolds Hand, meanwhile, is looking to CFPB leadership to "make the mortgage market safe again" by blocking lenders from steering borrowers into high-cost loans when they actually qualify for better terms. Other issues her group is pushing to the forefront of the CFPB agenda include abusive debt collection practices -- including new efforts to recover debt through social media and texting -- and a ban on mandatory pre-dispute arbitration clauses in contracts between financial service providers and their customers.
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