Watchdog Agency Hearing to Examine Payday Loans

January 18, 2012
AL.com 
payday lending news

The national debate over the controversial payday loan industry will take center stage in Alabama this week, when the government's fledgling Consumer Financial Protection Bureau holds its first field hearing at the Birmingham Civil Rights Institute. The CFPB said it chose the location because it is "a state with one of the highest number of payday lenders per capita in the country." Additionally, as noted by policy analyst Stephen Stetson of the Arise Citizens Policy Project in Montgomery, Birmingham just this month adopted a moratorium on new payday lending outlets in the city. "Payday lending in Alabama is a huge problem," he said. "It's basically a technology for stripping wealth from low-income communities." The CFPB's newly appointed director, Richard Cordray, is expected to attend the hearing -- which will including testimony from consumer groups, civil rights groups, industry representatives, and members of the public. While laws in the state are meant to regulate the industry, critics say they are not always effective. Despite regulations barring multiple, simultaneous payday loans to a single borrower, there have been numerous bankruptcy filings in the state by borrowers with as many as 20 outstanding payday loans. The agency said the hearing "will provide the CFPB with on-the-ground insight into the payday lending market."
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