The Consumer Financial Protection Bureau (CFPB) hosted a June 12 field hearing in New Orleans to seek input on mobile banking technology, but it was the topic of payday lending that dominated the discussion.
Louisiana recently adopted a reform measure that limits payday lending for bricks-and-mortar locations but not for online lenders. The state law also does not cap certain interest rates as much as many consumer groups had wanted. Most of audience members who spoke at Thursday's hearing expressed disappointment in the state's efforts.
The CFPB is under increasing pressure from consumers and lawmakers to issue new rules on payday lending, since it is the only agency with the power to do so nationwide. The bureau has so far delayed the release of new regulations, although it has issued several studies examining the topic.
"It is taking us somewhat longer as a result to address this [payday issue], but I think it's well worth a little additional time in order to make sure that what we do won't be made a mockery of by people circumventing it through just transforming their product slightly," CFPB director Richard Cordray had told the Senate Banking Committee a couple of days earlier.
At the New Orleans hearing, Cordray mentioned that underserved consumers tend to use payday lending over traditional banking and compared it to mobile banking products that can help expand access to financial services. The panelists generally favored better promotion and understanding of mobile banking, but some wondered how to get consumers comfortable with using it. Many underserved consumers do not trust banks, which makes mobile banking irrelevant for them.