'Loan Sharks Will Be Feasting': Comments of the Week
June 3, 2016 7:30 AM
American Banker readers share their views on the most pressing banking topics of the week. Comments are excerpted from reader response sections of AmericanBanker.com articles and our social media platforms.
In response to the CFPB's payday lending proposal:
"One thing is certain. The loan sharks will be feasting on consumers of modest and lower means. Over half of Americans do not have the means to meet a $400 dollar emergency. As currently proposed, these regulations will not only continue to keep them shut out of the regulated banking system, but also the modestly regulated payday loan industry. For loan sharks the dinner bell is ringing! Eat up."
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Rebutting an op-ed that puts a somewhat positive spin on policies that reduce credit to borrowers:
"So who decides who is 'worthy' of receiving credit? You? The academic elite? The government? I have a novel suggestion: how about the market?"
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On banks buying mobile banking products from non-core providers:
"This so-called 'trend' makes no sense at all. It's like going to a Lexus dealership and asking for BMW headlights, Lamborghini doors, etc. Sure they may perform better, but when something breaks who's going to fix it? You'll have to hire a specialty mechanic and pay a premium. Moreover, since 'digital' is a self-service channel, who will provide the customer support when the customers have questions?"
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On banks' exposure to the used-car market versus risks faced by the automakers' finance arms:
"The captives are just as exposed to falling used car prices. It doesn't matter whether the original loan was for a new or used car. ALL cars securing defaulted loans are used at the time of default."
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On consumers' needs for short-term financing:
"More importantly, this isn't about saving the economy. It is about someone living paycheck to paycheck having an emergency such as an auto repair or a veterinary bill that must be paid before the person can get his car or pet back (or sometimes before he can get his pet treated). Why should someone sitting high in an ivory tower pondering endless research projects decide if I can get a two week loan to get my car out of the shop when I need it for my job?"
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Another reader's reaction to an op-ed author's argument for restricting poor-credit borrowers' access to loans:
"By all means, let's take away the available options and leave credit-challenged folks to cast about for the undefined but presumably superior alternatives. Given a choice between [the author's] paternalism and the market's libertarianism, I'd as soon take the latter."
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