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BIRMINGHAM, Ala. (AP) — The Obama administration’s new consumer protection agency held its first public hearing Thursday about payday lending, an industry that brings in some $7 billion a year in fees nationwide.
The Consumer Financial Protection Bureau said testimony from the session in Birmingham — where City Council members recently passed a six-month moratorium on new payday lending businesses amid concern over their prevalence and high interest fees — would help guide the development of future regulations.
Richard Cordray (Photo: Whitehouse.gov)
Director Richard Cordray said the bureau recognizes the need for short-term loans, but the lending needs to help consumers, not harm them.
“Before this month, the federal government did not examine payday lenders,” Cordray said. “Some state regulators have been examining payday lenders for compliance with their state laws. We hope to use our combined resources as effectively as possible.”
About 19 million American households now have payday loans, officials said. With interest rates often in the teens and easy application procedures, lenders said they generate business through radio and television advertising, plus word-of-mouth and by locating offices in areas where other small-loan lenders are located.
Many in the standing-room crowd of more than 400 were lending company customers or employees who wore “I Choose Payday Advance” stickers provided by the industry.
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