Payday lenders are finding themselves in the Obama administration’s crosshairs as the president’s new financial regulator begins to flex its muscles following the recess appointment of the agency’s director, Richard Cordray.
Nearly 20 million U.S. households use payday lenders and pay roughly $7.4 billion in fees every year, Cordray told attendees at a Brookings Institution event.
Payday lending is one big piece of the Consumer Financial Protection Bureau’s responsibility that will include non-bank financial companies such as money transfer agencies, credit bureaus and private mortgage lenders.
“The consumer bureau will make clear that there are real consequences to breaking the law,” Cordray said. “Since most of these businesses are not used to any federal oversight, our new supervision program may be a challenge for them.”
But Jabo Covert, vice president of government relations for Cleveland, Tenn.-based Check Into Cash, said payday lenders already face multiple layers of regulation by states.