Payday Lending Pros And Cons

The systems that have been put in place by the Better Business Bureau to protect businesses and consumers are continually being updated as it should with any organization. The Better Business Bureau has implemented change as it relates to the point system of accreditation (Ferrell, Fraedrich & Ferrell, 2015). This change has allowed the organization to be grade each organization in a more uniform fashion. It is important for organizations to remain unbiased if their mission is service the public. Being fair and unbiased will always hold creditability versus not being fair and biased.

Over the next few decades, the FTC saw changes, many fleeting and few with staying power. There were also staffing issues from the 1930s to present. In addition, at one point in time, when the FTC was tasked with enforcing labeling and identification, especially within the textiles and furs industry, many felt that the FTC overzealously pursued labeling claims. FTC also saw other challenges such as scathing reviews by critics consistently accusing the FTC of falling short. From 1933 through 1935, there were significant turnovers of leadership areas including the Commissioner’s position. Critics would claim that the Commission had become complacent after the existing board remained in place from 1935 to 1945. (Federal Trade Commission, 2004)

The Consumer Financial Protection Bureau, or CFPB, was created as a tool of financial reform in the legislative package that was authorized by the Dodd-Frank Act, but the law specifically includes terms that prohibit setting interest rate limits, which is contrary to the 36-percent limit that the CFPB is currently trying to mandate as a universal limit on short-term rates. The specifics of the Dodd-Frank Act, according to the www.dodd-frank-act.us, state that the legislation grants, "NO AUTHORITY TO IMPOSE USURY LIMIT" unless such a limit is first passed through due legal processes.

“Instead, prior research claims to show that younger, nonminority consumers with relatively high incomes and educational levels are more likely to take advantage of services from third-party agencies, like the BBB” (Garret & Toumanoff, 2010, p. 3). Therefore, the organization created, Council of the BBB (CBBB), changed point system to eliminate points awarded for accreditation, streamlined its processes for receiving complaints, implemented additional procedures for investigating complaints, begun a thorough investigation into its Los Angeles bureau, agreed to review its processes into accrediting businesses, and instituted a procedure requiring an independent third party to help in the review process. Hopefully, these changes will give this organization the ability to regain its reputation with consumers. Since this organization is mainly funded by businesses and accredited membership, one should be confused as to whether these standards will be adhered to by BBB

A survey of 37 economists conducted by the University of Chicago in 2014, for example, found that nearly all believed that without the stimulus, the unemployment rate would have risen higher than it did.” In addition to this, President Obama strategized new regulations to protect consumers and to prevent another financial crisis. In 2009 and 2010, he signed the Credit Card Accountability Responsibility and Disclosure Act, the Dodd-Frank Wall Street Reform and the Consumer Protection Act into law. The CCARD Act restricted and obligated interest rates on credit card companies and obligated them to enact transparent policies. The Dodd-Frank created the Financial Stability Oversight Council and the Consumer Financial Protection Bureau which could disintegrate banks if it was possible to fail for any reason including but not limited to subprime loans.

I am going to look at one of America's most resilient industries. The Predatory lending better known as Payday loans, and even sometimes pass as car lenders and mortgage lenders. One in twenty households have taken one out at some point. And is estimated to be a nine billion dollar industry. With payday loan outlets are all over the place. The ethical question comes into place. When you question whether if receiving one of these loans can be a benefit or drag the person signing into the loan deeper in debt. Im very interested on this subject because I believe that payday loans can be very useful and benefit the general public, if we put in place very specific laws and restrain what lenders can do making sure that there is

The Trump administration is closely monitoring the roles of independent regulatory agencies since the president signed the executive order to reduce the regulatory burdens created by Dodd-Frank. Since many people consider the CFPB an independent agency, several student loan debt holders are left to wonder if a federal agency will exist to help protect them from predatory lending practices.

Because of this nasty lending cycle, payday lending is illegal in 15 states, and is regulated elsewhere. In some states, borrowers are only allowed to take out a specific number of loans per year. In other states borrowers can only take out a specified number of loans at a time, and after a certain length of time the lender must lower the interest and extend the term so the borrower can get out of debt.

Scurlock presents the statement that the United States federal government defends the lending industry, which adds to their ability to have such high profits. He appeals a lot to logic when presenting this argument and supplies the audience with many facts that increase both the credibility and strength of the minor argument. For example, he gives information from when George Bush was president and how his second highest campaign contributor was a bank, and that same bank, MBNA, wrote a bill increasing the difficulty for middle-class families to have a second chance because they claimed that the option of bankruptcy was being abused; Bush passed this bill. Scurlock reveals the bias that the government has towards the lending industry with the use of this factual information. He also says that the Federal Governments top regulator rushed to the banks’ defense when there were complaints aimed at the credit industry, which is just another example broadcasting the bias of the government. Along with facts, Scurlock includes footage of consumer credit hearings that show how each bank was given the chance to discuss their

MODERATION: In order for this crisis to have reached such alarming heights is a clear demonstration that there are not enough legislation and regulations in place to ensure that banks are not exploiting the public. For loans to have been declared unconstitutional is so alarming that America should be embarrassed that so many of their citizens were exploited. The travesty continued when banks, not the victims, were given additional funds to balance their books in the midst of the crisis. They gave themselves huge bonuses for having pulled off the greatest heist in the history of America. After securing their bailout and bonuses, they still foreclosed on the victims

In a 2010 National Review article titled “Chris Dodd’s Big, Misguided Bill” Malpass argued against the value of creating the consumer financial protection bureau, writing that the Obama administration should “streamline and concentrate” existing consumer protection regulators, a step that he said “would result in a reduction of government jobs.”

Americans who need a short term loan to repair a car, fly quickly to a stick relative beside or catch up on child care payments even find themselves going to payday lenders ether online or trough one of the thousands of payday lending store fronts. (Wherry) using online is a way to pay or catch up with your due date of the payment that you owe. Having someone that can help you with a payment is a payday lender that can help you with a car payment also paying your rent or buying food or also buying a new sofa. Nationally borrowers spend roughly 8.7 billion per year on payday loans fees and what might start as a 500 lifetime can become a heavily burden. (Wherry) having a borrower that lend you a loan can be easy but it’s time to payback that is when it became complicated. Also having a fee is very complicated because they pressure you to pay back when you miss your due date. Annual interest rates for payday loans typically run between 391 and 351 percent a cording to the center for responsible lending and most people who use them end up paying more in fees over the course of the year than they originally received credit. (Wherry) annual rates are very high in percentage because of lending tem money and not paying back on the due date. Having these huge percentages are too much but when you borrow more than you need the more you ending up paying than the last

The new consumer protection with this law is that applications such as loan and credit cards must be easy to understand. For example there can’t be any “fine print” that is tricky or hard to understand and there cannot be any hidden fees. Next time banks take big risk and fail the government will no longer bailout them on the reason “too big to fail”. If the bank fails because of their business practices; just like any regular mom and pop store it closes and files bankruptcy.

Bank of America is one of the largest banks in the nation. It is a multinational company and it is recognized by its high revenue value. Unfortunately, Bank of America has endured many complaints and harsh views regarding their lack of ethics. Ethical issues occur when there is a blatant disregard to implement integrity, trust, and responsibility. In some financial institutions, ethical matters are displayed in the way the consumers are treated. Within the past nine years, Bank of America has diminished all of their ethical promises by revealing customer information without their permission; discriminating against consumers based on their race; and manipulating overdraft fees in order to benefit the bank. In order to assess these problems, it is vital to recognize what Bank of America claims to stand for and determine where their most concerning issues are generated from.

On September 8 2016, the Consumer Financial Protection Bureau (CFBP) announced that it was taking an enforcement action against Wells Fargo Bank . Wells Fargo is a Fortune 100 company and one of the "Big Four Banks" of the United States. Investigations conducted by the Bureau revealed that employees of the bank created unauthorized deposit and credit card accounts across the country to meet sales goals. Over the years, the bank’s employees opened over 1.5 million fraudulent bank accounts and 0.5 million fake credit card accounts for customers, to meet sales targets and obtain bonuses. The affected consumers, were being harmed by the associated charges and fees for these accounts. The fees include insufficient funds or overdraft fees for the deposit accounts and annual fees for credit card accounts.