Lawmakers continue to debate payday lending regulations

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Sacramento Bee
By: Doug Schaefer
August 8, 2012

Lawmakers continue to debate payday lending regulations

WILMINGTON, Del., Aug. 8, 2012 -- /PRNewswire/ -- Industry critics and short-term lending agencies continue to argue over proposed legislation that will that will influence future regulation. In a bill proposed by Representatives Blaine Luetkemeyer (R-MO) and Joe Baca (D-CA.), online short-term lending resources such as www.fastunsecuredcashloans.com would be able to offer services to a broader base with fewer inconsistent regulations in each state. Currently, short-term lenders that cater to a growing online market face different rules and regulations from individual state officials.

Supporters of the proposed legislation claim the measures would reduce confusion and allow providers to offer more consistent lending options in various markets. Lenders argue the messaging and promotional campaigns would be more consistent with affiliated storefront agencies around the country. Currently, the Consumer Financial Protection Bureau has authority to regulate payday lending companies at a federal level, according to CNNMoney.com. Online agencies must adhere to these standards put in place, creating different lending standards in various regions. More than 12 states currently have prohibitive measures in place regarding payday lending.

States such as Oklahoma have seen an increase in the frequency of short-term loans issued over the last several years, according to NewsOK.com. The proposed legislation is the latest in a prominent debate over the legitimacy of unsecured loans and the accompanying interest rates and fees. Opponents of the short-term lending industry claim payday loan interest rates as high as 391% make the services unreasonably expensive. Supporters of unsecured loans offered by sites such as fastunsecuredcashloans.com counter that the loans are designed to be repaid within weeks and calculating the percentage over the course of a year is unrealistic when criticizing short-term lending services.

More than 12 million Americans use unsecured loans on a yearly basis, according to The Pew Charitable Trusts. Some opponents of the proposed bill include state regulators that believe the measures would dilute the current regulations and oversights put in place at a state level, according to a Bloomberg report. The arguments on both sides of the issue highlight a significant divide at a time when many consumers continue to struggle during the qualification process for traditional loans offered by financial institutions. Some states currently limit the amount consumers can borrow from short-term lenders. In Washington state, borrowers are limited to $700 issued at a time, or 30% of their gross monthly income (whichever is less). The debate concerning the total costs associated with these types of loan options demonstrates the divisive nature of the financial industry.

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