NEW ORLEANS (6/16/14)--The purpose of the Consumer Financial Protection Bureau's field hearing in New Orleans last week was to discuss mobile financial services, but once the hearing was open to the public, payday lending became a major topic of discussion.
"In this modern age where people can manage their money on the go, there is great potential to provide access to more consumers and allow them to take greater control of their financial lives," said CFPB Director Richard Cordray. "At the same time, using mobile devices for all sorts of banking services can make some transactions cheaper or faster or both. But we need to make sure that the legal and regulatory framework can keep up effectively."
While security in mobile financial services is a key concern of the CFPB, Cordray said they were also a valuable tool to allow access to services for populations that are physically unable to use brick-and-mortar institutions for their financial needs.
After remarks from Cordray and other officials, the meeting was opened to the public, where payday lending quickly became the topic of discussion. Together Louisiana, a grassroots organization, organized a caravan to the hearing in order to express the need for change when it comes to payday loans (The New Orleans Advocate June 12).
According to The New Orleans Advocate, the group asked Cordray specifically to:
Many speakers at the hearing were there because they felt the state of Louisiana was not doing enough to combat the practice, so consumers are seeking intervention at the federal level (American Banker June 12).
The CFPB has announced that payday lending would be part of its spring 2014 rulemaking agenda, with a special emphasis on whether rulemaking is warranted for payday loans and other deposit advance products.
In addition, the CFPB released a report on payday lending in March that found, among other things, that more than 80% of payday loans or rolled over or followed by another loan within 14 days, and half of all loans are a part of a rollover sequence of at least 10 loans.
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