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Consumer Protection Bureau Takes On Payday Loans

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Consumer Protection Bureau Takes On Payday Loans

Business

Consumer Protection Bureau Takes On Payday Loans

Consumer Protection Bureau Takes On Payday Loans

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The recently created Consumer Financial Protection Bureau went on the road to hold its first public hearing. The bureau traveled to Birmingham, Ala., to talk about payday lenders. In Alabama, there are four times as many store-front payday businesses than there are McDonalds.

RENEE MONTAGNE, HOST:

The new head of the controversial Consumer Financial Protection Bureau is taking on a multi-billion dollar industry. As one of his first acts, Richard Cordray is going after the payday lending industry.

From member station WBHM, Tanya Ott reports.

(SOUNDBITE OF TRAFFIC)

TANYA OTT, BYLINE: I'm standing near the main commercial road through a middle-class Birmingham suburb, and in a mile-and-a-half stretch there are 11 payday loan operations.

The number of payday lenders has skyrocketed in the last two decades. Twenty million American households use them, sometimes paying what amounts to 500 percent interest.

At the bureau's first hearings yesterday in Birmingham, resident Quinn Callins says a loan ruined his sister's life.

QUINN CALLINS: A payday loan of $500 ended up costing my sister a $15,000 car plus $5,000 that she paid on the loans.

OTT: Callins says his sister was so ashamed; she cut all ties with the family.

Richard Cordray says consumer want and need short-term loans, but his agency knows some operators are breaking the law.

RICHARD CORDRAY: Harassing families, friends, co-workers in ways that are prohibited by federal law.

OTT: One payday lending CEO who testified said his customers are intelligent and the fees he charges are in line with the risk he takes.

For NPR News, I'm Tanya Ott in Birmingham, Alabama.

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