Consumer Protection Bureau Takes On Payday Loans


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.

Copyright © 2012 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.


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.


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.

Copyright © 2012 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.



Please keep your community civil. All comments must follow the Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.