The rules were misconceived to begin with, by people who mistook the symptoms for the problem. There is a ton of competition in payday lending—there is zero reason to believe that payday lending rates are higher than the efficient amount. There is no hint of market failure, systemic risk, or any of the other criteria that typically justify regulating financial institutions.
That means this rule wasn’t really a consumer protection regulation but rather a moral regulation. It’s not in the vein of Dodd-Frank, but rather blue laws and the prohibition on buying cooked food with food stamps. People don’t like the moral implications of what it means to be poor, so they try to legislate the symptoms. The result is denying poor people access to credit.
EDIT: I see people hand waving about fraud and hidden fees and lack of transparency. But if you look at the rules, they don’t address such things: https://www.consumerfinance.gov/about-us/newsroom/cfpb-final.... They are restrictions on who can borrow and how much.
That means this rule wasn’t really a consumer protection regulation but rather a moral regulation. It’s not in the vein of Dodd-Frank, but rather blue laws and the prohibition on buying cooked food with food stamps. People don’t like the moral implications of what it means to be poor, so they try to legislate the symptoms. The result is denying poor people access to credit.
EDIT: I see people hand waving about fraud and hidden fees and lack of transparency. But if you look at the rules, they don’t address such things: https://www.consumerfinance.gov/about-us/newsroom/cfpb-final.... They are restrictions on who can borrow and how much.