Once he is confirmed as Director there will be significant regulation of "Loan Sharks." Make no doubt about it, if the Republicans filibuster his confirmation vote they will be protecting Loan Sharks.
The Loan Sharks are also known as "Pay Day Lenders." The entire dynamic surrounding this draconian lending causes hardship and not functioning to a family or home budget. It facilitates 'self-abuse' by consumers.
The concept of Pay Day Lenders/Loan Sharks is fairly straight forward. The person with the cash loans the person without the cash. And I emphasise CASH. The person with the cash loans the person without the cash a percentage of their anticipated pay check based on personal identificication and pay stubs and three to four personal references. Once a 'reputation' of who a borrow is they literally have carte blanc to not only receive one loand but to perpetuate that loan into the future.
The pay day loan goes like this. I earn $500 per week. Let's say there are deducations of $100. My application to the Loan Shark allows me to borrow 50%, a full one half of my take home pay. The loan is only good for at the very most 15 days and then it has to be paid back. For that loan of 15 days (if a borrow is paid twice a month on the 15th and 30th) I pay $15.00. Now, while that seems like a convenient thing to have especially around Black Friday; it gets out of control almost immediately.
The day I have to pay back the $200 I borrowed and the $15.00 interest I know have a take home pay of $185.00 until my next paycheck. Let's say that after Black Friday I had to pay the rent. Well, heck I don't have it. So, I am faced with paying late fees and risking eviction notices and paying court costs to remain in my rental or I go get another loan from the local and LEGAL Loan Shark. Once again I pay the $15.00 to have a full paycheck less the $15.00 I just paid, plus the $15.00 I will pay again in 7 days. So far I am into the Loan Shark for their profit of $30.00. Still not bad considering all the neat stuff I got on Black Friday.
So, I figure by the time my next paycheck rolls around I'll be able to sustain the net take home pay of $185.00 and I'll be good for Christmas. Well, 7 days goes by and the rent has been paid, but, the utilities and the groceries have to be paid and the price of gas went up by ten cents a gallon and things ain't looking so good. So, back to the Loan Shark and after one month I have now spent $60.00 I could have used for gas and groceries and here comes Christmas.
The practice is draconian, it sequesters people into a corner they never can manage to get out of and the $15.00 fee now becomes anywhere from 300% to 600% or more in interest charges on an annual basis. It becomes a chronic loan they should have never received in the first place because the people that frequently take these loans have very poor credit ratings. And why do they have very poor credit ratings, because they were foreclosed on or evicted due to the downturn in the economy.
So, a confirmation vote of Richard Cordray will facilitate the regulation and quite possibly the elimination of legalized Loan Sharking. This is the man the Republicans won't confirm because they are breaking the law. The new Consumr Protection Director is LAW now. There is a position for Director in the department created when the new law to regulate banks was passed. Effectively, the Republican Senate will again filibuster a vote to stop the confirmation of a highly respected Former Attorney General of Ohio and in doing so they will be breaking the law. The Republicans are instead pandering to cronies that literally rob people into unmanageable debt.
Oh, one other thing. When the borrower finally has a check that bounces because there comes a point where all the money they paid in interest has shortened their purchasing power by a full pay check, then there are charges filed with the local law enforcement to arrest the borrow to obtain the monies and the real fun begins. So, the confirmation vote today of Richard Cordray will serve the people in the USA greatly and should not be delayed. The really odd thing is that borrowers will continue to be arrested but the Republican Senate won't.
