Financial overhaul bill passed the senate vote today with 60 required votes and it’s on its way to President desk to be signed. The goal of of the reform bill is to further regulate the financial industry in particular the banks and the lenders including the short term lenders. This bill was passed to regulate the financial industry in order to prevent and avoid another big financial disaster as result of sub-prime mortgage crisis that led US economy to deepest recession after the great depression.
Some experts claim that this bill will have unintended consequences as banks will may shift business either abroad or pass on their cost to the consumers.
And that are evidence for that claim. For example today BOA announced to charge new fees, including online service fees and teller fees, to make up for the loss revenue of over draft fees and other fees that will be capped by this reform bill.
How does it affect the payday industry?
As result of this bill, a new government bureau will be created called Consumer Financial Protection Bureau or CFPB. This bureau will set caps and limitations on interest rates, fees, and amount of loans that can be offered by the lenders including the payday lenders. Payday lenders already feel regulated and scrutinized by the States they are licensed from and they fear that the additional federal regulations limits may hurt their businesses dramatically leaving them to close their doors leaving thousands unemployed.