As far as “predatory lending” is concerned (payday loans, for example), by and large, consumers know what they’re getting into. When people take out such loans, they realize they are paying a premium for this service – and are charged accordingly. They weigh the pros (short-term cash) against the negatives (higher cost), and when it is deemed necessary – perhaps to keep their checking account from becoming overdrawn, and from incurring additional fees – they act.
Prohibiting and restricting the use of these banking products is akin to price-fixing – and no good has come from that in the past. Price fixing and its cousin rate-setting will lead to shortages of capital. Those consumers who need these services to cover short-term expenses – young people, the poor, and business start-ups – will be hurt by lack of access.
As documented by the Heritage Foundation, the CFPB’s authority is vast – and frighteningly, virtually unchecked. As such, there is a very real possibility that this agency will become tyrannical because of its lack of accountability.
Ultimately, consumers should be allowed to make their own banking decisions, free from government interference. As Congress goes forward with its plan to defund and repeal laws and agencies that hurt Americans and slow growth, the Consumer Financial Protection Agency should be at the top of the list. It’s expensive, unnecessary, and burdensome, and it will hurt the very consumers that it claims to help.
Nicole Neily is executive director of the Independent Women’s Forum.