The fledgling Consumer Financial Protection Bureau (CFPB) is writing the first federal regulations to try and rein in the $46 billion payday loan industry, The New York Times reports, citing interviews with "industry lawyers, consumer groups, and government authorities briefed on the discussions." Several states have attempted to regulate the short-term loans with interest rates as high as 300 percent, but the industry has been adept at adapting their businesses around the new rules.
The CFPB is trying to find a balance between clamping down on predatory lending and cutting off credit to people who can't otherwise get loans. The median annual income of payday loan customers is $22,400, the CFPB found, and 70 percent of the borrowers use their often revolving loans to pay for basic expenses. That comes at a high cost, though: Payday borrowers paid median fees of $485 for each $350 loan, and they took out a median 10 loans per year. For an accessible and entertaining primer on payday lenders, watch this John Oliver segment from last year. —Peter Weber
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