Borrowing While Poor: Evaluating Payday Loan Regulatory Arrangements

Borrowing While Poor: Evaluating Payday Loan Regulatory Arrangements

  • Case
  • Teaching Notes
Abstract

Millions of chronically poor Americans live on the financial precipice—one dental bill, car repair expense, or abbreviated shift at the plant—away from bankruptcy. A substantive portion of these cases represent minimal credit risks because they merely need an additional sum to keep them afloat until their next paycheck arrives. What is to be done? Payday loans have cropped up across the United States to provide that access, but for a price. Many view the business practice as predatory and have sought ways to regulate the growing industry. Politicians assign the duty of regulating to agencies like the Consumer Financial Protection Bureau because many voters have come to expect that there is a primary duty of government to protect the consumers. Industry insiders press back against ...

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