“Haganism”
Ha-gan-ism n. 1. -the state of being Hagan 2. -to support or believe that the extreme limitation of short-term credit will result in an improved lifestyle for consumers. 3. -to insist that banking overdraft fees should not be limited, as they are a greater alternative than short-term loans.
Most of us who stay abreast of the happenings on Capitol Hill and the shenanigans relating to financial “reform” are aware of the Hagan Amendment 3744 which proposes to limit short-term loans to 6 or fewer in a 12 month period. The need to protect consumers in light of the financial crisis and continued lack of confidence from consumers is completely understandable. However, I have an increasing concern that politicians have no knowledge of the complexities of business…profit, loss, risk, cost-benefit, supply and demand etc., nor an understanding of consumer wants and needs. Further restricting access to credit in my opinion isn’t meeting anyones needs and will benefit no one. Of course, that doesn’t mean that reform isn’t welcomed by the payday industry as you’d probably be lead to believe by consumer advocacy groups founded by the Sandlers-whom-by the way-were on Time’s list of 25 people to blame for the financial crisis. But I’m sure I’ve mentioned that before. Again, the opposition stems from every reform measure involving either dramatically decreasing the availability of credit (which hurts the consumer) or drastically decreasing the APR of short-term loans. The irony is that no resources are being dedicated to the mandatory availability of financial education resources to consumers. In addition, no matter the limit placed on loans, there will still be an applicable APR per federal guidelines. Since much of the hoopla about payday loans is based on the associated APR and not fees, I have a feeling that the opposition will still not be satisfied.
That being said, are these amendments just for show and tell or are there actually considerations as to how they will affect the current financial climate and economic atmosphere? Or maybe there is some consideration but an absence of sincere concern unless there is a major stakeholder in the senate. Why is 6 the magical number in a 12 month period? If Hagan’s goal is really to protect consumers then shouldn’t the number of overdraft services extended per customer, per year be included in her definition of covered loans?
No comments yet.