The Nation: Nine years ago, a Harvard law professor dreamed up a new concept: a government agency devoted solely to protecting consumers from unscrupulous financial companies, the way the Consumer Product Safety Commission protects us from faulty microwaves. Today, Elizabeth Warren’s Consumer Financial Protection Bureau (CFPB) is in full effect, and has already netted Americans about $10 billion in remedies from banks since it started its watch.
One financial product remains in the shadows, however, preying on consumers: payday lending. The very same CFPB just announced rules to regulate the industry, proposing that lenders be required to verify whether customers have any chance of repaying what they borrow and limiting how many times a borrower can roll over loans while accruing interest and fees. But the CFPB’s powers are also limited—it can’t cap interest rates, which frequently soar to 400 percent, or restrict access to these short-term loans. Meanwhile, too many Americans who can’t afford the minimum deposit necessary for a traditional banking account, or who don’t live near branches or simply don’t trust banks, have nowhere to turn but to payday lenders and other kinds of risky, expensive products.
Elizabeth Warren has a new crusade, though, and it could fill that vast void: postal banking. Read more.