Robert Cordray, Director of the Consumer Financial Protection Bureau (“CFPB”) has stated that his agency intends to regulate payday lending, and has indicated that this includes tribal payday lenders. However, the CFPB has limited ability to regulate tribal payday lenders due to the sovereign status of Indian tribes. The states are even less able to regulate tribal activities.
Payday lending is the business of providing short-term, high interest loans that are typically due within two weeks, or on the borrower’s next payday. However, many borrowers let the loans roll over, only paying the interest and penalties due, and generating “churn”, which is how lenders make much of their money. The CFPB is concerned that many borrowers can end up paying up to 300% – 400% interest on their original loans and is looking for ways to regulate this industry. Continue reading this entry