Personal responsibility and the CFPA

Payday Pundit shares a very intelligent article about the CFPA (Consumer Financial Protection Agency). I would like to add my $0.02.

Start by reading this blurb from the article by Megan McArdle:

“For some people this is an argument for laws that make it unprofitable to loan money to people who are likely to default, aka those living on marginal incomes. The problem is, there are two groups of people among the poor: those who will be made better off by credit, and those who will be made worse off. Judging from the bankruptcy statistics, the former group is larger. And there is no way to distinguish between them. The alternate forms of credit that poor people have traditionally used, like pawn shops and loan sharks, are worse than Bank of America.”

My opinion is that as long as the government and press baby people who make bad financial decisions for themselves, it’s going to be hard to lend money to people that need it. Instead of looking at payday lenders as part of the credit cycle. They want to demonize them and make them as unprofitable as possible. The problem is that this inevitably lets irresponsible borrowers off the hook (in their own minds), and the cycle continues.

I just don’t get the insanity of all this. If you ate liver and didn’t like it, then you stop eating liver. If an adult takes out a payday loan and does not like it, then they don’t have to borrow again.

Here’s the full video:

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