Federal regulations could soon be in place for payday lending companies
By WRCB Staff
President Obama has announced a proposal to tighten rules on payday and title lenders. He says many short-term loans are trapping borrowers into a spiral of debt. The proposal will be overseen by the Consumer Financial Protection Bureau.
The bureau wants rules to verify that borrowers can pay back loans, limit loans to 500 dollars, and mandate a 60-day "cooling off" period before a borrower could take out another short-term loan.
"The idea is pretty common sense: if you lend out money you have to first make sure the borrower can afford to pay it back. Don't lend somebody money if you know that can't pay it back."
The city of Chattanooga is dealing with its own payday leaning businesses. Earlier this year, Mayor Andy Berke proposed a zoning ordinance to limit the number of predatory lenders in a particular area. The measure was approved by the City Council.