[Jonty30]

I’m guessing the banks are behind it, so they can make more friendly $5,000 bank loans and really trap the poor.

[Extremely Extreme Extremist]

I’m guessing the banks are behind it

No, Obama is behind it. He's cutting out the middlemen and making the federal government the source for poor people already poor because of his policies.

[LostInBayport]

I’m guessing the banks are behind it, so they can make more friendly $5,000 bank loans and really trap the poor.

This was a topic not long ago on a talk show I listen to. There were many callers who argued that these loans, in small amounts only, were beneficial to the users.

Most of them do not have bank accounts. When they have to cover an emergency expense (blown tire, health issue, etc.), they use the payday loan process. The banks want them to lose that option and instead open up bank accounts, so when they need that emergency cash they overdraw their accounts, generating big overdraft fees for the banks.

That was the argument anyway.

[Pelham]

I suspect that payday lenders are being funded by the same Wall Street firms that were funding the exotic mortgage loans during the bubble. That market blew up, this is just another, albeit smaller, high yield market for them to farm. The rates would have been considered usury back when we still had usury laws on the books.