Summary of Understanding Non-Prime Borrowers and the Need to Regulate Small Dollar and “Payday” Loans

Looking for the article?
We have the summary! Get the key insights in just 5 minutes.

Understanding Non-Prime Borrowers and the Need to Regulate Small Dollar and “Payday” Loans summary
Start getting smarter:
or see our plans


9 Overall

9 Importance

9 Innovation

8 Style


In June 2016, the US Consumer Financial Protection Bureau proposed a rule to govern the financial products that constitute “payday lending.” The rule, which could take effect in 2018, places stricter guidelines on vetting a customer’s ability to repay debt that often carries extortionate interest rates. In this comprehensive analysis, economist Aaron Klein explains in clear, plain language that federal regulation is necessary, given the dangers associated with predatory lending. getAbstract recommends his compelling report to financial professionals and policy makers.

In this summary, you will learn

  • How proposed rules from the US Consumer Financial Protection Bureau (CFPB) will affect the “payday lending” industry,
  • Why consumers need the protection of new regulations, and
  • How the CFPB can strike the correct balance between market choice and government oversight.

About the Author

Aaron Klein is a fellow in economic studies at the Brookings Institution.



Proponents of more stringent oversight of American “payday” lenders focus on the negative outcomes of payday loans for consumers, who often find themselves in “debt cycle traps.” Opponents of regulation stress the need for short-term credit for those who don’t qualify for traditional loans at lower ...

More on this topic

By the same author

Four Ways to Make Wiser Infrastructure Investments
America’s poor subsidize wealthier consumers in a vicious income inequality cycle
Biggest Financial Regulation Stories of 2017, and What to Watch in 2018
Four Questions to Ask Before Breaking Up the Banks

Customers who read this summary also read

The Value of Debt in Building Wealth
The End of Alchemy
Risk Reduction Through Europe’s Distressed Debt Market
And the Weak Suffer What They Must?
Financial Stability Report
Doing Business 2018

Related Channels

Comment on this summary