Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Jul 6, 2012

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While many payday loan lenders and other untraditional lending sources were fearful when the Consumer Financial Protection Bureau (CFPB) was created, the CFPB has demonstrated a surprisingly large amount of impartiality and fairness in oversight of the cash loan industry.

The problem with quick cash loans and the payday lending industry as a whole is that they are so necessary for a substantial number of our population. But in order to operate successfully, they’re required to charge high fees for their services. These high fees coupled with the inherent financial position of their clientele make for an unpleasant catch-22: those in poor financial positions should be the last people to receive expensive loans, but lenders offering money to those in poor financial positions cannot lower their costs out of fear of growing insolvent.

Consequently, the CFPB has taken a pleasant stance in which they’re patiently listening, and simply gathering information right now.

“We approach our task with, on the one hand, great humility, and also with full appreciation and respect for the groundbreaking work that so many [payday lenders] have done,” said David Silberman, the CFPB’s acting director for research, markets and regulations, in a speech.

That’s not to say the CFPB is taking it easy. The government-sponsored agency is simply progressing with a cautious and unbiased approach to regulating the industry.

“We intend to be transparent in our expectations of [cash loan lenders], so that there should be no ‘gotchas,’” Silberman said.

And the transparency has already begun. The CFPB announced at the Underbanked Financial Services Forum that they expect the payday loan industry to change. They hope, however, that the change can come with a benefit to both lenders and borrowers. They intend to do that by helping the cash loan market “facilitate access and innovation.”

That word innovation is what we can hope to expect from the CFPB, and, with any luck, it will be the key to providing mutually beneficial changes to the short-term lending services we currently have in the country.