FTC Commissioner, Joshua Wright, has given a word of caution concerning the issue of imposing interest rates and other restrictions on consumer lending. His comment was released on December 26, 2014 and is specifically related the Defense Department’s proposed amendments to the Military Lending Act.
Wright is not only one of the five Commissioners of the Federal Trade Commission, but he is also a leading economic scholar. He holds a Ph.D. in economics and a JD from the UCLA. He is a Republican and was nominated to the FTC by President Obama.
His comments against restrictions have been posted on the FTC’s website. Wright is deeply concerned that further restrictions will cause serious harm to service members. According to an article by PYMNTS.com, Wright feels that economic research strongly supports an inevitable result of restricted access to legal credit for consumers due to the interest rate ceilings – especially for higher-risk borrowers.
PYMNTS.com also quotes Wright saying that “studies find that, on average, access to payday loans and other products help consumer’s smooth negative expenditure shocks, avoid more onerous forms of credit, alleviate financial distress, and increase job retention. The evidence suggests that some consumers will face adverse consequences if these forms of credit are restricted”.
It should also be pointed out that these arguments agree with numerous, previous attempts to regulate various lending programs (such as, payday and automobile). That being said, there is a growing tension that could lead to a showdown between the FTC and CFPB – both have considerable consumer protection responsibilities.
When economic factors are ignored, it trickles down and effects businesses – your business. Don’t let restrictions and slow periods for your business stop you from achieving your goals. There are solutions out there that can help you continue to operate successfully.
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