Again this week the US President was pushing hard for a new agency that would oversee credit products and require companies to plainly states the terms of financial products, while banning “the most unfair practices” in consumer credit. “We’re going to level the playing field for consumers,” he said. To me, this spells trouble for every source of short-term consumer credit. Why? Because the playing field will never be level. It cannot be. Consumer credit needs are not level. Can we paint the same face on a consumer credit product to finance an automobile as we can for a short-term consumer credit product to provide gasoline for the vehicle? Of course not. But this is exactly what they are attempting to do with all credit falling under the same rules. It will not work.

If President Obama really wants to form The Consumer Financial Protection Agency to oversee credit in the US, the real question is not what the agency will do, but who will do it. If this proposed agency consists of nothing more than bloviating bureaucrats with their pie-in-the-sky Pollyanna view of reality, consumers seeking short-term credit will be forced to unregulated sources or worse. Consumers of short-term credit in the US would benefit greatly by having a pawnbroker on the board of The Consumer Financial Protection Agency being proposed. At least someone would be looking out for the needs of the millions of customers currently relying on short-term credit.

Tags: consumer credit, Consumer Federal Protection Agency, Pawn Loans, pawnbroker, pawnshop