Last week, Richard Cordray and the Consumer Financial Protection Bureau started out with a bang , establishing new guidelines for regulating mortgage lender practices for banks, and for the first time, also for non-bank mortgage lenders.

This week, they're rolling out the guidelines for payday lenders. These businesses, and some banks that have created short-term, payday-type lending products, have proliferated in the past two decades, and the non-bank businesses have been largely unregulated by the federal government. Cordray is holding a field hearing in Birmingham, Alabama on Thursday to gather information and input on the payday lending market.

“We recognize the need for emergency credit. At the same time, it is important that these products actually help consumers, rather than harm them,” said CFPB Director Richard Cordray in his opening remarks at today’s field hearing. “Now, the Bureau will be giving payday lenders much more attention.” [...] Payday loans are typically marketed to bridge a cash flow shortage between pay or benefits checks. They generally have three features: the loans are small dollar amounts; borrowers must repay the loan quickly; and they require that a borrower give lenders access to repayment through a claim on the borrower’s deposit account. Most loans are for several hundred dollars and have finance charges of $15 or $20 for each $100 borrowed. For the two-week term typical of a payday loan, these fees equate to an Annual Percentage Rate ranging from 391 percent to 521 percent. Loan amounts and finance charges vary depending on state law. If the consumer does not repay the loan in full by the due date, the loan agreement typically permits the lender to cash the consumer’s check to obtain repayment. With the establishment of the CFPB, a federal agency for the first time can supervise not only bank payday lenders but also all nonbank payday lenders. Specifically, the Short-Term, Small Dollar Lending Procedures describe the types of information that the agency’s examiners will gather to evaluate payday lenders’ policies and procedures, assess whether lenders are in compliance with federal consumer financial laws, and identify risks to consumers throughout the lending process. The procedures track key payday lending activities, from initial advertisements and marketing to collection practices.

Now there will at least be federal supervision of these businesses, coordinating with federal and state partners to maximize that supervision. They'll be able to make sure that lenders are in compliance with state and federal laws, and actually provide information to consumers on the lenders and their products. That's a bit of protection that's been completely lacking for consumers.