When taxes aren’t a windfall

As a child, I remember driving past billboards advertising to get your taxes done somewhere and “Get the cash you deserve now!”  I remember trying to make sense of it the rest of the way home. “How do those places get refunds faster than just doing it yourself? Are they directly connected with the government or something? Do they have forms with special powers? How are they faster?”

Robbery at ball-point

Banks and other traditional financial institutions are regulated in such a way so as not to charge usurious fees and strap customers with predatory loan terms. Banks are in business to make money, and sometimes this happens at the expense of the consumer (which then eventually threatens the whole system). So there are regulations in place.

Okay.

Payday lenders, on the other hand, aren’t so mainstream. They’re fringe banks and so they aren’t regulated in the same way. By the same logic, a bank isn’t a payday lender, and they don’t have anything to do with payday loans.

Okay.

Banks do something extra, however.

Takin’ aim

This morning, I stumbled on an article on the Bloomburg website about the Consumer Financial Protection Bureau (CFPB) sanctioning certain banks for vehicle loans and loan interest rate increases by the auto dealer that appear discriminatory.

Dealers often provide financing by giving buyers loans backed by banks and other lenders, a process known as indirect lending…buyers receive a loan that is costlier than the one the bank gave the dealer.

One particular part of the article jumped out at me: