Regulate Payday Lending, But Not Like This

For the first time, the federal government is creating rules focused on the short-term, small-sum credit known as payday lending. That’s a good idea, but the plan announced by the Consumer Financial Protection Bureau isn’t the way to do it.

Payday lenders cater to people with poor credit who need cash fast. Lenders typically offer two-week loans of a few hundred dollars for a 15 percent fee -- nearly 400 percent annualized. Outrageous as those terms may seem, they can make sense for someone who, say, needs to fix a car to get to work and can’t borrow any other way.