Payday lenders’ performance
I took a look at how the stocks of the storefront payday lenders performed since 2008, and they have been relatively solid. In fact, all of them saw their stocks rise after 2008, but World Acceptance Corp. (NASDAQ:WRLD)’s share price skyrocketed and never looked back. Also, all of them have market caps of more than $1 billion, with Cash America International, Inc. (NYSE:CSH) having the largest at roughly $1.2 billion.
Something interesting that I found has to do with their year-over-year returns to investors. According to YCHARTS, the year-over-year returns to investors for these stocks are mixed. World Acceptance Corp. (NASDAQ:WRLD) is the only one that is up at 32.51% for the year compared to last year. Cash America International, Inc. (NYSE:CSH) is down 1.13%, and EZCORP Inc (NASDAQ:EZPW) is down 23%. This is versus the S&P 500’s total return being up 20.6%.
Big banks join the fray
As mentioned above, larger banks have also joined the fray and have offered or facilitated payday loan lending. The largest is Wells Fargo, which has a product called Direct Deposit Advance. For every $20 borrowed, the fee is $1.50.
The CFPB has not said it wants to outright ban these products. However, any move that it takes to protect consumers from these high fees will likely reduce them.
Look out ahead
Another move underfoot by the CFPB has to do with the deposit advance products offered by banks, such as the one I mentioned about Wells Fargo. At the end of the month, the CFPB will begin reviewing what will likely be thousands of comments about how it will pressure the big banks about how these products can be just as damaging to consumers as payday loans. I’ll detail the big banks that have such products in an upcoming post.
The article Good Old Days For Payday Lending Stocks Could Be Ending originally appeared on Fool.com and is written by Tedra DeSue.
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