CFPB White Paper Has Cash America (CSH), EZCORP (EZPW) Reeling
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Price: $25.63 --0%
Rating Summary:
2 Buy, 9 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
2 Buy, 9 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Cash America International, Inc. (NYSE: CSH) and EZCORP, Inc. (NASDAQ: EZPW) are both lower by about 2 percent Wednesday, and according to analysts, this could be related to a CFPB white paper on payday loans and deposit advance products.
"Our initial read is that this is a net negative for the space particularly CSH and EZPW, which generate 22% and 17% (respectively) of net revenues from U.S. payday," FBR Capital analyst Bob Ramsey said.
The report states: "Our findings thus raise substantial consumer protection concerns." and "based upon the facts uncovered through our ongoing work in this area, the CFPB expects to use its authorities to provide [consumer] protections." The CFPB intends to continue studying the industry, and will be analyzing the effectiveness of "limitations" and cooling-off periods.
Ramsey notes "sustained use" is a key concern, with 2/3 of borrowers taking 7 or more loans per year. The white paper showed 90% of fees earned are from borrowers with over 7 transactions per year.
"Our initial read is that this is a net negative for the space particularly CSH and EZPW, which generate 22% and 17% (respectively) of net revenues from U.S. payday," FBR Capital analyst Bob Ramsey said.
The report states: "Our findings thus raise substantial consumer protection concerns." and "based upon the facts uncovered through our ongoing work in this area, the CFPB expects to use its authorities to provide [consumer] protections." The CFPB intends to continue studying the industry, and will be analyzing the effectiveness of "limitations" and cooling-off periods.
Ramsey notes "sustained use" is a key concern, with 2/3 of borrowers taking 7 or more loans per year. The white paper showed 90% of fees earned are from borrowers with over 7 transactions per year.
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