News & Resources

Facing regulations, short term lenders scale back operations

Mar 16, 2011 Todd Milner

Citing increased government regulations of short-term finance companies, pawn and short term lender First Cash Financial Services announced it would be reducing its short term lending operations in Illinois. The company also announced it had recently purchased six retail pawn locations in Indiana and Missouri, and said proceeds from the sale of its Illinois locations would fund the expansion of the company's pawn section. First Cash's chairman and chief executive officer, Rick Wessel, said "new and significantly different legal and regulatory changes" in Illinois that are set to go live at the end of March were a driving factor behind the sale. "This disposition allows us to exit the Illinois market without incurring the expense associated with compliance with these new laws and regulations," Wessel said, and the sale cuts down the company's exposure to short term lending and credit services regulations outside Texas. Despite the increased regulations nationwide that have hurt many short term lenders' operations, First Cash reported it would raise its fiscal 2011 guidance for earnings per share, based on "stronger than expected" quarter-to-date results. Lawmakers in the company's native Texas are currently considering new regulations that would cap the interest fees that short-term financiers can charge on a loan, the Star-Telegram of Fort Worth, Texas, reports.