WASHINGTON–The CFPB is proposing to delay by 15 months enforcement of a significant piece of its rule on small-dollar, short term loans that requires lenders to
determine whether borrowers will be able to repay the loans.
At least one of the credit union trade groups said it welcomes the delay.
Primarily targeted at payday and vehicle title lenders that offer high-rate loans, the proposed rule was originally enacted during the Obama Administration and has been among the most debated of rules to come out of the CFPB. At the time the rule was finalized in 2017 more than one-million comments in support of or in opposition to had been received by the CFPB. The delay is likely to draw ire in the now Democrat-controlled House.
The CFPB said it is seeking to delay the rule in part due to a pending lawsuit filed by a payday lender in Texas.
NAFCU Pleased with Delay
In response to the announcement, NAFCU CEO Dan Berger issued a statement saying, “We are pleased that the CFPB is going to delay the payday rule for further consideration. NAFCU supports the removal of problematic ability to repay portions of the rule, but we also want to ensure, that going forward, the egregious practices of certain payday lenders are addressed. Credit unions provide many forms of small-dollar loans and other affordable products to their members, and NAFCU urges all consumers to consider a credit union for their financial needs.”
CUNA issued a statement that it has consistently advocated for the CFPB to revise its rule to ensure their credit union members have access to short-term, small-dollar lending options, and noted it earlier sent a letter to Director Kathy Kraninger supporting revisions to the rule that would create an express, broader exemption for credit union loan products.
Agree With Need to Regulate, But…
CUNA said it agrees with the CFPB that payday lenders should be effectively regulated.
“Credit unions are known for providing safe and affordable short-term, small-dollar loans designed to keep members away from predatory payday lenders and debt traps,” said CUNA Chief Advocacy Officer Ryan Donovan. “We support Bureau efforts to revise this rule and urge the Bureau to ensure these changes do not inhibit credit unions participating in the short-term, small-dollar loan market.”
CUNA added it continues to maintain the rule should be tailored to address predatory actors who abuse consumers.