WASHINGTON—Next week’s CFPB field hearing on payday lending is drawing the attention of NAFCU and CUNA, which will be watching to see if any credit union loans are included in a proposed rule expected to be introduced at the June 2 meeting.
“We expect that the CFPB’s proposed rule on small-dollar and payday lending will be released in conjunction with this hearing,” said Elizabeth Eurgubian, CUNA’s deputy chief advocacy officer, about the hearing in Kansas City, Mo.
Even though the proposal has not yet been released, Eurgubian said CUNA has been advocating that credit union loans not be part of the rulemaking.
“In the CFPB’s outlined release for the small business review process last year we were disappointed to see that in this preliminary framework it swept in credit union products, such as loans offered under NCUA’s Payday Alternative Lending (PAL) program, as well as similar loans offered by state charted credit unions.”
Eurgubian said that CUNA’s advocacy efforts have focused on the fact credit union payday loans provide consumers, many trapped in predatory payday loans, with a good alternative.
“We have been advocating to the CFPB that any credit union small-dollar loans, including those offered through NCUA’s PAL program, not be included in the proposed rulemaking on payday loans, and that this proposed rulemaking should only address the problems in the payday lending industry,” explained Eurgubian.
Eurgubian said CUNA will continue its advocacy efforts if the CFPB sweeps in any CU loans under the proposal.
NAFCU, as well, has been advocating that credit union payday loan alternatives should not be subject to CFPB rulemaking.
Late last year NAFCU sent a letter to the Bureau addressing that while the trade association supports the CFPB’s mission to bolster consumer protections in an effort to eliminate the “ability of predatory payday lenders to continue trapping consumers in cycles of debt they have little hope of exiting,” credit unions are responsible lenders that provide consumers with good alternatives to the payday lending industry. Therefore, CU small-dollar loans should not be brought under the Bureau’s oversight.
NAFCU has also met with CFPB to discuss this issue.