WASHINGTON—The CFPB’s payday lending rule should not impact credit unions’ ability to make needed, small-dollar loans to members, emphasized NAFCU and CUNA in comment letters to the Bureau.
In responding to the Bureau’s request for information on the proposal, NAFCU urged the CFPB to withdraw its payday lending proposal, arguing that the proposal’s complexity and breadth will impede consumer access to credit and have a particularly negative impact on credit unions.
In the letter, NAFCU Regulatory Affairs Counsel Andrew Morris’s writes, “NAFCU believes that the proposed rule would necessitate an end for most, if not all, covered loan products at many credit unions. Consequently, some credit union members might turn to predatory online lenders in times of emergency, or when they need liquidity during the proposed rule’s mandatory cooling-off period.
“NAFCU and our members ask that the CFPB recognize that the proposed rule contains numerous provisions that are unlawful, detrimental to the safety and soundness of credit unions, harmful to consumer access to credit, and unworkable in any form,” Morris continued. “Accordingly, NAFCU asks that the CFPB withdraw its rule and consult with NCUA regarding any future plans to regulate short-term, small dollar lending at credit unions.”
CUNA’s letter, signed by Chief Advocacy Officer Ryan Donovan, highlights “consumer friendly credit union services that should not be detrimentally impacted by CFPB rulemakings,”
CUNA explained. CUNA also points out that the CFPB should consider the recent feedback of other agencies and regulators in response to its proposed rule including NCUA, SBA Office of Advocacy and NASCUS. Finally, CUNA addresses the fact that the CFPB, despite saying it has not done so, has engaged in debt collection policymakings in the small dollar proposed rule and in its recent enforcement action against a credit union – that conflict with established credit union statutory rights.
Donovan cites comments made by CFPB Director Richard Cordray at the Credit Union Advisory Council meeting that support how CUs have consumers’ bests interests in mind, including in making small-dollar loans to get people out of the payday lending trap. Donovan said that Cordray stated that credit union financial education programs and efforts are virtually unmatched, noting that credit unions, “take your responsibility to your members very seriously, and many of you have been pacesetters as consumer educators.”