WASHINGTON—NAFCU and CUNA are carefully evaluating the CFPB’s proposed guidelines on payday lending to make sure the new rules do not impact CUs’ ability to lend to members or add to regulatory burden.
The CFPB’s proposals under consideration seek to end payday debt traps by requiring lenders to take steps to make sure consumers can repay their loans, the CFPB stated in a release. The rules also restrict lenders from attempting to collect payment from consumers’ bank accounts in ways that tend to rack up excessive fees. The consumer protections being considered would apply to payday loans, vehicle title loans, deposit advance products, and certain high-cost installment loans and open-end loans.
“NAFCU and our members strongly support responsible short-term and long-term lending. We appreciate the CFPB looking at the practices of actors in the marketplace that could harm consumers,” said NAFCU SVP of government affairs and general counsel Carrie Hunt in a statement. “As with any rulemaking NAFCU wants to ensure that there are no unintended consequences for credit unions. At first blush, the CFPB’s announcement could touch upon many areas of lending and NAFCU will closely review the CFPB’s potential rulemaking ideas to avoid those unintended consequences.”
CUNA President and CEO Jim Nussle reminded that “one of the goals of the founders of the American credit union movement was to create a system of cooperative finance that provided consumers with access to credit, including short-term, small dollar loans, on fair terms and rates. Therefore, CUNA supports the ability of credit unions to provide beneficial short-term, small loans as alternatives to predatory payday lending, which has no place in the financial marketplace,” said Nussle in a release.
Nussle added that the extent to which credit unions will be able to continue to productively, efficiently and responsibly serve their members’ short-term, small-dollar credit needs will be a key measure in evaluating the CFPB’s proposals.
“If the rule results in consumers having reduced access to credit from credit unions or if the access to credit is made more expensive by regulatory burdens imposed on credit unions which would be more appropriately targeted toward the abusers of consumers, it will have failed to adequately protect consumers,” Nussle said.