On the very day its payday lending rule takes effect, the Consumer Financial Protection Bureau announced that it intends to engage in a rulemaking process to reconsider the final rule. The Bureau also stated that it will entertain requests to waive the April 16, 2018, deadline to submit an application for preliminary approval to become a registered information system (RIS) under the rule. Although most provisions of the rule do not require compliance until Aug. 19, 2019, the effective date—Jan. 16, 2018—marks codification of the rule in the Code of Federal Regulations.
Final rule. The Bureau adopted its final rule regulating short-term, small-dollar loan regulation on Oct. 5, 2017, shortly before the departure of former Bureau Director Richard Cordray (see Banking and Finance Law Daily, Oct. 5, 2017). The final rule:
- established a full-payment test for installment loans to ensure that consumers can afford their payments and still meet their basic living expenses and major financial obligations;
- limited to three the number of loans that can be made in close succession (while a prior loan is outstanding or within 30 days after a prior loan is repaid);
- created an exception to the full-payment test for very small loans if the lender offers a way the consumer can get out of debt more gradually;
- created a separate exemption for loans that pose less risk for consumers; and
- prevented lenders that make short-term loans, balloon-payment loans, and longer-term loans with an annual percentage rate of more than 36 percent from continuing to attempt to debit consumer accounts for payments after two consecutive failures.
Efforts to repeal the rule. On Dec. 1, 2017, Reps. Dennis Ross (R-Fla), Alcee Hastings (D-Fla), Tom Graves (R-Ga), Henry Cueller (D-Texas), Steve Stivers (R-Ohio), and Collin Peterson (D-Minn) introduced a joint resolution (H.J. Res. 122) to repeal the rule under the authority of the Congressional Review Act. In response, Rep. Maxine Waters (D-Calif) called the repeal "a massive giveaway to payday loan sharks."
Director of Federal Advocacy for the Center for Responsible Lending Scott Astrada has also criticized Bureau’s Acting Director Mick Mulvaney for supporting the repeal effort. According to Astrada, while still a member of Congress, Mulvaney introduced legislation that would have let states opt out the rule and delayed its issuance and enforcement.
Companies: Center for Responsible Lending
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