The Chair of the House Financial Services Committee and 101 members of Congress pressed CFPB Director Kraninger not to delay the compliance date of the Bureau’s payday lending rule.
Representative Maxine Waters (D-Calif), Chair of the House Financial Services Committee, has joined with 101 like-minded House members to pen a letter to Consumer Financial Protection Bureau Director Kathy Kraninger asking her to reconsider the Bureau’s final rule delaying the original Aug. 19, 2019, compliance date of the 2017 Payday, Vehicle Title, and Certain High-Cost Installment Loans Rule. In February 2019, the CFPB proposed amendments to the rule that would not only delay the compliance date but would relieve lenders of the obligation to consider whether a consumer would be able to repay the loan before extending credit (see Banking and Finance Law Daily, Feb. 6, 2019). The lawmakers also expressed dismay that the CFPB has not asked the district court to lift the stay that is in place so that the payment provisions of the rule could be implemented and expressed concerns about the Bureau’s "harmful plans to roll back the Payday Rule by removing key protections for consumers."
"Contrary to recklessly false characterizations, payday, car-title, and predatory consumer installment loans made without regard to the borrower’s ability to repay are not acceptable or sustainable sources of credit," the lawmakers wrote in their letter to Kraninger. They stressed that "payday and car-title lenders lack the incentive to make loans that borrowers have the ability to repay while still being able to afford basic necessities of life." Research indicates that predatory products such as those covered by the rule create debt traps that leave consumers worse off than they were before taking out the loans, they wrote.
Waters noted in her release that the letter follows an April 30, 2019, Subcommittee on Consumer Protection and Financial Institutions hearing that examined the debt traps created by the payday and car-title industries. The Congresswoman included in the letter witness testimony from that hearing from payday loan borrowers and consumer activists.
"The Consumer Bureau’s proposal represents a betrayal of its statutory purpose and objectives to put consumers, rather than lenders, first. Moreover, the Bureau has offered no new evidence and no rational basis to remove the ability-to-repay provisions," the letter concluded.
MainStory: TopStory CFPB ConsumerCredit Loans
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