CFPB to ‘Reconsider’ Payday Loan Restrictions, is Applauded by CBA

The Consumer Financial Protection Bureau (CFPB) will be taking a closer look at the Payday Rule.

The legislation, which was finalized in October by former CFPB head Richard Cordray, mandates that lenders must certify that borrowers can afford a loan via background checks before issuing them. Also, the amount of loans to a single customer must be capped.

“January 16, 2018 is the effective date of the Bureau of Consumer Financial Protection’s final rule entitled ‘Payday, Vehicle Title, and Certain High-Cost Installment Loans’” a statement from the CFPB reads. “The Bureau intends to engage in a rulemaking process so that the Bureau may reconsider the Payday Rule.”

Yesterday, the Consumer Bankers Association (CBA) threw their support behind the decision to “reconsider” the restrictions.

“The CFPB’s decision to revisit its small-dollar rule is welcomed news for the millions of American consumers experiencing financial hardship and in need of small-dollar credit,” said CBA president & CEO Richard Hunt via statement.

“Under the current rule, many banks are forced to sit on the sidelines and prevented from offering affordable and popular small-dollar credit options to help meet the needs of their customers. As the CFPB reconsiders this rule, we encourage the Bureau to work with bank regulatory agencies to examine the use of bank offered small-dollar lending products, such as deposit advance products, and ensure any final rule treats all banks equally.”

Should no changes be levied against the Payday Rule, compliance is set to be enforced on August 19th of 2019.