Rep. Maxine Waters (D-CA) has expressed concerns with the Consumer Financial Protection Bureau’s (CFPB) decision to reconsider its rule designed to halt payday loan abuses.
The CFPB is proposing to rescind certain provisions of its 2017 final rule governing Payday, Vehicle Title, and Certain High-Cost Installment Loans, specifically requirements lenders make certain underwriting determinations before issuing payday, single-payment vehicle title, and longer-term balloon payment loans.
“I am deeply troubled by the Consumer Bureau’s proposal to gut a much-needed rule that would have reined in payday lenders and ensure consumers can afford to pay off their loans,” Waters, chairwoman of the House Financial Services Committee, said. “It is no secret that payday loans often lead to irreparable financial consequences for hardworking families, as they usually have interest rates of 300 percent or more and borrowers frequently take out new loans to pay off old ones because the loans were never affordable in the first place.”
CFPB officials said the preliminarily finding is rescinding the requirement would increase consumer access to credit. The proposal suggests there was insufficient evidence and legal support for the mandatory underwriting provisions in the 2017 final rule.
“The Bureau will evaluate the comments, weigh the evidence, and then make its decision,” CFPB Director Kathy Kraninger said. “In the meantime, I look forward to working with fellow state and federal regulators to enforce the law against bad actors and encourage robust market competition to improve access, quality and cost of credit for consumers.”
The CFPB is concerned the provisions would reduce access to credit and competition in states that have determined that it is in their residents’ interests to be able to use such products, subject to state law limitations.